UNS: Electricity rates may jump 18% next year
Revenues didn’t meet operations costs in 2008, spokesman says
KINGMAN - Local electricity provider UniSource Energy Services gave its customers a jolt this month, notifying them that the company is pursuing a distribution rate hike for next year, with total rates set to rise by as much as 18 percent.
UniSource sent out a notice with this month's bills informing customers that the company submitted its rate hike application to the Arizona Corporation Commission on April 30, with the new rates expected to go into effect by next summer. The company's director of corporate communications, Joe Salkowski, said the rate hike was being proposed to help cover the cost of operations, which revenues failed to meet during 2008.
"The revenue we recovered last year was not adequate to cover our costs and provide the company with a fair return on our rate of investment," Salkowski said. "The cost of delivering power continues to rise, and our rates need to change to keep up with those costs."
The company has requested a distribution rate increase of 7.5 percent - an amount Salkowski said would have made up last year's shortfalls, had it been in effect. He noted, however, that the percentage is subject to change, based on the ACC's decision and whether UniSource sees an increase or decrease in the number of customers it serves between now and when the new rate takes effect.
Additionally, Salkowski said the rate hike only reflects the company's operational and delivery costs. UniSource's actual wholesale cost to buy the fuel necessary to generate electricity is reflected by a separate rate called the Purchased Power and Fuel Adjustment Charge, or PPFAC, which fluctuates once a year and is based on the global cost of energy, particularly oil and gasoline.
Salkowski said the PPFAC fell sharply this year but is likely to rise again next year as the global economy recovers and demand for oil and gas returns.
He said that, between UniSource's rate hike and the likely PPFAC increase, UniSource customers are likely to see their bills rise substantially more than 7.5 percent.
"The combined impact of our requested increase in distribution rates and our anticipated increase in the PPFAC would result in an estimated 18 percent increase in the bills paid by typical residential customers," Salkowski said.
Both increases are likely to come at nearly the same time in early June, though Salkowski said it was impossible to know exactly when the distribution rate hike would take effect. "That's up to the commission, but we expect, based on the typical process, that these rates will take effect around June of next year," he said. "The entire process can take 13 months or more, and we filed in April, so if it holds to 13 months, the rates would take effect June 1 (of 2010)."
While the increases may sound threatening, Salkowski noted that they still fall below last year's rates for both distribution and wholesale costs. He added that, until next June, customers will continue to pay the lowest electric rates since August 2003, when UniSource first acquired the local system from Citizens Utilities.
"(By next summer) bills will still be 7 percent below where they were before last month," Salkowski said. "That's assuming the new rates take effect by that date, which we won't know until the commission decides."
For more information on UniSource's rate increase, or for general billing inquiries, visit the company's Web site at www.uns.com, or call (877) 837-4968.