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Developers may have to pay more for power lines
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The Arizona Corporation Commission and Arizona Public Service are drawing up new regulations that would require developers and individuals to pay more for the cost of extending power lines into new subdivisions and homes in remote areas.
The measure could potentially hold down electricity prices for APS customers and save them millions of dollars annually.
Under current practice, the utility pays all or a portion of the cost of extending lines to new developments in what is called a “free footage” allowance. The utility covers that cost in the monthly bills charged to its present customers.
But in an effort to hold down APS rate increases, members of the corporation commission are shifting that cost from existing customers to developers and others who create the demand for the additional electricity.
The move could save APS customers $50 million to $150 million annually, according to analysts.
“Generally I believe that, to the extent practical, growth should pay for itself,” said Commissioner Jeff Hatch-Miller.
The commissioners abolished the free footage allowance in the APS service territory as part of the company’s last rate case, in which the commission granted APS a 6.8 percent rate increase in June.
However, differences have arisen between the utility and the commission staff over how to implement the change.
The issue centers on how the additional money collected by APS from developers would be treated for accounting purposes.
The utility wants the income to be treated as revenue while the staff wants it to be considered as a gift, or contribution in aid of construction, as it has historically been recognized.
Commissioner Kris Mayes said treating the income as revenue could create greater savings for ratepayers in the short run, but in the long run customers might benefit more if it were treated as a contribution.
She said that issue is still being analyzed.
“We want to make sure it helps customers in the long term,” she said. “This is a significant amount of money.”
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