The Sierra Club and Synapse Energy Economics released an analysis examining Arizona Public Service’s substantial investment in natural gas generation and its implications for utility customers. The report, titled Passing the Buck: How APS’s Gas Rush Risks Ratepayer Dollars, evaluates how the utility’s reliance on gas resources has evolved and projects the financial impact on customer bills.
APS is currently seeking a 14% rate increase that would raise the average residential customer’s annual bill by approximately $240, marking the third rate hike in five years. The utility has also proposed implementing “formula rates,” a mechanism that would enable annual price adjustments with reduced regulatory oversight and public participation. Concurrently, APS has announced plans to reduce its clean energy targets and withdraw previous commitments to eliminate zero-carbon power generation and retire the Four Corners coal facility by 2031.
Among Arizona’s utilities, APS has the most extensive planned gas expansion, including proposed projects such as the Desert Sun Power Plant and the Redhawk Expansion Project. The latter involves constructing eight new methane gas-fired turbines in Maricopa County, an area frequently cited by the American Lung Association for having notably poor air quality levels.
According to the report’s authors, APS currently lacks meaningful incentives to manage fuel cost risks, allowing the utility to pass the entirety of fuel and purchased-power expenses to customers. The analysis recommends implementing a fuel cost-sharing mechanism that would encourage the utility to reduce dependence on fuel-intensive generation and accelerate renewable energy adoption. The report contends that ratepayers will continue bearing the long-term costs through elevated utility bills, environmental degradation, air quality deterioration, and public health consequences unless regulatory protections are established.
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