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SRP needs to answer questions before raising rates

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Posted: Tuesday, September 25, 2012 1:00 pm

While it would be hard to find anyone who wants to pay more on their electric bill, SRP’s proposed rate increase is particularly hard to stomach since it falls short of providing details necessary for the SRP Board to make an informed decision.

In particular the following questions need to be answered:

1. What would be the impact of increasing energy efficiency to at least 20 percent by 2020?

Although SRP continues to ramp up its investment in energy efficiency, there is still more that can and should be done. Energy efficiency is the cheapest, cleanest, and quickest resource for SRP to meet energy needs. Arizona Public Service and Tucson Electric Power are required to meet an Energy Efficiency Standard of 22 percent by 2020. An analysis by the Lawrence Berkeley National Laboratory found that this Energy Efficiency Standard will produce $9 billion in savings for Arizonans by 2030.

Before SRP raises rates for its customers, it should provide researched options for increasing energy efficiency beyond the status quo. The options should include short- and long-term implications on rates and transmission and distribution, as well as water usage, air quality and associated public health and other life cycle costs. Further adopting and implementing successful energy efficiency programs will ultimately lead to lower electric bills.

2. What is the impact of removing the proposed monthly charge increase and/or holding harmless low-income individuals?

On page five of its report to SRP, Pacific Economics Group Research, LLC states: “Clearly, higher fixed monthly service charges (MSCs) would help ensure a more stable recovery of the overall level of fixed costs. However, while it is true that higher MSCs would improve fixed cost recovery, by their very nature they result in disproportionately large price increases for smaller customers (because by definition, they consume fewer kwh to average the MSC over). The pricing approval process should clearly consider these impacts.”

SRP should be encouraging, not discouraging, its customers to incorporate energy conservation and energy efficiency in their homes and businesses. However, through management’s proposal, SRP residential customers regardless of energy use would pay the same monthly service charge increase. The Board should recognize the economic benefits of its customers who best manage their energy use and reward, not penalize, these individuals. Furthermore, APS and Southwest Gas recently agreed to hold low-income individuals harmless; SRP should do the same.

3. What is SRP’s commitment to reducing costs?

While SRP reduced costs by approximately $1.2 billion in FYs 2010-2012, SRP has not presented what steps are being taken to further reduce costs in FY 2013-beyond. As individuals and businesses continue to tighten our belts, so should SRP.

The Arizona PIRG Education Fund appreciates the opportunities for the public to raise questions and offer input as part of SRP’s rate increase process. However, before sticking ratepayers with larger bills, SRP management needs to present additional documentation prior to the Board’s vote. This information can prove helpful in assessing if an increase is warranted and if so how those dollars can best be spent.


• Diane E. Brown is executive director of the Arizona PIRG Education Fund, which conducts research and education on public interest issues. More information can be found at

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