ACC Recommended Order's Impact on APS Revenue

On our latest call, folks were asking how the Hearing Officer's Recommended Opinion and Order (if adopted by the ACC) would affect APS's total bottom line.  That turns out to be a difficult question.  The ROO provides for a $4 million dollar rate increase.  However, APS has a negative fuel adjustment that works into the equation as well.  

Here's an excellent explanation from the transcript of the latest earnings call.  

Ted N. Geisler -- Senior Vice President and Chief Financial Officer

High level, so you've got the $4 million net sort of revenue increase as proposed in the ROO, that includes fuel. So we've got to get that down to non-fuel. So you back out about $33 million of fuel related increases that takes you to a total non-fuel revenue decrease of $29 million. You add to that incremental cost that we've stated for a while now will hit the income statement once rates go into effect of about $110 million and then you tax effect that, that gets you to the $90 million estimated annual impacts to ongoing earnings. And again, we expect that to be up to $90 million and that's an estimate at this time.

Fitch: APS Rating Outlook Negative

On our last Zoom call, we discussed the Hearing Officer's Recommended Opinion and Order in the APS Rate Case.  The judge rejected the company's request to put the Four Corners SCRs into rate base.  The Commissioners can, of course, amend the order to put the SCRs into rates, but it takes three votes to amend the order and there's a lot of inertia.   If the ACC adopts the  judge's recommendation, APS will not recover the investment of nearly $500 million. 

Here's what Fitch said:

The Negative Outlook reflects heightened regulatory risk in Arizona with an adverse outcome in APS's pending general rate case (GRC) being the main concern. A final order in APS's pending GRC consistent with a recent administrative law judge (ALJ) recommendation, which Fitch views as more onerous than previously expected, will be detrimental to credit quality and could lead to a one-notch rating downgrade at APS and parent Pinnacle West Capital Corp. (PNW, IDR: A-/Negative).




SRP Stakeholder Slides

Salt River Project has restarted its Integrated Resource Planning sessions.  The Stakeholder group met virtually yesterday.   Here are the slides.

The slides provide an excellent overview of the direction SRP is going and include estimates of load, scheduled coal retirements and storage updates.  

One interesting tidbit is that SRP is planning to build 4 new combustion turbines at the Coolidge site.  Here is the slide. 

SRP Peaking Slide


AZCPA Annual Energy Conference

1200px-Kyrsten_Sinema_(cropped)The Arizona Competitive Power Alliance is celebrating its 20th year!  Each year we host an Energy Conference...well, almost every year.  US Senator Kyrsten Sinema was scheduled to by our 2020 Keynote speaker.  That conference was in the post-COVID, Pre-zoom era, so it didn't happen.  

This year we hosted the meeting via Zoom and Senator Sinema reprised her role as keynote and we added APS President Jeff Guldner and ACC Chairwoman Lea Marquez-Peterson as additional VIP speakers.  

Slides from the APS Advisory Council Meeting

In order to formalize stakeholder input, the new ACC Energy Rules require the utilities to form a Resource Planning Advisory Council (RPAC).  I’ve been appointed to the APS Council in my capacity a Alliance Director.  This is a great opportunity to provide input on the front end of the APS planning process.  Naturally, we will still participate in the broader stakeholder process as well as the Integrated Resource Planning process at the ACC.  However, serving on the RPAC provides an opportunity to deal directly with APS early in the process as part of a smaller stakeholder group. 

Here are the slides from the April 15th APS RPAC Presentation

Let me know if you have any questions or suggestions.