APS to host Stakeholder Meeting

The Company made an announcement this afternoon. 

"APS plans to host a virtual stakeholder meeting on Tuesday, September 15, 2020 from 1:30 to 3:30 p.m.  This is a follow up to the June 11th meeting which was held prior to the filing of the Company’s Final IRP on June 26, 2020.  We will send out an agenda in the next few business days and will file a notice of the upcoming meeting in the Commission’s Docket No. E-00000V-19-0034.

We look forward to the discussion and hope you will be able to participate."

Stranded Costs for Four Corners?

When the Competitive Power Alliance opposed APS's purchase of the Four Corners Power plant, we predicted that the purchase would be a financial disaster for APS.  Our prediction has come true and APS is attempting to cut its losses by retiring the plant in 2031.  This is seven years earlier than the planned retirement date.  

ACC Chairman Bob Burns has asked APS to come up with a plan to account for the stranded investment associated with the closing the plant early.    Here's a copy of the Burns letter.

If I had my consumer advocate hat on, I would argue that there is no stranded investment associated with the early retirement.  The rationale for stranded investment is that the company was required to make the purchase in order to ensure reliability.  The Regulatory Contract implies that in exchange for this increased capacity, the ratepayers on on the hook for any costs associated with the early obsolescence or retirement of the plant.  

However, APS purchased the plant over the objections of the stakeholders.  Sure, the plant increased capacity and reliability, but it was one of the more expensive and riskier options available at the time.  APS bet heavily on the long term economic viability of coal and lost.  They could have met their needs through low risk contracts with existing natural gas plants.  They assumed the risk and now they are trying to shift that risk to ratepayers.  


APS on the Future of Natural Gas

Here's an interesting take on the latest APS earning's call.  

CEO Jeff Guldner said the integrated resource plan (IRP) for utility Arizona Public Service Co. (APS) filed in June called for 2,500 MW of power supply from 2020-2024 via a mix of renewables, demand response, energy efficiency and storage.

Between now and 2035, the APS territory is expected to see steady growth even as 1,400 MW of coal capacity is retired and 1,600 MW of gas-fired generation purchase agreements expire. Overall, APS by 2035 still would need another 6,000 MW of capacity, Guldner said

Supreme Court: Statute Trumps ACC Rules.

Those of you who don't live in AZ will not be surprised by a headline that says "Statute Trumps ACC Rules."  After all, don't laws always trump rules?  Not in Arizona.  The Arizona Corporation Commission is a Constitutional body and has long argued that it has sole authority over Public Service Corporations, so its rule making authority with respect to the companies that it regulates trumps Statute.  

The Supreme Court disagrees.

Here's the key paragraph.

¶30 However, when there is a conflict between a Commission
regulation and a statute, the legislature’s police authority is “paramount,”
meaning it has the authority to override the regulations of the Commission.
Pacific Greyhound, 54 Ariz. at 176–77 (stating that apart from the
Commission’s ratemaking authority, “under the direct language of the
constitution and the police power inherent in the legislative authority, the
paramount power to make all rules and regulations governing PSCs not
specifically and expressly given to the[C]ommission by some provision of
the constitution, rests in the legislature”); see Ariz. Const. art. 14, § 2 (stating
that all corporations doing business in Arizona may “be regulated, limited,
and restrained by law”); see also State v. Harold, 74 Ariz. 210, 215–16 (1952)
(holding that the legislature has a duty to exercise its police power to enact
laws “reasonably necessary for the preservation of the public health, safety,
morals, or general welfare of the public”).