Arizona’s record-setting stretch of triple-digit temperatures was national news this summer. Not surprisingly, with such high heat comes an increased demand for air conditioning in our homes and businesses, and in Arizona, this comes at a cost – one of the highest average electricity bills in the nation. Now, a rushed decision by the Arizona Corporation Commission (ACC) earlier this month to adopt a formula ratemaking process could usher in an era of annual increases the state has never experienced, and will upend how electricity rates are set. The abrupt and sweeping change to the way the Commission decides rate increases is a solution in search of a problem and will not benefit Arizona’s residential and commercial ratepayers. The formula ratemaking process adopted by the Commission allows any water, gas or electric utility to opt into automatic annual rate adjusting, with a general rate case only occurring every five years. General rate cases are formal proceedings in which a utility examines its costs to determine updated rates for customers. The automatic adjustments to the utility’s base rates will be decided by a formula which directly tracks the utility’s costs in the previous year. In contrast to how rate increases are currently approved, the process the Commission has adopted will have severely limited time for review and scrutiny and greatly reduced stakeholder involvement and transparency. Some commissioners explained that a d …
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