Arizona AG Calls for Investigation into APS Cost Shifting Allegations

Arizona’s Energy Billing Under Scrutiny

Arizona Public Service (APS) faces scrutiny as Attorney General Kris Mayes calls for an investigation into potential cost-shifting practices by the utility. Concerns have been raised about whether APS has transferred the financial burden of serving large industrial clients onto other consumers, a move that could tarnish the reputations of both APS and the Arizona Corporation Commission if not addressed.

Abhay Padgaonkar, a data analyst, highlights that a significant portion of the increased demand on APS’s grid stems from approximately 100 data centers and large industrial users. To meet this demand, APS has resorted to purchasing power from external providers, a cost reportedly distributed across the entire customer base. Padgaonkar’s analysis, submitted to the commission on October 2, suggests that these large users have potentially underpaid by $600 million for their energy, causing others to cover these expenses.

In a letter dated October 9, Mayes emphasizes the need for regulatory scrutiny over APS’s justification that growth finances growth, referencing Padgaonkar’s findings. Her letter to the commission urges a deeper investigation into these claims.

APS has addressed these allegations through a post on X, countering concerns about the impact of data center growth on energy bills. In their statement, APS asserts, “With misleading claims circulating about whether data center growth is affecting energy bills, we know our customers want clear, accurate information. The simple fact is: APS is ensuring that residential and small-business customers are not paying for data center power usage.”

Attorney General Mayes has challenged APS to provide evidence if Padgaonkar’s analysis is indeed misleading. “If that is the case, APS should show how the Commission and its ratepayers, using the underlying records and calculations, why Mr. Padgaonkar is incorrect,” she stated.

Later on October 9, a spokesperson for the Arizona Corporation Commission communicated that they disagree with Padgaonkar’s analysis. The spokesperson noted that Padgaonkar, as an APS customer, had the opportunity to engage in the APS rate case proceedings but chose not to participate as an intervenor. The commission’s current rate case involves auditing APS’s expenditures and purchases by both staff and 23 other intervenors. The commission stated that it cannot comment on the ongoing rate case evidence.