Judge Dismisses Legal Challenge to Arizona’s Utility Rate Policy
In a significant development for Arizona’s utility sector, a Maricopa County Superior Court judge has rejected a lawsuit contesting a policy that permits annual rate hikes by utility companies. This decision upholds a contentious measure approved by the Arizona Corporation Commission, designed to streamline the rate adjustment process for electric, water, and gas firms.
The approved policy statement, passed by a narrow 3-2 vote in December, enables utility companies to adjust rates annually, bypassing the lengthy traditional rate case system. However, consumer advocates have expressed concerns, suggesting that this new policy reduces public input on rate decisions.
Opponents, including Attorney General Kris Mayes and two dissenting commissioners, Anna Tovar and Lea Márquez Peterson, argued that the commission sidestepped state law by not following a formal rulemaking process. The Residential Utility Consumer Office (RUCO) echoed this sentiment in their lawsuit, claiming the policy violated the Administrative Procedures Act (APA) of Arizona.
However, Judge Susanna Pineda ruled against RUCO, stating that the Corporation Commission is explicitly exempt from APA procedures. Pineda also pointed out that RUCO missed an opportunity to challenge the policy under a different statute within the 30-day window following the policy’s adoption.
Commission Chair Kevin Thompson, who supported the policy, welcomed the court’s decision. He stated, “The court unequivocally affirmed our constitutional authority to set policy and rules in our ratemaking capacity.”
Despite the ruling, RUCO remains dissatisfied, particularly since the court did not evaluate the substance of the new rate policy. RUCO attorney Sarah Barrios Cool expressed disappointment, noting the lack of judicial review on whether the policy constitutes a rule subject to formal rulemaking. “RUCO is disappointed with the outcome and evaluating next steps,” Barrios Cool said.
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