APS Enters $25 Million Consent Agreement, Failed To Help Customers Find Economical Rate Plans

PHOENIX – Utility giant, Arizona Public Service (APS), has reached an agreement with the Arizona Attorney General’s Office to provide $24 million to about 225,000 APS consumers who were not on their most economical rate plan for electric utility service.

According to the Attorney general’s Office, in August 2017, the Arizona Corporation Commission (ACC) approved APS’s new rate plans and a rate increase. As part of the approval, the ACC directed APS to develop a Customer Education and Outreach Program (CEOP). The CEOP was supposed to educate APS’s then 1.1 million residential customers about the new rate plans. As part of the CEOP, the company developed an online plan comparison tool that was intended to help customers evaluate and compare the various plan options.

The Arizona Attorney General’s Office (AGO) began investigating the implementation of the CEOP in December 2019 after learning of an error that affected the plan comparison tool from February 2019 to November 2019. The AGO also explored whether the information provided to customers through the CEOP was adequate to educate customers about understanding the new rate options.

After negotiations with the AGO, APS agreed to provide $24 million for certain residential customers. Eligible consumers include those who, as of March 2020, were not on their most economical plan and could have saved an estimated $120 or more per year on a different rate plan.

The Attorney General’s investigation revealed that additional APS customers may have been affected by a data error that impacted letters recommending the Saver Choice plan as the most economical plan for some customers in late 2017 (the “2017 Letters”). In particular, the 2017 Letters included rate recommendations and estimated cost savings that were calculated using an incorrect rate schedule for the Saver Choice plan. Some customers who received the 2017 Letters chose to move to the Saver Choice plan and then did not receive an updated plan recommendation during the rate migration process in 2018.

These consumers also will be eligible for restitution under the AGO consent agreement, pending court approval.

Consumer Restitution

  • $20.7 million to up to 210,000 consumers who APS estimates were not on their most economical plan as of the March 2020 billing cycle and would have saved $120 or more over the previous 12 months. This group of consumers will receive a per capita payment of at least $98.
  • Up to $3.3 million to approximately 17,500 consumers who may have been affected by the data error in the 2017 Letters. This group of consumers will receive a varying restitution payment based on the extent of the likely effect on the consumer resulting from the data error.
  • Restitution will be provided in the form of checks (or possibly bill credits) and will be made within four months of the court’s approval of the consent agreement.
  • APS previously compensated consumers impacted by its rate tool errors. The restitution announced today is separate and in addition to those refunds.

Additionally, APS shall pay $200,000 to cover the state’s cost of the investigation. Furthermore, APS shall pay $550,000 to promote the Attorney General Office’s consumer and community outreach awareness and prevention programs.

Residential customers with questions about their rate plans should visit aps.com or call APS directly at 602-371-7171 or 800-253-9405.

 

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