Mayes: APS surcharge on solar users is ‘discriminatory’ and ‘unconstitutional’

Attorney General Kris Mayes is demanding the Arizona Corporation Commission reconsider a decision to allow Arizona Public Service to increase its rates on customers who have rooftop solar panels. 

On Monday, Mayes filed a demand with the Corporation Commission outlining why she thinks the rate increase unconstitutionally discriminates against solar users. If the commission fails to hold another hearing, she said her office would ask the courts to intervene and both overturn the new fees for solar customers and force APS to return any money it collected from the new charges. 

“As the Attorney General and the former chair of the Arizona Corporation Commission, I am committed to protecting Arizonans, including those residents who wish to utilize clean and renewable energy like solar,” Mayes said in a statement to the Arizona Mirror. “The current Commission’s decision is discriminatory towards solar customers and unsupported by the evidence in the record. We look forward to making these arguments before the Commission and, if necessary, in court.” 

Mayes was appointed to the Corporation Commission in 2003 by then-Gov. Janet Napolitano. She was elected to a full term in 2004 and served as its chair from 2009-10

The focus of Mayes’ objections is how the rate increase impacts solar energy users.

The new rates, which took effect March 8, saw the average bill increase by approximately 8%, or between $10 and $12. Additionally, the commission voted on an amendment that adds a monthly charge of between $2.50 to $3 for residential customers with rooftop solar power. 

Mayes’ office claims that the commission violated the Arizona Constitution by making a change that impacts a select set of ratepayers without providing any evidence justifying the solar surcharge. 

“As a result, the Commission must either modify the Decision to eliminate these plainly unconstitutional provisions or, at a minimum, grant a rehearing to allow the parties to develop an evidentiary record which might support the Commission’s otherwise unconstitutional orders,” the filing says. “If the Commission does not grant rehearing and conform the Decision within the bounds of the Commission’s constitutional authority, the Arizona Court of Appeals will almost certainly order it to do so.”

The rate increase was hotly debated in an 11-hour hearing in February that also included thousands of comments submitted by consumers. 

In her filing, Mayes contends that APS did not provide adequate evidence to support treating solar customers as a “separate class.” She cited another case in which similar measures were requested at a late stage in the process but were denied. 

“[Solar customers] should not receive an increase in rates greater that (sic) non-solar residential customers. To do otherwise runs afoul of the Arizona Constitution,” the filing says, adding that it would also run afoul of state law. 

Other groups have also filed with the commission to ask it to rehear the rate increase, including the Sierra Club, Western Resource Advocates and Vote Solar. 

“Under these circumstances, the additional charge for residential solar customers cannot be authorized because the underlying proceedings were constitutionally infirm. At a minimum, the Commission should grant a rehearing to allow parties to introduce evidence into the administrative record refuting the additional charge for residential solar customers to properly preserve the issue for judicial review,” Mayes’ filing says. 

APS has previously argued that the increase is needed to help with creditors and lenders, and it anticipates using the funds from the rate increase to recoup expenses from previous years that went to expanding the utility’s infrastructure. 

The increase would provide APS with a return on equity of 9.55%, according to the Arizona Republic. 

APS is the state’s largest electric utility, serving 11 of the state’s 15 counties and approximately 1.4 million customers. 

“The State strongly urges the Commission to reconsider the Decision, grant this Application for a rehearing, and either eliminate the unconstitutional provisions altogether or set a rehearing that will allow the parties to develop the evidentiary record required for a constitutional decision to issue,” the AG’s office said in the filling. “The State expressly reserves the right to seek all available remedies on appeal, including disgorgement of all unconstitutional rates collected.”

The Corporation Commission said it cannot comment on Mayes’ filing.

“Several parties have filed applications for re-hearing in the APS rate case, in addition to the Attorney General. Consequently, the Commission must abide by ex parte rules, and our legal team has advised that it would be inappropriate to discuss pending litigation, including merits of the filing,” a spokesperson said.

***UPDATE: This story has been updated to include a comment from the Corporation Commission.