Attorney General Mayes Files Expert Testimony Showing APS Rate Hike Could Be Cut from 14% to 3%, Saving Arizona Families $220 a Year

PHOENIX – Attorney General Mayes today announced that her office has filed expert testimony with the Arizona Corporation Commission showing that Arizona Public Service's proposed 14% rate increase is unjustified and could be reduced to just 3% while still maintaining reliable service and a strong credit rating.

The expert testimony demonstrates that APS is asking customers to pay shareholder profits that are significantly higher than what it actually costs the company to maintain reliable service—resulting in an unnecessary wealth transfer of approximately $524 million per year from Arizona families to APS's shareholders.

“APS is asking Arizona families to foot the bill for shareholder profits that far exceed what any reasonable investor requires. This is just corporate greed run amok," said Attorney General Mayes. "Our expert analysis proves that customers are being asked to pay far more than is needed. Instead of a 14% rate hike, the expert testimony we just filed with the ACC shows that APS can achieve the same reliability with just a 3% increase by aligning what customers pay with APS's actual costs."

The Attorney General's expert witness analyzed APS's rate request and found:

• APS's proposed shareholder profit level is significantly higher than what it actually costs to attract and retain investment. The company is asking customers to pay returns well above what investors require in today's market.
• Customers would save $524 million per year under the Attorney General's alternative proposal, which sets APS's allowed return equal to its actual cost of capital—what the expert calls the "ROR=COC standard."
• Every residential customer would save approximately $220 per year under the alternative proposal compared to APS's proposal.
• APS's proposed 14% rate increase could be reduced to just 3% while still fully compensating investors and maintaining APS's current investment-grade credit rating.
• APS's financial models rely on economically unrealistic assumptions, including inflated growth rates, exaggerated risk estimates, and circular logic that essentially assumes the answer in advance. In some cases, the assumptions are economically impossible.
• When the same models are applied using reasonable, market-based assumptions consistent with modern finance, they produce a much lower cost of equity than APS proposes.

“What APS is proposing is a half-billion-dollar annual transfer of wealth from Arizona ratepayers to its shareholders," said Attorney General Mayes. "Arizonans are already stretched thin. They shouldn't be paying a premium on their electric bills so APS can deliver outsized returns to its investors."

The expert testimony shows that a wide range of independent evidence—including investment firm forecasts, long-term stock market data, and academic research on utility returns—all point to the same conclusion: utilities' authorized returns in Arizona and across the United States are significantly higher than what investors actually require.

The alternative proposal would not harm the reliability of APS's service or weaken its financial position. The savings come entirely from aligning customer charges with APS's real-world cost of capital, not from cutting service, maintenance, or infrastructure investment.

"Arizonans should not have to choose between keeping the lights on and keeping their bills affordable," said Attorney General Mayes. "APS can remain financially strong, attract investment, and maintain reliable service — all while charging customers a whole lot less. That's exactly what we're asking the ACC to require."

A copy of the filing is available here.