Getting good data on rate designs is worth the effort

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There’s been good national conversation in recent years around the need for transparency and responsiveness from electric utilities and regulators when it comes to data on rates and pilots, assessing impacts on consumers, and consumer outreach and education. All of these areas were addressed by a diverse group of utility rate design experts a couple of years ago, and progress was made at the level of the National Association of Regulatory Utility Commissioners (NARUC).

At the local level, though, it can take quite a bit of work to turn guidelines into reality. That’s certainly been our experience in Arizona over the past year. Here’s a bit of the back story on the effort, the progress we’re starting to see, and a few takeaways for others around the country:

Over the last year or so, Arizona Public Service (APS) has rolled out a set of changes that have included base rate hikes and an increase in the monthly fixed charge. Existing customers were shifted onto one of six new rate plans, and all new residential customers were required to enroll in either a demand rate or a time-of-use (TOU) rate for at least 90 days.

While my organization opposed the APS rate increase and the aforementioned changes to rate design, we were fully committed to making sure that consumers received the best information and tools to navigate their new rate options. We know that getting consumer outreach and education right is vital for ratepayers to make informed decisions. We also know that families and individuals without sufficient disposable income can’t easily just soak up the costs of being on a plan that isn’t best for them, even for a short time.

Thus as APS readied to implement its approved changes, our organization and others weighed in with recommendations on both data and consumer outreach and education. Along with allies, we conducted meetings with the utility to provide input from individuals confused with their bills and to offer potential clarifying remedies.

On data, we advocated that APS should provide metrics every month on customers projected to be enrolled – and actually enrolled – in each of its various rate plans. We recommended the same for its 90-day demand charge and TOU plans for new customers, including providing numbers on how many stayed or moved to other plans after the trial period, and which plans they ultimately chose. And we pressed for data transparency on budgets, too, in order to understand how APS expends millions of dollars in ratepayer money on outreach and education efforts.

Overall, the level of transparency and participation we were advocating was important to enable Arizona’s regulators – the Arizona Corporation Commission (ACC) – and all stakeholders to see in real time how the company’s new rate plans were going, to propose adjustments along the way, and to evaluate whether replication in future rate cases would be a good idea or not for Arizona. While APS and the ACC didn’t embrace many of these data disclosure and outreach recommendations at first, we are encouraged by recent actions that have the potential to result in real progress:

·       Recently, Commissioner Boyd Dunn submitted a letter to a customer complaint docket requesting information on APS’s customer outreach efforts, implementation of new rate plans, and budget expenditures. APS provided a 957-page response that includes helpful details to analyze the effectiveness of their outreach and education efforts while also presenting ideas for future rate cases.

·       As part of this same proceeding, Commissioner Andy Tobin requested that APS provide more data on the actual rate impact experienced by its customers. In response, APS has provided some good information about the rate impact.

·       Building on the experience over the past year with stakeholder-utility meetings on consumer outreach and education, movement is underway to establish a consumer education working group that meets regularly to provide input to the utility and the ACC and to assist with outreach.

While every state is different, there are a few broad takeaways from our experience in Arizona that may be useful for others:

1.     Be persistent. “If at first you don’t succeed…” is the old adage here, and it’s applicable – persistence can pay off. Many of the same kinds of recommendations we urged a year ago, we’ve subsequently repeated, and expanded on. Change takes time, and while repetition can be frustrating, little by little it can also sink in.

2.     Be specific. Properly assessing new rate designs requires a real look under the hood, not just a snapshot of the vehicle from afar. What are the average bill impacts – positive and negative — per customer class? How many households per customer class are there and how many are impacted by increased or new charges to their monthly bill? What is the increase on the low-end and on the high-end, and how many households are in which category? If a variety of new plans are being offered, how many customers end up changing their plan, how many times, and from which plan to which plan? Same with stakeholder involvement around topics like consumer outreach and education: how many meetings, at what points, with whom exactly and with what core goals and expectations around input on materials and community outreach?

3.     Be inclusive. Representatives of organizations that represent consumers, seniors, limited income individuals and minority populations as well as environmental and faith-based leaders can offer unique perspectives on the constituencies they serve and work with regularly. If the goal is to help ratepayers understand their rate plan options and opportunities to best manage their monthly electric bill, utilities and policy makers should consider input from various entities as essential.

At times it may feel like the proverbial pushing of the boulder uphill, but data and process are worth every effort. They are bedrock to ensuring we navigate well for all consumers as change continues across our energy sector.