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Arizona Public Service Files Proposal For Medium Customer "Buy-through" Program Which Does Not Allow Customers To Select Alternative Supplier

November 4, 2019

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Copyright 2010-19
Reporting by Paul Ring •

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As part of a newly filed rate case, Arizona Public Service has filed a proposed AG-Y "buy-through" program which is intended to comply with an Arizona Corporation Commission directive for the creation of a program for medium-sized customers

As previously reported by, the Arizona Corporation Commission had directed that APS shall either expand and modify its current AG-X competitive supply program to allow medium size commercial customers to participate or, "propose a new AG-Y alternative generation/buy-through program that would be for medium size commercial customers in its next rate case."

The current AG-X program (which is capped), for customers with an Aggregated Peak Load of 10 MW or more, allows customers to select a "Generation Service Provider" other than APS, with APS receiving delivery and title to the power on the customer's behalf.

In contrast, APS has proposed an AG-Y program under which the customer would not select a Generation Service Provider

Instead, the AG-Y program would only provide access to market index pricing for eligible medium and large general service customers, with AG-Y customers continuing to be served as part of APS's overall retail load, and with APS continuing to provide resource adequacy for such customers

AG-Y would provide the customer an hourly market price signal for billing generation energy costs, and would credit the customer for the generation energy costs reflected on their retail rate schedule and the PSA (Power Supply Adjustor) fuel adjustor rate.

"APS has developed an experimental AG-Y proposal that provides access to market energy prices for eligible commercial customers without creating issues of resource adequacy, preferential transmission access or increased ancillary service costs bore by non-AG-Y customers. Under AG-Y, APS's proposal is to replace the base fuel related kWh and PSA charges with an hourly market index price and an administrative charge. Further, the hourly index price will be available the day prior to allow customers that can adjust their load to respond to the hourly price signal," APS said in its filing

"Essentially, for AG-Y customers, APS will continue to provide resource adequacy," APS said

"And, with the AG-Y customer continuing to be served as part of APS's overall retail load, there will be no transmission delivery issues related to Palo Verde, and no issue of hourly block schedules from commercial customers creating ramping issues for the APS system,' APS said

The proposed AG-Y program would be available for Standard Offer customers who are served under retail rate schedules E-32M, E-32MTOU, E-32L, E-32LTOU, or E32L Storage Pilot. These are commercial customers between 101 kW and 2,999 kW of monthly maximum demand.

As proposed, total AG-Y program participation will be limited to 200 MW of customer load

Customers will be enrolled on a first come first served basis. However, if the participation exceeds 100 MW during an initial 3-month enrollment period, APS will assess whether a lottery will be held for the remaining program MW or whether the program limit will be expanded.

Under proposed Rider AG-Y, all provisions, charges and adjustments in the customer's applicable retail rate schedule will continue to apply except as follows:

• The unbundled generation energy costs in the retail rate will be credited on the monthly bill at the following credit rate: Monthly credit for generation energy costs: $0.03600 per kWh credit

• Adjustment Schedule PSA-1 charges will not apply

Additional Schedule AG-Y charges include the hourly prices applied to the customer's hourly metered kWh during the billing period. Under AG-Y, customers would pay hourly market prices derived from relevant wholesale market prices and posted on a company website on a day ahead basis.

Also in the rate case, APS said that it analyzed the AG-X (large customer buy-through) customer group as a separate customer class in the allocation of generation-related costs. "From APS's perspective, this customer group does not presently provide sufficient resource adequacy for APS to exclude a portion of the customer's load as a resource planning obligation. In fact, many legacy generation resources were initially constructed for serving these customers as pan of the overall retail load," APS said

Docket E-01345A-19-0236

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