Arizona Allows Some Large Customers to Purchase Alternative Generation Supply

The Arizona Corporation Commission has approved a settlement in Arizona Public Service Company's rate case proceeding under which a limited amount of large customers will be able to choose an alternative provider of wholesale energy under a "buy through" mechanism (Docket E-01345A-11-0224).

The settlement had been first reported in Matters.

As more fully discussed in our prior story, the adopted settlement creates APS Experimental Rate Schedule AG-1, a mechanism allowing customers to elect alternative wholesale power supply under a buy-through.

Under this rate, a third party Generation Service Provider selected by the customer will provide wholesale power to APS on behalf of the customer. APS will serve and bill the customer, and remit payment for generation to the Generation Service Provider.

The experimental "buy through" mechanism will be authorized for a period of four years, with participation capped at 200 MW.

Rate Schedule AG-1 will be available to customers who have an aggregated peak load of 10 MW or more and are served under Rate Schedules E-34, E-35, E32-L, or E-32 TOU L. An aggregated group may also include metered accounts that are served under Rate Schedules E-32 M or E-32 TOU M, if the accounts are located on the same premises and served under the same name as an otherwise eligible customer.

Of the 200 MW load cap, 100 MW shall initially be reserved for customers served under Rate Schedule E-32 L.

Eligible customers may be aggregated if they have the same corporate name, ownership, and identity. In addition, (1) an eligible franchisor customer may be aggregated with eligible franchisees or associated corporate accounts, and (2) eligible affiliate customers may be aggregated if they are under the same corporate ownership, even if they are operating under multiple trade names. ·

Customers on Schedule AG-1 will avoid the APS generation charge, except for the historic reconciliation charge under PSA-1 for the initial 12 months of AG-1 service, and will avoid Adjustment Schedule EIS.

AG-1 customers will be subject to:

• A monthly management fee of $0.00060 per kWh applied to the customer's metered kWh;

• A monthly reserve capacity charge applied to 15% of the customer's billed kW (on-peak for Rate Schedules E-35 and E-32 TOU L) at APS' applicable cost-based rate filed at FERC and revised from time to time, which is currently $6.985 per kW month;

• An initial charge or credit for prior fuel hedging costs made on their behalf

• Imbalance charges

An initial enrollment period will be established for service under Schedule AG-1. If the applications for service are greater than the program maximum amount, then customers shall be selected for enrollment through a lottery process as detailed in the program guidelines

Additional details in our prior story.