Phoenix, Ariz. - The Arizona Corporation Commission voted 3-2, with Commissioners Anna Tovar and Lea Marquez Peterson dissenting, on Tuesday, December 3, 2024 to approve an amended version of the Arizona Corporation Commission Policy Statement Regarding Formula Rates.  The policy statement allows regulated utilities to propose formula rates in future rate cases.  Under this approach, the ACC reviews and accepts as the rate a formula for calculating the utility’s cost of service, including clear definitions of inputs to that formula and a process for updating rates every year as the utility’s costs change.  Formula rates will still be monitored closely to ensure that the utility does not overearn relative to the cost of service for providing service (plus a reasonable return on invested capital), while continuing to provide service safely and reliably.   The Policy Statement Regarding Formula Rates provides a new option to calculate a utility’s rate base, and does not forego the current use of a historical test year in the determination of utility ratemaking.