Phoenix, Ariz.— At the Arizona Corporation Commission’s Special Open Meeting on December 17, 2024, Commissioner Nick Myers voted with the majority of the Commission to approve the conforming order adopting the Commission’s Formula Rate Plans Policy Statement (FRP Policy Statement). 

“Rather than jumping into rulemaking at this time, the Commission will be better positioned to develop FRP rules after gaining some real experience vetting proposed FRPs,” stated Commissioner Myers, “after all, the evaluation of proposed FRPs from different types of utilities will likely shed light on issues the Commission needs to address in rulemaking that we would otherwise be unaware.”

“Evaluating proposed FRPs in the context of a rate case will ensure they are thoroughly analyzed so the Commission can determine whether they will result in just and reasonable rates and are in the public interest,” commented Commissioner Myers, “rate cases are more widely publicized and include public comment sessions, multiple rounds of briefings, and multi-day hearings before an administrative law judge with testimony given under oath and subject to cross-examination. This level of vetting by an administrative law judge, ACC staff, parties to the rate case, stakeholders, the public, and ultimately by the Commission does not occur in rulemaking.” 

“Scrutinizing FRPs in multiple rate cases and then through the rulemaking process will allow for far greater vetting and public participation before any final FRP rules are adopted,” concluded Commissioner Myers.     

For more information about Formula Rate Plans, Chairman O’Connor and Commissioner Myers have written a letter and press release detailing the benefits of FRPs, including promoting gradualism, savings passed on to customers each year, timely and accurate cost recovery, lower regulatory burden, improved financial efficiency for utilities, and facilitating investment in critical infrastructure. The ACC FRP Policy Statement also includes significant customer protections like the use of a historical test year, an annual true-up, an earnings test to prevent overearning by utilities, annual prudency determinations, a full rate case every five years, and the evaluation of proposed FRPs in a rate case.

For more information, please contact Commissioner Myers at myers-web@azcc.gov.