TUCSON - Arizona Corporation Commission Chairwoman Lea Márquez Peterson is asking regulated electric, water, and gas utilities in Arizona to take advantage of low interest rates now, before they increase this year.
Interest rates typically get passed onto customers through monthly bills, therefore any financing that utilities secure when interest rates are low result in lower comparative bills for customers than those who secured financing when interest rates were high.
“Over the last several years, interest rates have been at an all-time low. From approximately April 2020 to February 2022, the Federal Funds Effective Rate was under 0.10%,” said Márquez Peterson.
“Due to rising inflation, the Feds have announced plans to increase interest rates. This means utilities and customers may no longer be able to take advantage of historically low rates.”
To lock-in interest rates now, before it's too late, Chairwoman Márquez Peterson filed a letter in the dockets of several pending financing applications noting the upward trend and signaling that utilities should file any anticipated financing applications before the end of Q2, 2022.
Chairwoman Márquez Peterson is making the request preemptively in an effort to save customers money in the future.
The letter requests pending applications for financing be processed expeditiouslya to allow applicants to enter the debt market as quickly as possible. In addition, the letter requests that utilities who took advantage of historically low rates in 2020 and 2021 be considered for a “performance incentive bonus” for helping to keep rates low for Arizona customers.
“Not only should we be processing open applications as quickly as possible to ensure utilities can finance future projects at the lowest costs possible, but also we should be recognizing the efforts put in by utilities that have already secured historically low rates for customers over the past two years.”
Ultimately the decision whether to apply for financing is in the hands of utility management. Chairwoman Márquez Peterson expects Arizona utilities to act in the best interest of customers.
A copy of Chairwoman Márquez Peterson’s letter can be found here.