Phoenix, Ariz. –   For the second time this year, Fitch Ratings, one of the Big Three credit rating agencies, has recognized the Arizona Corporation Commission for markedly improving the regulatory environment in the state.  In upgrading the financial outlook for Southwest Gas Holdings, Inc. this month, Fitch Ratings noted, “ACC regulation has improved meaningfully from a credit perspective reflecting personnel changes at the Commission and a focus by the reconstituted Commission on reducing regulatory lag, system reliability and efficiency.”  In stabilizing the regulatory environment, the Commission has lowered additional costs that are ultimately passed down to utility customers.  The credit ratings of our utilities make an incredible difference—just like purchasing a car or home — the difference between 2% and 5% interest has a substantial impact on a monthly payment. If utilities pay more in interest on billion-dollar loans, these extra fees and costs increase customers’ bills.

On top of this positive news, WalletHub recently ranked and recognized Arizona as having the second most affordable energy rates in the nation.  These outcomes reflect years of careful planning and management by the public service corporations and the Commission. 

In March 2024, Fitch Ratings upgraded the financial outlook for APS (Pinnacle West Capital) to “stable” because of “the improved regulatory environment in Arizona following a series of constructive rate case outcomes over the last year with increased authorized returns.”  Its reasoning went further to say, “Fitch believes the regulatory environment improved significantly in Arizona in 2023 driven primarily by changes in the composition of the Arizona Corporation Commission (ACC). Two new commissioners were elected, Republican Jim O'Connor was elevated from commissioner to chair.”  

“Since assuming the role of Chairman, I have worked diligently alongside my fellow Commissioners to improve the regulatory investment climate in our Great State.  Through consistency of our decision making; reducing regulatory lag; and removing obstacles to our utilities being able to competitively source power and infrastructure at the least cost, we are dedicated to providing our ratepayers affordable rates and reliable infrastructure,” said Chairman Jim O’Connor.   

Just this month, Arizona’s two largest electric utilities set new records for energy demand as temperatures in the Phoenix metro area also broke records.  Arizona utilities have made, and continue to make, investments in resources to increase energy generation capacity, storage, as well as investments in maintaining grid sustainability to successfully meet ever-increasing electricity demand.  Significant investments in new transmission infrastructure will be needed over the next decade to connect new resources to customers.  APS predicts it will need to increase its resource capacity by about 40% in the next 15 years, and SRP expects it may need to triple its resource capacity in the same time frame to meet future customers’ demands.  These investments will require utilities to secure loans, and Arizona’s stable regulatory environment will contribute to lower interest rates, and lower electricity costs for customers in the long run.

The Commission’s mission to power Arizona’s future by ensuring safe, reliable, and affordable utility services remains steadfast in the face of rapid residential and economic growth.

The August 5, 2024, Fitch Ratings Commentary referenced in this news release can be found here:  https://www.fitchratings.com/research/corporate-finance/fitch-removes-southwest-gas-holdings-inc-from-rating-watch-negative-outlook-negative-05-08-2024