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Rate Increase Helps APS Boost Profits 23%

by Ryan Randazzo - Oct. 29, 2009 02:04 PM
The Arizona Republic
An emergency rate increase and the hottest month ever in the state helped Arizona Public Service's parent company boost profits 23 percent from July to September, it reported Thursday. 

APS still is trying to get a rate hike it applied for in early 2008 approved through the Arizona Corporation Commission, but was given part of the hike on an emergency basis in December.

Including the emergency increase that added about $2.68 to the average household monthly bill, the full increase would add about $9 a month to the average bill - more in summer when people use more electricity and less in winter.

Many customers have written or spoken in opposition to the rate hike at hearings, but the only formal opposition is a group that wants APS to reinstate a policy to build 1,000 feet of free line extensions to new customers.

 APS officials said reinstating the free lines would require renegotiating the settlement to cover those costs.

"The settlement will provide significant benefits to customers, shareholders, and stakeholders alike," CEO Don Brandt said.

Pinnacle West Capital Corp. reported profit of $186.7 million for the third quarter, or $1.84 per share, compared with $151.6 million, or $1.50 per share, in the same quarter last year. 

Revenue hit $1.08 billion, compared with $1.04 billion in the third quarter last year.

Analysts predicted earnings of $1.75 a share on revenue of $1.07 billion.

Part of the increase was attributed to the way fuel contracts are accounted for compared with market prices.

Weather also helped APS earnings.

July was the hottest month on record in Arizona, averaging 98.4 degrees, which pushed customers to use more electricity, even though the state didn't set a record for hottest day or peak energy demand.

APS measures the effects of weather on energy demand in "cooling-degree days," which account for the average daily temperature and number of days at those temperatures.

The July-September quarter had 2,721 cooling degree days, according to APS, which was 5.2 percent more than normal and 7.4 percent more than last year.

Excluding the effects of weather, APS customers actually reduced their energy use significantly during the quarter, which one analyst said was impressive.

Excluding weather, the average customer used 2.4 percent less electricity during the quarter, with the average residential customer using about 1.4 percent less, according to APS.

"You seem very successful (at energy conservation)," said Paul Patterson, an analyst with Glenrock Associates, to APS executives during a conference call Thursday.

Brandt said the company anticipates saving much more energy through programs that subsidize the cost of weatherproofing homes. 

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