APS 2015 Annual Report Download - page 107

Table of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On June 1, 2015, APS filed its 2016 DSM Plan requesting a budget of $68.9 million and minor modifications to its DSM
portfolio to increase energy savings and cost effectiveness of the programs. The DSM Plan also proposed a reduction in the DSMAC of
approximately 12%.
Electric Energy Efficiency. On June 27, 2013, the ACC voted to open a new docket investigating whether the Electric Energy
Efficiency Standards should be modified. The ACC held a series of three workshops in March and April 2014 to investigate
methodologies used to determine cost effective energy efficiency programs, cost recovery mechanisms, incentives, and potential
changes to the Electric Energy Efficiency and Resource Planning Rules.
On November 4, 2014, the ACC staff issued a request for informal comment on a draft of possible amendments to Arizona’s
Electric Energy Efficiency Standards. The draft proposed substantial changes to the rules and energy efficiency standards. The ACC
accepted written comments and took public comment regarding the possible amendments on December 19, 2014. A formal rulemaking
has not been initiated and there has been no additional action on the draft to date.
PSA Mechanism and Balance. The PSA provides for the adjustment of retail rates to reflect variations in retail fuel and
purchased power costs. The PSA is subject to specified parameters and procedures, including the following:
• APS records deferrals for recovery or refund to the extent actual retail fuel and purchased power costs vary from the
Base Fuel Rate;
• An adjustment to the PSA rate is made annually each February 1 (unless otherwise approved by the ACC) and goes into
effect automatically unless suspended by the ACC;
• The PSA uses a forward-looking estimate of fuel and purchased power costs to set the annual PSA rate, which is
reconciled to actual costs experienced for each PSA Year (February 1 through January 31) (see the following bullet
point);
• The PSA rate includes (a) a “Forward Component,” under which APS recovers or refunds differences between expected
fuel and purchased power costs for the upcoming calendar year and those embedded in the Base Fuel Rate; (b) a
“Historical Component,” under which differences between actual fuel and purchased power costs and those recovered
through the combination of the Base Fuel Rate and the Forward Component are recovered during the next PSA Year;
and (c) a “Transition Component,” under which APS may seek mid-year PSA changes due to large variances between
actual fuel and purchased power costs and the combination of the Base Fuel Rate and the Forward Component; and
• The PSA rate may not be increased or decreased more than $0.004 per kWh in a year without permission of the ACC.
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