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Arizona Supplier Seek Increase In Large Customer Shopping Cap
Retail supplier NRG filed a motion to amend the Arizona Corporation Commission’s July 7th decision approving the latest version of utility APS’s AG-X tariff. The tariff allows certain large C&I customers to have the opportunity to shop for energy in a limited program. Specifically, the supplier requested an “increase the AG-X program cap from.
From the NRG motion:
[***] “Pursuant to A.R.S. § 40-252. NRG, Inc. (“NRG”) hereby submits this Motion to Amend Decision 79293 (the “Decision”) to make two specific modifications to the AG-X Tariff approved therein. The requested changes will enable additional private investment in much needed capacity while maintaining system reliability and taking pressure off the utility as it is faced with increasingly difficult demands for additional service. The changes sought herein are: 1) modify the date on which the reserve capacity charge becomes applicable to AG-X customers such that it only becomes applicable if and when Arizona Public Service (“APS”) becomes a binding member of the Western Resource Adequacy 2 Program (“WRAP”), and 2) increase the AG-X program cap from the current 200 MWs 3 to 800 MWs.” [***]
As background, in 2012, the Arizona Corporation Commission (“ACC”) introduced AG-X as a pilot buy-through program designed for large commercial and industrial customers, enabling them to purchase power from competitive suppliers through the utility. Since its inception, APS billed participating customers through its billing system but passed on energy costs from generation service providers (“GSPs”) that serve customers under the 1 Public Service (“APS”) becomes a binding member of the Western Resource Adequacy 2 Program (“WRAP”), and 2) increase the AG-X program cap from the current 200 MWs 3 to 800 MWs. The ACC has modified and reapproved the AG-X tariff in each subsequent rate case.
“In December 2024, the ACC again approved the continuation of the AG-X tariff. 2 Today, the AG-X tariff is tied into other tariff mechanisms (like time of use adjustments, 3 capacity payments, service fees, and other billing components), creating complexity.
“Nevertheless, in the last rate case APS proposed added conditions around RA. 16 These new provisions that were adopted require GSPs to provide RA in one of two ways. First, they can provide it themselves in compliance with the Southwest Power Pool’s (“SPP”) Western Resource Adequacy Program (“WRAP”). In the alternative, GSPs that cannot provide their own RA can pay APS to participate in WRAP for them by paying the 20 APS “reserve capacity charge.”
These new RA options were intended to provide additional levels of reliability, however, at this point, these new requirements have proven unfair and unworkable. The 23 first option, to self-supply WRAP-compliant RA, is currently impossible as no product 24 exists on the market that can satisfy this requirement. This leaves only the option of paying 25 APS to participate in WRAP on behalf of the GSP in exchange for the reserve capacity 26 charge. However, the WRAP program itself did not become binding in 2024 as anticipated and has now been delayed, and it is currently slated to become binding for all participants as of winter 2027-2028. This leaves AG-X customers stuck paying for APS’ WRAP 3 participation when WRAP is not binding on APS. This presents fairness issues that were not considered at the time of the original Decision.
NRG submits that customers should not be required to pay APS’s AG-X reserve 6 capacity charge until the WRAP program is active with APS participating as a binding 7 member. In the meantime, NRG fully supports maintaining the requirement that GSP’s 8 continue to be required to provide WSPP Schedule C firm power that has proven 9 historically reliable. As a result, the date on the current AG-X tariff should be modified 10 to reflect that the reserve capacity charge cannot be implemented until APS becomes a 1 | binding member of WRAP.
Specifically, we propose the following amendments to the AG-X tariff language 13 that will restore the reserve capacity charge to the level it was set at prior to the rate case 14 and delay the new charge’s implementation until APS is a binding member of WRAP.” [***]
E-01345A-22-0144
(In the Matter of the Application of Arizona Public Service Company for a Hearing to Determine the Fair Value of the Utility Property of the Company for Ratemaking Purposes, to Fix a Just and Reasonable Rate of Return Thereon, and to Approve Rate Schedules Designed to Develop Such Return.)
