With utility rates potentially on the rise, low-income Arizonans are feeling the pinch

Low-income Arizonans are already dealing with financial stress stemming from the ongoing government shutdown and other federal cuts. Now, they’re also dealing with price hikes on their utility bills.

At a recent town hall in Sun City about this issue, Attorney General Kris Mayes said that electricity prices in Arizona have risen faster in the past two years than in the previous nine. And those costs may get even higher in the coming months.

Kelly McGowan, the executive director of Wildfire AZ, an organization working to end poverty, joined The Show to explain why this is happening.

Full conversation

SAM DINGMAN: Kelly, good morning.

KELLY MCGOWAN: Good morning.

DINGMAN: Thank you so much for being here. To start, give us a sense of what we might be seeing, in terms of these rate hikes. What sorts of increases would customers be looking at?

MCGOWAN: Yeah, well, I think we are seeing across the nation that — we have data that electricity prices are climbing more than twice as fast as inflation — and we're seeing that here locally, certainly. We've got most of our major utilities coming in for rate cases at our Arizona Corporation Commission over the next couple months to year.

APS is coming in for a 14% increase, that's after a 2023 increase of about 8%. Although, that was base rate increase, it was higher based on some other factors. We have TEP, Tucson Electric Power, coming in for a 14% increase. And then SRP, just recently in November, had a price proceeding that resulted in an increase across the board for customers.

DINGMAN: What reasons are the utilities giving for needing these hikes?

MCGOWAN: A lot of varying reasons. I mean we have just growth in general, our population continues to grow and that's increased demand on the grid for serving more customers. And we're having the impacts of climate change here, and the utilities are citing the need to protect against major catastrophes, like wildfires and the floods that we just saw out in the Globe area.

They also cite that, like our costs are increasing, their costs are increasing, so inflation is impacting them — interest rates — just like they're impacting our daily lives and our bills. So data centers certainly play into that growth. In addition to just customer growth, we're seeing large users of our electric grid coming in for building out these data centers, which is certainly going to impact rates.

DINGMAN: So as I mentioned at the beginning, your organization Wildfire advocates, in particular, on behalf of low-income Arizonans. I wonder if you could tell us a little bit about the particular impacts of all this on low-income folks, because some people might be listening to this and thinking, "If my bill went up by 20 bucks a month, that would be frustrating perhaps, but not necessarily debilitating."

It's not the case for everybody.

MCGOWAN: Correct. And we've got some really good data that comes from the Census Bureau on a pretty regular basis. And so here in Arizona, in the last 12 months, we know that about 46% of households had one indicator of energy insecurity, and I'm going to talk you through a couple of these; 21% were unable to pay their electric bill in full, 27% kept their houses at unsafe temperatures to lower the bill, and about 36% forewent expenses for other basic needs — food, medicine — to try to pay that utility bill.

So we're seeing real impacts for low-income households choosing between which bill to pay and to try to stay housed, frankly.

DINGMAN: Yes, and these are — it's no exaggeration to say — life and death issues in some cases, especially here in the Valley when the heat gets really intense.

There has also been some news recently about the state's corporation commission working to repeal energy efficiency standards. Can you give us some context on that? Why are they trying to do that and what would the implications be if they are, in fact, repealed?

MCGOWAN: So all five commissioners on our Arizona Corporation Commission voted to begin the repeal process of the energy efficiency standard. And that will be an ongoing process that we're going to encourage consumers to come out and share their thoughts. But some of the things that they cited in that meeting where the opening of the repeal took place were that they met the standards that were put in place when we adopted these measures as a state. A desire to understand individual program by individual program, which ones are working and which ones are not, were the two main reasons, and so that those costs don't get passed on to consumers across the rate base.

Now, as advocates, we think that energy efficiency programs show that they can reduce bills. And particularly for low income families, we're very concerned about that repeal.

One of the largest programs that we have is the weatherization program, and that program goes into low-income households and looks at the household as a whole to see what we can do to reduce energy burden in that household, lower bills and increase efficiency. And so for programs like that to potentially be taken away reduces our impact to lower low-income households' energy bills.

DINGMAN: So as we've been talking about, Wildfire works on behalf of poor folks. You also do actively partner with the utilities in some cases. Talk a little bit about that collaboration. How does that serve your larger aims at Wildfire?

MCGOWAN: To their credit, all of the utilities look to provide funding and programs to help their low-income customer base. That helps us all, that helps their entire rate base. And so we partner with all of the state's utility programs to run bill assistance programs for households who are unable to pay their energy bill, and also then to run programs to help families replace utility-related appliances.

So we get funding from all of the state's utilities to help families replace their HVAC systems, because $10,000 is a mighty bill for a low income household. So in SRP's current price proceeding, they increased their bill assistance from $1 million to $5 million, so that will be a huge help. And both in the TEP and APS rate cases that we see pending, there is additional support for low-income households.

DINGMAN: Kelly, we've got just about 30 seconds left here. I'm wondering if you could give us some national context on this. You alluded to the fact that this is a nationwide issue. Any takeaways from how we saw the elections last night play out, in terms of what we've been discussing here?

MCGOWAN: Yeah, we keep hearing that electricity prices are going to be a campaign issue and I think you saw that play out in last night's election. We have two governors who spoke about that on the campaign trail, we had a commission in Georgia switch parties with a nod to what electricity prices mean there.

So I think that that will continue to play out in Arizona as we have upcoming elections across the next year.

DINGMAN: Well, Kelly McGowan is the executive director at Wildfire. Kelly, thank you so much for joining us.

MCGOWAN: Thank you.