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Big Arizona utility to pay overcharged customers $24 million

PHOENIX — Arizona’s largest electric utility will pay $24 million to about 225,000 customers who were placed on new pricing plans that were not their cheapest available option after a 2017 rate increase approved by state utility regulators.

The settlement agreed to by Arizona Public Service was announced Monday by Arizona Attorney General Mark Brnovich. The attorney general launched an investigation after reports showed an online calculation tool utility customers used to choose their cheapest plan was giving erroneous recommendations. Investigators later learned some customers were misled by letters from the utility suggesting cheaper plans.

About 210,000 customers will receive $98 payments or bill credits, according to the attorney general. Those are residential customers who were still on a more expensive plan as of March 2020 and would have saved at least $120 in the previous 12 months.

APS had previously offered refunds to customers who chose a more expensive rate plans during 10 months in 2019 when its rate comparison tool was providing inaccurate information.

Another 17,500 customers will receive payments totaling $3.3 million. They are customers who could have been affected by errors in letters about how to choose the best plan the utility sent in 2017. The amounts each customer receives will be dependent on their likely excess payments but the average is $188 per customer.

The 2017 rate increase approved by state utility regulators raised residential rates an average of 4.5% and required all 1.1 million residential customers to choose new rate plans. The utility said its average customer would see a $6 per month increase. But many customers said they were confused by the new plans and rate structures and complained to the utility and its regulators, the Arizona Corporation Commission.

APS CEO Jeff Guldner said in a statement Monday that moving all its customers to new rate plans was a “major undertaking and there are areas where we could have done better.”

“This agreement acknowledges that and recognizes our commitment to inform customers of their service plan options and to provide effective tools and resources for choosing the one that’s right for them,” Guldner said.

He said the utility now provides all residential customers information each month on whether they could save money on a different rate plan and they can switch as often as they want.

Brnovich said in a statement that he is committed to ensuring that both large and small businesses ensure that their customers have adequate information about products and services.

APS serves 1.1 million residential customers in 11 of 15 Arizona counties. It did not admit wrongdoing in reaching the settlement, which requires court approval.

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