Testimony of Devi Glick on Behalf of Sierra Club in the Arizona Public Service Company Rate Case

Sierra Club
Project ongoing.

Synapse provided expert witness support to Sierra Club in the Arizona Public Service Company (APS) 2023 rate case. Our testimony and analysis focused on APS’s two coal-fired power plants at Cholla and Four Corners, as well as the associated operation and maintenance (O&M) and capital expenses that APS was requesting to include in test year rates. For Cholla, we supported the APS’s plan to retire Cholla by 2025. For Four Corners, we evaluated APS’s current data and future cost projections, as well as public market data for renewables and battery storage projects in the region, to evaluate the reasonableness of APS’s plan to continue relying on the coal plant relative to alternatives.

Based on our review of the Plant’s cost and market data, we found that the cost to operate and maintain Four Corners substantially exceeded the cost of alternative clean energy resources in the region. We found that APS could avoid a substantial portion of projected future costs at Four Corners, including unnecessary capital expenditures and O&M costs, by retiring the plant before 2031 and replacing it with lower cost alternatives. We also found that APS could have reduced or avoided spending on the Effluent Limitation Guidelines (ELG) compliance project at Four Corners if it had planned to retire the plant three years earlier, by the end of 2028. APS did not perform analysis to support or justify the ELG project, which is not significantly more expensive than its authorized budget. Finally, we found that APS had based its decision to forgo seasonal operations at Four Corners on outdated gas market projections.

We recommended that the Commission disallow test year O&M and capital expenditures at Four Corners on the basis that the plant is uneconomic relative to alternatives, and APS has failed to adequately analyze the cost of early retirement and replacement with alternatives. We also recommend that APS switch Four Corners back to seasonal operations starting in fall 2023 as originally planned to take advantage of falling gasp prices and avoid unnecessary excess variable costs in the near term.