PHOENIX (3TV/CBS 5) -- Arizona utility company APS reached an agreement with the state's Attorney General's Office on Monday to provide $24 million to about a quarter of a million customers. The agreement stems from an investigation by the AG's office that the company failed to educate or assist their customers in utilizing their most economical rate plan for service.
In August 2017, the Arizona Corporation Commission approved APS's new rate plans and rate increase. Part of the approval included APS creating a Customer Education and Outreach Program. The program was supposed to help educate the company's 1.1 million residential customers about the new rate plans. Included in the program was an online plan comparison tool intended to help people compare and contrast the various plan options.
Arizona Attorney General Mark Brnovich and his office began investigating the program in December 2019 after learning about an error in the plan comparison tool that reportedly lasted from February 2019 to November 2019. Lawyers also looked into whether or not APS was providing enough education on the plans to its customers.
"We believe that the information that was being provided to consumers as to what rate plans may or may not have been best for them was inadequate and it didn't give them enough information," Brnovich explained. "You had consumers, potentially, that maybe didn't switch plans when they should have switched plans."
Stacey Champion, an APS customer, first sounded the alarm to issues with the rate in 2018. In September 2019, she received a letter in the mail stating she may not be on the most economic plan.
"We started working with a couple of other customers and basically uncovered the fact that this rate comparison tool was flawed," Champion said. "They're overearning in excess of more than $100 million per year because of this flawed rate design--$24 million is still kind of a drop in the bucket."
After negotiations, the utility company agreed to make the payout for specific residential customers. Eligible customers include anyone who, as of March 2020, were not on their most economical plan and could have saved at least $120 or more per year on a different rate plan.
"The AG basically said 'you screwed over Arizona customers,' which is what I've been shouting from the rooftops for the last few years. So I mean, that feels good," said Champion. "It's better than nothing but I also think that it still just scratches the surface."
The payouts are broken down as follows:
- $20.7 million to up to 210,000 customers whose APS estimates were not on their most economical plan as of the March 2020 billing cycle. This group will receive a payment of at least $98
- $3.3 million to 17,500 customers who may have been affected by a data error in 2017. This group will receive varying repayment based on the extent of the effect on the consumer.
Payments will be provided in the form of checks or bill credits and will be made within four months of the court's approval of the agreement. APS is also paying $200,000 to cover the state's cost of the investigation and $550,000 to promote the Attorney General's Office's consumer and community outreach awareness and prevention program.
The CEO of APS, Jeff Gulder, released the following statement after the announcement of the agreement:
“APS has entered into an agreement with the Arizona Attorney General Office’s Civil Litigation Division related to the implementation of new service plans from our last rate case. Moving all customers to new plans in the 2017-2018 time frame was a major undertaking and an industry first, 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. We now provide all residential customers with information every month about whether they could save money on a different plan and the flexibility to switch plans as often as they choose. That is just one example of how we strive to meet and exceed our customers’ service expectations. I am committed to that personally, along with all of our employees who are dedicated to the customers and communities we serve."
Arizona Corporation Commissioner Sandra Kennedy thanked Stacey Champion and Abhay Padgaonkar for bringing the original complaint to the commission in the first place.
"I must give acknowledgement and credit to the two ratepayers for their tenacity and dedication in bringing the wrongdoings of Arizona Public Service Company (“APS”) to light. I appreciate the AG, his staff and the Consumer Fraud Department for recognizing APS had been caught with their hand in the cookie jar. The AG has discovered what we already knew, that APS had a flawed education and outreach plan and a flawed rate tool. It only took him two years to discover this when all the work had been done by the Overland report," Kennedy said in a statement.
Residential customers with questions about their rate plans should visit aps.com or call APS directly at 602-371-7171 or 800-253-9405.
If you believe you have been the victim of consumer fraud, please contact the Attorney General’s Office in Phoenix at (602) 542-5763, in Tucson at (520) 628-6648, or outside the metro areas at (800) 352-8431. Bilingual consumer protection staff is available to assist.