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Conflicting Customer Interests In APS' "Just Transition Plan"

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The Arizona Public Service’s (APS) “Just Transition Plan” just might be one of industry's most ambitious equitable transition schemes to date. In an effort to mitigate the negative economic and electric fallout anticipated from the three coal plants, the utility is proposing a $144.45 package that would expand electricity access and promote economic development on the Navajo, Hopi and Cholla reservations. The economic boosts would come through renewable energy projects in the mentioned territories. 

APS’s proposal has the potential to at least partially mend many decades of utility neglect on the reservations. In 2019, about 10% of Navajo reservation residents were without power. How that fact hamstrings economic development in the region is hard to calculate, but rest assured that it isn’t negligible. Despite sincere good intentions in recent years, hooking those homes up has proven difficult. The daunting task was outlined last year in an NPR article

“On the Navajo Nation, the homes are so spread out that it costs $40,000 on average to hook up one home to the grid. And half the tribe is unemployed. So you can't raise rates to energize all those homes. The Navajo Tribal Utility Authority and the nonprofit American Public Power Association have put a call out to utilities across the U.S. to help.”

While I don’t think many doubt the good of APS’ proposal, there remains one big question mark: Who is going to pay the bill? As it stands now, APS proposes that ratepayers pay $119.25 and shareholders pay $25.2 million. From a customer care perspective, the utility is in between a rock and a hard place. Do right by their customers on the reservations and hike up rates? Or let the reservations face the consequences of the closed plants alone while keeping rates where they are? 

Assuming shareholders can’t be expected to pay more, APS will have to sell their plan to consumers off the reservations. As I often stress, transparency in this case is necessary. If customers who won’t directly reap the benefits of the “Just Transition Plan” have to pay for it, it’s vital that they understand the initiative’s historical importance—both past and present. To mitigate any backlash, the utility needs to sell customers on the moral urgency to electrify the reservations. However, it’s important to also explain how this will benefit all in the state. More economic development on reservations will boost the state’s economy, and more renewables will help mitigate climate change—which would be a major concern of mine if I lived in an already unbearably hot place like Phoenix. 

If APS can get customers excited about their potential work on the reservations, the good PR will outweigh any small rate hike. Moving forward, the utility’s customers will remember APS as the good guy and will thus be more inclined to participate in programs and trials. That’s what customer care is about: Building a positive relationship with customers in which they view themselves as beneficiaries, not mere dollar signs.

 

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