Arizona AG Challenges Utility Rate Mechanism
Summary
Arizona Attorney General Kris Mayes has challenged a recent Arizona Corporation Commission decision approving a new rate-setting mechanism for UNS Gas, Inc. The mechanism, known as the Annual Rate Adjustment Mechanism (ARAM), could lead to automatic annual rate increases for customers with limited oversight. The AG argues this shifts financial risk to ratepayers and violates due process.
What changed
Attorney General Kris Mayes has filed an Application for Rehearing challenging the Arizona Corporation Commission's Decision No. 81653, which approved an Annual Rate Adjustment Mechanism (ARAM) for UNS Gas, Inc. The ARAM is criticized for potentially guaranteeing automatic annual rate increases for ratepayers with minimal oversight, shifting financial risk from the company's shareholders to consumers, and undermining due process protections by limiting the ability to challenge rate hikes.
Regulated entities, particularly those in the utility sector operating under similar rate-setting mechanisms, should review this challenge for potential implications on their own rate structures and due process considerations. The AG is requesting the Commission rehear the decision and amend the order to align with Arizona's constitutional requirements for fair and transparent utility rates. While this is an application for rehearing, it signals a potential shift in regulatory scrutiny regarding automatic rate adjustments.
What to do next
- Review the AG's application for rehearing regarding UNS Gas, Inc.'s ARAM.
- Assess current rate-setting mechanisms for potential due process or fairness challenges.
- Monitor the Arizona Corporation Commission's response to the rehearing application.
Source document (simplified)
Attorney General Mayes Challenges Utility Rate Mechanism That Could Guarantee Higher Bills
Thursday, March 19, 2026
PHOENIX – Attorney General Kris Mayes today filed an Application for Rehearing challenging a recent Arizona Corporation Commission decision that approved a new rate-setting mechanism for UNS Gas, Inc. that could lock in automatic annual rate increases for the company's ratepayers with little meaningful oversight.
The filing argues that the Annual Rate Adjustment Mechanism (ARAM) approved in Commission Decision No. 81653 imposes unjust and unreasonable rates by shifting financial risk from UNS Gas shareholders to ratepayers and essentially guaranteeing that the company will earn its authorized rate of return regardless of how efficiently it operates.
"Arizonans deserve utility rates that are fair and transparent, not a rubber stamp process designed to increase rates automatically," said Attorney General Mayes. "This mechanism strips ratepayers of the due process protections they're entitled to under the Arizona Constitution."
The filing also argues the ARAM's streamlined annual review process — which gives parties just a few months to challenge rate increases with limited discovery and no witness testimony from the company — fails to provide constitutionally required due process.
AG Mayes is asking the Commission to rehear the decision and issue an amended order consistent with Arizona's constitutional requirements.
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