Arizona Utility Report
2026 Rate Hike Update
Arizona Public Service has proposed a 14% rate increase.
The proposal from Arizona Public Service (APS) is the third rate case the company has filed in the past four years. Decisions about how much customers pay are made by the elected Arizona Corporation Commission, which is required to consider public input before issuing a final order.
Arizona Utility Report
2026 Rate Case Update
Active Filings
$2.7B+
in proposed or approved utility rate increases since 2025
AZ Customers Affected
3M+ Electric / 1.4M+ Gas
served by utilities with recent rate-case filings
Recent AZ Electricity Costs
+8.9%
average residential electricity costs since January 2025
What's driving costs
Several factors are pushing Arizona bills higher
Average Arizona residential electricity costs have risen roughly 9% since January 2025. Analysts and regulators point to a combination of federal trade and energy policy changes, fuel mix decisions, rapid load growth, and the way investor-owned utilities recover costs through rate cases.
- Tariffs & trade policy
Tariffs are raising the cost of grid equipment
Federal tariffs on steel, aluminum, transformers, and imported solar components have increased the cost of materials utilities use to maintain and expand the grid. Those costs are typically reflected in future rate cases.
- Fuel mix
Reliance on natural gas adds price volatility
Arizona utilities continue to depend heavily on natural gas for generation. Because gas is a commodity, monthly fuel costs can rise and fall with national markets, which can flow through to customer bills.
- Load growth
Data centers are increasing electricity demand
Arizona has attracted significant new data center and manufacturing load. Meeting that demand requires new generation and transmission, and the cost of those projects is generally recovered through rates.
- Utility finance
Rate cases also set utility profit margins
When utilities file a rate case, they request both cost recovery and an authorized return on equity for investors. APS, for example, has requested an additional $20/month from customers and reports a 12.8% profit margin.
Federal clean energy cuts
Rollbacks of federal clean energy programs are reshaping Arizona's pipeline
- 01
In January 2026, the Department of Energy canceled a $1.81 billion conditional loan to APS that the utility estimated would have saved customers approximately $250 million on transmission, renewables, and storage upgrades.
- 02
Industry trackers identify roughly 8,900 announced Arizona clean energy jobs and $3.6 billion in investment as at risk following federal funding changes, with several large projects in Buckeye, Goodyear, and Phoenix paused or canceled.
- 03
Lazard, the U.S. Energy Information Administration, and most utility integrated resource plans currently identify utility-scale solar paired with storage as among the lowest-cost new generation in the Southwest. When that pipeline shrinks, utilities often turn to higher-cost alternatives that are recovered through customer rates.
How It Works
How Arizona rate hikes actually get set
In Arizona, electricity rates for investor-owned utilities are set through a public regulatory process at the Arizona Corporation Commission (ACC). The ACC oversees rates for nearly every investor-owned electric, gas, and water utility in the state, serving close to 2 million Arizonans. Customers don't vote directly on their bills, but they do elect the five commissioners who decide them and can submit comments at any stage of a rate case.
- Step 1
A utility files a rate case
Investor-owned utilities — including Arizona Public Service, Tucson Electric Power, UNS Energy, Ajo Improvement Co., and Morenci Water and Electric — file a formal rate case with the ACC detailing requested rate changes, costs, and a proposed return on equity for investors.
- Step 2
The public participates
The ACC opens a comment docket, holds public hearings, and accepts written testimony through its online e-filing portal. Customers, businesses, and advocacy groups can all submit comments, and commissioners are required to make those comments part of the official record.
- Step 3
Five elected commissioners vote
Following hearings and review by ACC staff, the five elected commissioners vote to approve, modify, or reject the request. The resulting order sets the rates customers will pay, often for several years.
Energy policy in context
How clean energy decisions shape Arizona bills
Utility-scale solar and wind paired with battery storage are currently among the lowest-cost new generation available in the Southwest, according to Lazard, the EIA, and most utility integrated resource plans. Federal incentives and state clean energy rules influence how much of that low-cost generation gets built — and how much customers ultimately pay.
20%
of Arizona's 2024 electricity from clean sources
66,681
Arizonans employed by clean energy in 2024
~10 GW
of planned Arizona generation tied to federal incentives now in flux
Recent Decisions
Federal & state energy actions in 2025–2026
- 01
$1.81 billion APS clean energy loan canceled
In January 2026, the federal Department of Energy canceled APS's conditional loan, which had been intended to finance transmission upgrades, renewables, and grid storage. APS estimated the projects would have saved customers approximately $250 million.
- 02
Arizona Renewable Energy Standard repealed
In March 2026, the Arizona Corporation Commission voted unanimously to repeal the state's Renewable Energy Standard and Tariff, which had required regulated utilities to generate 15% of their energy from renewable sources.
- 03
Two coal plants approved for conversion to natural gas
In March 2026, the ACC approved the conversion of two rural Arizona coal plants to natural gas. Some analysts argued new wind, solar, and storage would have been less expensive; others cited reliability and timeline considerations.
- 04
Clean energy projects and jobs at risk
According to industry trackers, seven Arizona clean energy projects representing roughly 8,900 jobs and $3.6 billion in announced investment are at risk following federal funding changes. Some projects in Buckeye, Goodyear, and Phoenix have been canceled or paused.
By the numbers
Recent Arizona utility rate cases
Since 2025, at least seven Arizona utilities have proposed or received approval for rate increases totaling roughly $2.7 billion, collectively affecting more than 3 million+ electric customers and 1.4 million+ gas customers. The table below summarizes recent filings and the authorized profit margins reported in those cases.
| Utility | Customers | Rate Action | Profit Margin |
|---|---|---|---|
| Arizona Public Service | 1.4M | Asked to raise monthly bills $20 | 12.8% |
| Tucson Electric Power | 452K | Sought a 13.7% rate hike (+$19.43/mo) | 16.8% |
| Salt River Project | — | Approved +$5.61/mo (3.5%) in Nov 2025 | — |
| Southwest Gas | — | Raised bills +$3.75/mo (~9%) in March 2025 | — |
Sources: Energy & Policy Institute Utility Profit Tracker, Arizona Corporation Commission, Arizona Public Service, Tucson Electric Power
Submit a comment on the current rate case.
Public comment is a formal part of the Arizona rate-setting process. The five elected commissioners are required to consider comments submitted to the docket before issuing a final order. You can share your perspective — for, against, or asking questions — through the ACC's official e-filing portal.