Helping Arizona Public Service Company implement MCR’s Cost of Service Tool to achieve greater cost transparency
“MCR was very responsive and very thorough. We’re continuously impressed with how quickly they were able to implement the model; it was much shorter than other vendors’ estimates. I think they did a tremendous job”
—Jessica Hobbick, APS Manager of Rate Design & Revenue Requirements
Background
Arizona Public Service (APS) began their search for a new cost of service model in 2017 at the end of a general rate case proceeding. The new rates sought significant structural changes with respect to net metering and other related issues. The nature of the changes prompted the input of many intervenors and intense review of their rate and cost of service filings. At the heart of the cost of service filing was an existing database tool. While the tool generated the appropriate reports for the filing in spreadsheet form, these reports were essentially pasted values with no underlying logic. Given the scrutiny of the filing, commission staff and intervenors sought more transparency on the logic, which the existing tool had buried in proprietary code. As part of the final rate order, APS agreed to implement a more transparent cost of service model.
Solution
APS selected MCR’s Cost of Service Tool (COST™) after reviewing various alternatives. COST™ met two important criteria for the utility per Jessica Hobbick, APS’s Manager of Rate Design & Revenue Requirements, “We were looking for something Excel-based, so intervening parties could make changes to see how the revenue requirement changes” and “we were looking for something that didn’t rely on as much vendor support, a living breathing model that we could change between rate cases.”
Results
The MCR team worked closely with APS staff to quickly implement COST™ with the new model up and running in a matter of weeks. COST™ met the requirement for transparency, allowing external party review of all model logic coupled with the ability to adjust key inputs. In addition, APS staff were able to quickly learn the model and incorporate modifications to meet ongoing changes in their rate structure.