APS's 14% Rate Hike Funds 8 New Gas Turbines, Report Warns

For climate and energy watchers, the report turns APS's rate case into a test of utility decarbonization. The Redhawk Expansion Project alone would add eight methane gas turbines in Maricopa County, a region already suffering from some of the nation's worst air pollution. The proposed fuel cost sharing mechanism matters because it would force the utility to bear some of the financial pain of staying hooked on gas.

On September 15, 2026, the Sierra Club, working with Synapse Energy Economics, released a report titled 'Passing the Buck: How APS’s Gas Rush Risks Ratepayer Dollars.' The study lands while Arizona Public Service, the state’s largest electric utility, is pursuing a 14 percent residential rate increase that the report says would raise the average customer’s bill by about $240 per year. Because the underlying statements come from an advocacy group's press release and a CleanTechnica article based on that release, the figures should be treated as claims in an active regulatory contest rather than final determinations. Even so, the report frames a concrete risk: APS is planning more gas-fired generation than any other utility in the state, and ratepayers rather than shareholders could absorb the cost for decades.

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A $240 annual increase is regressive and may make it harder for the commission to approve future requests.

The centerpiece projects are the planned Desert Sun Power Plant and the Redhawk Expansion Project. The latter would add eight new methane gas-fired combustion turbines in Maricopa County, a region the American Lung Association has repeatedly ranked among the worst for air quality. The report argues that these additions are not simply replacements for retired coal; they are growth in fossil infrastructure that could remain in rate base for 30 years or longer. Fuel costs, operations and maintenance, and eventual environmental compliance would be passed through to customers, while the utility earns a return on the capital investment.

The rate case dimension sharpens the debate. APS is requesting a 14 percent increase, its third in five years, and is also asking for formula rates. Formula rates would allow annual adjustments with less regulatory scrutiny and fewer public comment opportunities than traditional rate cases. For a utility, that can create predictable revenue, but for customers it shifts more risk to them, because fuel and purchased power costs can be recovered more quickly without a full prudence review. The Sierra Club report recommends a fuel cost sharing mechanism to rebalance that risk: if APS were required to absorb a portion of fuel cost overruns, it would have a stronger incentive to build or procure lower-cost, cleaner resources.

The report also calls out APS for walking back clean energy targets, abandoning zero-carbon commitments, and reneging on its earlier commitment to retire the Four Corners coal plant by 2031. That reversal is significant because it suggests the utility is expanding gas not as a short-term reliability bridge but as a longer structural bet on methane generation. From a climate perspective, each new gas turbine locks in additional years of carbon and methane emissions, and in a county already facing poor air quality, local health and environmental justice concerns compound the global climate impact. The report frames this as a policy failure: Arizona has abundant solar potential and rapidly falling battery storage costs, yet the utility's resource plan emphasizes fossil gas.