New Report: Arizona’s Power Companies Could Save Customers $114M per Year

PHOENIX — As Arizona families and businesses face mounting electricity costs, a series of new independent analyses released today by the Environmental Defense Fund (EDF) and Aurora Energy Research reveals a significant opportunity for Arizona’s utilities to deliver substantial savings and a more reliable power grid to its customers. The reports find that by participating in a larger regional electricity market that shares energy across state lines, Arizona as a whole could save more than $114 million per year between 2027-2040 by joining the extended day-ahead market (EDAM), as compared to another regional electricity market (Markets+) that the state’s three largest utilities have all signaled they plan to join in late-2027. The analysis also found that APS, the state’s largest single utility, could save an average of $109.9 million more per year by joining EDAM, even if the state’s other utilities opted to continue with Markets+. For APS customers, that’s about $50 per year in savings.

These findings come as Arizona utilities weigh options for regional market participation, a decision that will have long-lasting impacts on the state's energy future. The findings underscore the powerful benefits of a more integrated Western grid, which can enhance efficiency, improve grid stability, and lower costs for consumers.

Residential and business customers are already seeing increasing energy costs, with Arizona Attorney General Kris Mayes filing testimony Thursday against TEP’s proposed 14% rate hike, and her office is expected to file testimony against APS’s current proposed 14% rate hike.

For millions of Arizonans, participation in a robust, independent West-wide electricity market means lower bills and more reliable service. The nearly $114 million in additional annual savings were Arizona’s utilities to move toward EDAM instead of Markets+ can help offset recent and coming rate hikes and provide a buffer against future cost increases.

“We’re seeing massive cost increases in our power bills with APS,” said Aureliano Dominguez, President of Union Pochteca, a local business that supports food trucks and other small businesses in the region. “We have to pass those increased costs on to our customers who are already operating on tight margins. It’s really threatening a lot of the small businesses that we serve every day.”

A more stable grid ensures that the lights stay on during periods of high demand, giving customers peace of mind.

“Arizona just experienced another summer of record-breaking peak demand, and APS customers are now bracing for double-digit rate hikes,” said Alex Routhier, Ph.D., Senior Policy Advisor, Western Resource Advocates. “Choosing a West-wide market is one critical step in managing affordability and strengthening grid resilience. Utilities must evaluate all available options and choose the market that will deliver the greatest cost-savings and reliability benefits to Arizonans."

A coordinated West-wide energy market allows utilities to buy and sell electricity across a wider geographic area, leading to significant efficiencies. When Arizona's solar panels are generating abundant, low-cost power, that excess energy can be sold to neighboring states for a profit. Conversely, when Arizona's demand is high, it can import the cheapest power available from across the region. This increased efficiency means that the least expensive energy resources are used first, driving down the overall cost of electricity for everyone in the market.

“This analysis documents what many already know – a bigger trading marketplace drives bigger savings,” said Amanda Ormond, Director, Western Grid Group. “If APS joined the Regional Organization for Western Energy (ROWE) rather than Markets+, it would increase opportunities for purchasing cheaper power and selling excess power. The result will be  hundreds of millions in total savings for Arizonans over the next decade and a half.”

Additional analysis showed a mix of results for the state’s other utilities, with Tucson Electric Power (TEP) estimated to save around $8.1 million per year if they joined EDAM even as other utilities did not, while Salt River Project’s (SRP) costs could increase by $4 million or more per year by joining EDAM instead of Markets+. 

Beyond the cost savings, a large coordinated market can dramatically improves the stability and reliability of the energy grid. By connecting multiple states and a diverse range of power sources, the grid is better equipped to handle the fluctuations of renewable energy and sudden changes in demand. This ability to more effectively balance the grid load is crucial for maintaining reliable power, especially during Arizona's scorching summer months.

For more on the analysis and regional electricity markets, this EDF blog explains further.