Why Are APS Rates Increasing? A Complete Guide to the 2025 Proposal + Federal Solar Tax Credit Explained
- Ultra Energy
- Sep 16, 2025
- 3 min read
Updated: Oct 2, 2025
Arizona Public Service Company (APS) filed a rate application with the Arizona Corporation Commission (ACC) this summer, June 2025. If approved, residential customers could see rate increases of up to 14-16.9% depending on plan.
In September 2025, households with APS received an email notice with an overview of upcoming potential changes. With many households already feeling the strain of high energy costs, this proposal raises important questions.
Here’s what’s driving the request, what it means for your bill, and steps you can take to prepare.
What APS Is Requesting from the Arizona Corporation Commission
APS has asked the Arizona Corporation Commission (ACC) to approve a $662 million annual increase in base rates. For residential customers, this translates to:
Energy charges increasing by 14.7–16.9%, depending on the plan
Basic service charges rising 9–38%, depending on tier and usage
For the average household, these changes add up to hundreds of dollars in additional annual costs.
What This Means for You
A household with a $250 monthly bill could see an increase of roughly $500 more per year under the proposed rates. Households with higher usage could see even steeper increases.
Because rate hikes compound, each new increase resets your “normal.” What starts as an extra $40 a month this year could be $80 or more within just a few years.
Customers on time-of-use plans could see significant jumps in both on-peak and off-peak rates, which makes it harder to shift usage to save money.
For families already stretched by rising costs of living, this type of rate increase can make energy bills a much larger share of the monthly budget.
To put this into perspective: in just the past three years, APS residential customers have already seen double-digit percentage increases to their bills. This new proposal would add another 14–16.9% on top — creating a new, higher baseline for every household moving forward.
Why Are Energy Rates Rising?
APS cites several drivers in the proposal:
Grid investment: Building and maintaining infrastructure to support Arizona’s rapid population growth
Load growth: Higher overall energy demand, especially from large users like data centers
Financial return: Adjustments to provide higher returns for investors, a cost ultimately passed on to customers
While the details are complex, the outcome for customers is simple: higher monthly bills.
Complete information can be found in the public application docket filing (DOCKET no. E-01345A-25-0105).
Why Upgrading to Solar Matters Now: Federal Solar Tax Credit Timeline
If approved, APS’s proposed rate increases wouldn’t take effect until mid-2026. But here’s the catch: by the time higher bills hit, the 30% Federal Solar Tax Credit will already be gone.
Acting before December 31, 2025 to take advantage of the 30% Federal Solar Tax Credit is your opportunity to use today’s incentives to offset tomorrow’s higher costs.
How Homeowners Can Respond
While the rate case is still under review, homeowners can take steps now to manage costs:
Evaluate upgrading to solar: Generating your own electricity reduces reliance on utility rates you can’t control, stabilizes your monthly utility costs and instantly saves you on average 30-40% on your monthly energy bill - with no upfront costs or down payments.
Use government incentives while they last: The federal tax credit lowers your total system cost by 30% through the end of 2025.
Plan ahead: With demand expected to rise, acting earlier helps you avoid installation backlogs later in the year.
APS’s proposed increase highlights the reality many Arizonans are already experiencing: energy costs continue to rise, and households are left with little control.
Exploring solar while the 30% federal credit is still available offers one of the few ways to take back control and stabilize your energy costs long term.
