Plaintiffs challenge Arizona Corporation Commission over unauthorized utility rate-setting

The Arizona Court of Appeals has made a significant ruling that challenges the authority of the Arizona Corporation Commission regarding utility rate-setting procedures. On November 21, 2025, the Residential Utility Consumer Office (RUCO) and Stuart Thaler filed a complaint in Maricopa County Superior Court against the Arizona Corporation Commission and several utility companies, including Arizona Public Service Company and Tucson Electric Power Company. The complaint argues that the Commission improperly authorized utilities to use formula rates instead of traditional ratemaking methods without following proper rulemaking procedures under the Administrative Procedure Act (APA).

The case stems from a decision by the Arizona Corporation Commission to adopt a policy statement allowing utility companies to implement formula rate plans. RUCO contends that this policy change constitutes a “rule” under the APA, which requires public notice and comment periods before implementation. RUCO filed for declaratory relief in March 2025, seeking a judicial declaration that the Commission’s decision is subject to APA rulemaking mandates. Despite initial dismissal by the superior court on grounds of untimeliness and inapplicability of the APA, RUCO appealed, arguing that their filing was timely and valid under § 41-1034(B) of the APA.

The Arizona Court of Appeals accepted jurisdiction over this special action due to its statewide importance and potential impact on future utility regulation. The court found that while certain provisions of the APA do not apply to the Commission, it is not exempt from all aspects of it. Specifically, RUCO’s request for declaratory relief is supported by statutory rights granted under § 41-1034(B), which allows any person affected by an agency’s substantive policy statement to seek judicial review.

RUCO seeks not only a declaration that the Commission’s decision should have followed formal rulemaking procedures but also aims to ensure transparency and accountability in how utility rates are set in Arizona. This case highlights ongoing tensions between regulatory bodies’ autonomy and legislative oversight designed to protect consumer interests.

The attorneys representing RUCO include D. Andrew Gaona from Coppersmith Brockelman PLC and Daniel W. Pozefsky from Residential Utility Consumer Office. Respondents are represented by Thomas Van Flein for the Arizona Corporation Commission among others from various law firms like Osborn Maledon P.A., Papetti Samuels Weiss McKirgan LLP, Snell & Wilmer LLP, Global Water Resources Inc., Tucson Electric Power Company, Liberty Utilities Corp., and others involved as amici curiae such as Goldwater Institute represented by Timothy Sandefur.

Case ID: No. 1 CA-SA 25-0209; Judge Susanna C. Pineda presided over initial proceedings with Acting Presiding Judge Michael J. Brown delivering this opinion joined by Judges Cynthia J. Bailey and Veronika Fabian.