At a special open meeting on February 19, 2026, the Arizona Corporation Commission (ACC) approved UNS Gas, Inc.’s application to implement an Annual Rate Adjustment Mechanism (ARAM). The decision passed with a 4-1 vote, with Commissioner Lea Márquez Peterson dissenting. This marks the first time in Arizona that a regulated utility will use this alternative ratemaking method.
The ARAM methodology allows for annual rate adjustments based on a formula and review process approved by the ACC. According to Chairman Nick Myers, “The approved ARAM will help address regulatory lag, promote rate gradualism for ratepayers, and introduce meaningful regulatory efficiencies. Similar methods are used at the federal level and in various states across the country. However, as this is our first attempt in Arizona, the Commission will be especially watchful to make sure the ARAM operates as intended and results in just and reasonable rates.”
Supporters say that ARAM will increase transparency and oversight while reducing administrative costs. It is also expected to eliminate several of UNSG’s current adjustor mechanisms and could allow UNSG to access capital at lower rates. These changes may result in lower customer bills over time and more gradual shifts in rates. The new process includes public notice requirements, opportunities for informal and formal challenges, comprehensive data reviews by ACC staff, and a final vote by the Commission on any proposed rate adjustment.
Vice Chair Rachel Walden stated: “The ARAM will require the Commission to review and approve all expenditures, including capital investment, each year instead of only reviewing test year financials. Savings, such as those resulting from the One Big Beautiful Bill corporate tax cuts will be passed onto customers via the ARAM. In every state that has implemented formula ratemaking, their electricity rates are below national average, and annual increases, if any, have been well below the rate of inflation or 1% – 1½% per year. To me, that is a step in the right direction for affordability.”
Several amendments were adopted during deliberations to strengthen oversight of UNSG’s finances and reduce revenue projections for the company. The Commission set return on equity at 9.61% and reduced Fair Value Increment (FVI) to zero percent—steps intended to reduce utility profits while lowering bill impacts for customers. Lower FVI is also anticipated to improve UNSG’s credit rating and decrease its cost of debt.
Commissioner Kevin Thompson commented: “Today’s outcome strikes a fair balance between protecting ratepayers from dramatic rate increases and ensuring a healthy and viable utility that can continue to safely provide critical services to customers. We’ve consistently heard from ratepayers that they’d prefer rate increases be gradually spread out over time and not experience dramatic increases more frequently. The Commission adopted several amendments that enhance the recommended order and further protect ratepayers and promote transparency.”
Further information about this case is available through the ACC’s eDocket system under Docket No. G-04204A-24-0237 at https://edocket.azcc.gov/.
