Why are electricity rates rising in Arizona? The short answer is that building and running the grid keeps getting more expensive. But the full picture is more mixed than the headlines suggest. In 2026, some Arizona prices were actually lower for part of the year, and the biggest proposed increase hasn't been approved.
Arizona's two largest utilities are also handling these costs in very different ways. Here's what's really driving prices, what is still only a proposal, and what an Arizona homeowner can actually control.
Arizona Doesn't Have One Electricity Rate
Most Phoenix-area homes get power from one of two utilities. Arizona Public Service (APS) is an investor-owned utility with about 1.5 million customers in 11 of Arizona's 15 counties. Its rates are set by the Arizona Corporation Commission (ACC). Salt River Project (SRP) is a not-for-profit public power utility. Its prices are set by its own elected board, not the ACC.
That means APS and SRP prices change at different times, through different processes. “Arizona rates went up” doesn't tell you what happened to your bill.
APS Has a Big Rate Request, but It Isn't Approved
APS filed a major rate case with the ACC in June 2025. Hearings began May 18, 2026 and wrapped up in July 2026. Nothing has been approved yet. The request did not change summer 2026 bills, and a decision is expected by the end of 2026.
So a pending APS increase is not the same thing as today's rate. If a savings estimate assumes the full request, ask why.
How Large Is the APS Request?
APS asked for a base-rate increase of $662.44 million, or 15.99%. After other adjustments, the net increase across all customers would be about $579.52 million, or 13.99%. For the residential class, the request works out to about 16.44%.
APS says a typical home using 1,000 kWh (kilowatt-hours, the unit on your bill) a month would pay about $20 more per month. These are requested numbers. The ACC can approve less or change how the increase is designed.
Why Is APS Asking for More Money?
APS says its current rates mostly reflect 2021 and 2022 costs. Since then, it says it has invested about $2 billion a year to maintain and expand its system. It points to reliability, wildfire mitigation, extreme-heat readiness, security, customer growth, inflation and higher borrowing costs.
Transformers are one example. APS says they now cost about 64% more than when current rates were set. That kind of equipment inflation eventually shows up in regulated rates.
APS Also Wants Yearly Formula Rate Updates
The request includes a proposed Formula Rate Mechanism. Instead of waiting years between full rate cases, APS would adjust rates each year based on the prior 12 months of costs. Residential changes would be kept between 0.85 and 1.15 times the average change. APS argues this would mean smaller, more predictable changes. It is still only a proposal.
Arizona's Grid Has to Be Built for Extreme Heat
Arizona's grid has to handle huge summer cooling loads. APS set a new record of 9,164 MW (megawatts) on August 2, 2026, between 6 and 7 p.m. SRP hit its own record of 9,072 MW on July 24, 2026. Utilities must build enough to cover those hottest hours, even if they're brief.
That's a big reason Arizona utilities rely on time-of-use (TOU) plans, where the price depends on the time of day. Some also use demand charges, a fee based on your highest use during peak hours. Both push use away from the most expensive hours.
SRP Raised Prices in November 2025
SRP's most recent price increase began with the November 2025 billing cycle. It raised prices 2.4% systemwide. For the average home using 1,117 kWh a month, the increase was about 3.5%, or $5.61 a month. Homes without solar saw about 3.4% on average, while solar homes saw about 5.5%.
Then SRP Cut Prices for Summer 2026
Here's where “Arizona rates are rising” gets misleading. SRP lowered all of its energy prices by 0.38¢ per kWh for the May–October 2026 billing cycles. Natural gas and market power costs came in lower than expected, so customers got the savings.
That cut ends with the November 2026 billing cycle, when SRP's standard prices return. So your October and November bills could differ even with the same usage. That's not a new rate increase. It's a temporary discount expiring.
Base costs can rise while fuel costs fall. That's why Arizona electricity prices don't move in a straight line.
Why Electricity Rates Don't Move in a Straight Line
An Arizona bill has several moving parts. There are base rates for the grid itself, plus fuel charges, transmission charges, seasonal prices and temporary credits. Some pieces rise while others fall. That's why “rates went up 5%” rarely explains a single home's bill.
Are Data Centers Raising Arizona Electricity Rates?
Arizona's data-center growth is one of the most debated parts of this story. Large data centers need huge amounts of power, plus new substations, power lines and power plants. APS says requests from extra-large customers now exceed 19,000 MW. That's more than double its 2025 peak. It's fair to ask whether homeowners will end up paying for that.
The honest answer is that data centers increase how much grid Arizona may need. Whether that raises your rate depends on how utilities and regulators assign the costs.
How APS and SRP Say They Handle Data-Center Costs
In its pending rate case, APS proposes raising rates for its extra-high-load class by over 45%. That class covers very large users that run almost around the clock, such as data centers. APS has also pledged that “growth pays for growth.” It says data centers will pay their own costs. It also says it won't connect new extra-large customers faster than it can reliably serve them.
SRP says large customers, including data centers, pay for the new infrastructure built to serve them. It also says data centers are not causing it to raise prices. The real test is how costs actually get assigned over time.
Population Growth, Inflation and Fuel Matter Too
Data centers aren't the only new demand. Utilities also serve new homes, businesses, factories and EV charging. Many grid projects would be needed even without another data center.
Fuel can push the other way. When natural gas and wholesale power prices fall, customers can see lower prices, as SRP's summer 2026 cut shows. So future prices depend on both long-term grid costs and short-term fuel costs.
Your Bill Can Rise Even When the Rate Barely Changes
Say a home used 1,300 kWh and paid $195 in July 2025. In July 2026 it used 1,900 kWh and paid $290. The bill went up $95, but usage went up about 46%. That's mainly a usage problem, not a price problem.
Common causes include longer AC runtime, an aging compressor, leaky ducts, weak insulation, pool equipment or EV charging. In Arizona, that extra use often lands in the hottest, most expensive hours. A small rate change plus a big jump in use can mean a summer bill that's 30–50% higher.
What Can an Arizona Homeowner Control?
You can't control APS rate cases, SRP pricing decisions, gas markets or data-center growth. But you can influence four things:
- How much electricity you use. In Arizona, that usually starts with HVAC. If summer use rises from 1,200 to 1,800 kWh, no rate plan can hide that extra 600 kWh.
- When you use it. On APS's Time-of-Use 4–7 p.m. Weekdays plan, summer on-peak energy costs about 2.8 times the off-peak price. On SRP's Conserve plan, July–August on-peak energy costs about 6 times the super off-peak price.
- How much you buy from the grid, which is where solar comes in.
- When your solar energy gets used, which is where a battery can help.
Solar Should Match Your Utility and Plan
Solar can cut what you buy from the grid. But its value depends on your utility, rate plan, system size and when your home uses power. It also depends on your export credit, which is what the utility pays for extra solar you send to the grid. For new APS solar customers connecting from September 1, 2026, that credit is 5.554¢ per kWh, locked for 10 years. SRP's solar plans work differently. So model solar against your actual APS or SRP plan, not a statewide average.
Batteries Shift Solar Into Expensive Hours
A battery can store midday solar and use it in the evening, when peak prices hit. That's most valuable when your plan has a big gap between cheap daytime or overnight power and expensive evening power. Backup power during outages is a separate benefit, so weigh it on its own.
HVAC Should Often Come Before Solar
Picture a Scottsdale home using 22,000 kWh a year. It has a 16-year-old AC, weak attic insulation and leaky ducts. A solar company sizes a system for all 22,000 kWh. Then the homeowner fixes the HVAC and insulation, and use drops to 16,500 kWh. Now the solar system is oversized.
The better order is simple. Diagnose the load, fix the waste, estimate future use, then size solar for that future home.
Same $300 Summer Bill, Four Different Answers
- Home A (APS): Usage is up 45% from last year. Best first move: HVAC diagnosis.
- Home B (APS): Usage is nearly flat, but the plan makes evening use expensive. Best first move: a rate-plan and timing review.
- Home C (SRP): An efficient home with steady high use. Best next move may be solar.
- Home D (SRP): Existing solar, heavy evening use and a need for outage protection. Best next move may be a battery.
Is Solar Still Worth It if Rates Aren't Skyrocketing?
Yes, it can be. Solar doesn't need an extreme rate forecast to make sense. A good analysis starts with what you pay today, how exports are credited, what the system costs and what your efficient future home will use.
One thing that should not appear in a 2026 proposal is the old 30% federal solar tax credit. It isn't available for systems placed in service after December 31, 2025. Arizona's own residential solar tax credit is still available. It covers 25% of the cost, up to $1,000.
Will Arizona Electricity Rates Keep Rising?
Probably, over the long run. Aging equipment, growth, extreme heat, wildfire risk and new power plants all cost money. But the path won't be a straight line. SRP raised prices in November 2025, then cut them for summer 2026. APS has asked for a large increase, but the ACC hasn't decided. Be skeptical of anyone who claims to know exactly what Arizona power will cost 10, 15 or 20 years from now.
The Best Order for an Arizona Homeowner
- Compare kWh year over year to see if the house is using more.
- Identify your utility: APS or SRP.
- Check your rate plan, especially time-of-use or demand pricing.
- Diagnose HVAC and insulation, since cooling loads can outweigh small rate changes.
- Shift flexible loads like EV charging, pool pumps, laundry and the dishwasher.
- Evaluate solar using your actual plan and your future efficient load.
- Evaluate a battery separately for peak shifting, solar use and backup.
- Treat the APS rate case as pending. Don't model the full request as if it's approved.
The Ashborn Approach
Before recommending anything, Ashborn Partners looks at your utility, current rate plan, historical kWh and peak-hour usage. We also review HVAC, insulation, solar, export credits, battery storage, EV load, and both approved and pending rate changes.
Your bill is the symptom. Find the cause first.
Utility rates and filings can change. APS’s pending rate request has not been approved and remains under Arizona Corporation Commission review. SRP prices are set by SRP’s elected board.