Utility monopolies APS, SRP explain huge advertising costs - New York News

Utility monopolies APS, SRP explain huge advertising costs

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PHOENIX -

The University of Phoenix Stadium is home to the Arizona Cardinals and the Super Bowl in 2015.

But Thursday an SRP board will discuss giving a million dollars in services and contributions to the Super Bowl Host Committee. It will be voted on by the full board at a later date -- but it has some wondering if it's a good idea for the nonprofit utility to use customer funds to help fund the Super Bowl.

Their ads are heard on the radio, seen on TV, in the newspapers and online. Each year SRP and APS utility companies spend millions of your dollars on advertising. But why?

There's no competition between utility companies SRP and APS. They are utility monopolies.

Where you live dictates which company controls your utilities -- but that's not stopping them from spending millions of ratepayer money on advertising, even as one of the utilities just raised its rates.

It's something at least one lawmaker wants to take a closer look at.

Over the years, you may have noticed your utility bill going up. Both APS and SRP have had rate hikes in the last 2 years. SRP just raised their rates in November by 3.9 percent.

But where it that money going? FOX 10 found millions are being used on commercials and billboards.

"There are plenty of ways to communicate with consumers these days, via email, twitter, snail mail, a lot of ways to communicate with customers that don't cost $5 million," says Rep. Chad Campbell.

House Minority Leader Representative Chad Campbell questions the spending.

This year, SRP spent $4.2 million on advertising. APS spent $3.4 million dollars. The money comes from ratepayers -- people like you and me who get electricity from the companies.

But we don't have a choice which company we use because our utility company is determined by where we live -- so what's the point of advertising?

"When we advertise about energy efficiency we're not asking them to use more electricity, we're asking them to use less electricity," says Jim McDonald, APS spokesperson.

Both companies have billboards and ads encouraging people to enroll in their energy saving programs along with tips on how to conserve water and energy.

"So if they weren't aware of these programs, one their utility bills would be higher and we would not be meeting the energy efficiency goals mandated to us," says Sergio Carlos, Marketing Communication and Brand Manager of SRP.

By using less electricity, the utilities argue the customer and the company, saves money.

But what about an SRP banner at the Cardinals game or an APS flag at the Diamondbacks game? They only have logos on them.

We found SRP spent an additional $1.8 million of ratepayer money this year on sponsorships like that.

They say the goal is to support community events and educate customers. They point out some money raised at the events is donated to non-profits.

APS won't reveal what it pays for sponsorships because they're paid for by shareholders.

"Ratepayers, especially now in harder economic times want to see more relief on their electric bills, they don't want to see more advertising," says Diane Brown of PIRG.

Diana brown with Arizona PIRG, a public interest advocate group, supports utilities spending money educating customers, but she feels sponsorships are used by utilities to soften their image.

"Oftentimes the utilities want to make sure the public has a good feeling of them, particularly when they're asking to increase rates, they want the decision makers to follow suit and if they hear from a lot of customers the decision makers may be less inclined to do so," says Brown.

It's a theory that's perked the ears of Representative Campbell.

"I think its concerning when you have a company like APS or SRP that has a captive audience, no competition and they're coming down to elected officials asking for a rate hike, then they turn around and use that money to self-promote themselves, I don't understand what the end game is here and I think consumers should be very concerned about this," says Rep. Campbell.

Both the utilities deny the claim, saying their intentions are only to encourage people to save energy. APS says they got results in an ad featuring former Suns guard, Steve Nash.

"Steve Nash, was he paid for these ads, yes he was," confirms McDonald. But he can't say how much.

But APS says Nash helped them meet their energy goals, required by the state.

"56 percent of customers in 2007 were aware of our energy efficient programs we had at APS in 2010. After Steve had been helping us for a few years, that awareness had increased to almost 70 percent," says McDonald.

Advertising dollars account for roughly 36 cents of your monthly bill if you're an SRP customer, and about 13 cents a bill for APS customers. Both utilities say they're mindful of spending ratepayers' money.

"Because of that were very very sensitive, every dollar has absolutely got to be spent effectively and efficiently," says Carlos.

"I think both the legislature and the corporation commission should look into this issue next year," says Rep. Campbell.

As far as the proposed Super Bowl sponsorship goes, SRP says they're a significant corporate entity and one of the largest employers in the greater-Phoenix area.

They justify the sponsorship by saying the game exposes the city to corporate leaders that can bring in new industry and jobs -- and when more business locates to the valley, it helps electric prices remain low.

We want to hear from you. What do you think of this topic? Leave a comment below, vote in our poll question or check out the discussion on Facebook.com/myfoxphoenix!

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