SRP seeks nearly 3% rate hike
Utility says investment in plants, lines spurs request

By Ed Taylor
East Valley Tribune
January 30, 2004

Salt River Project managers are proposing a rate increase of nearly 3 percent for residential electric customers beginning Nov. 1.

The higher prices are needed to pay for new invest ments in power plants and transmission lines to meet the growing demand for electric ity in SRP's service area, said general manager Richard Silverman.

For a typical residential homeowner using 1,100 kilowatt-hours of electricity a month, the proposal would cost an additional $2.65 a month.

At the same time, the Tempe-based utility said it will raise commercial rates 0.8 percent and will impose no increase on large industrial customers, creating an aver age overall hike of 1.8 percent.

If approved, it would be the first SRP general rate increase since 1991, although the utility has passed on higher fuel prices to customers twice in the past two years. The utility actually has reduced its gen eral rates by 11 percent since 1991 as it took advantage of excess generating capacity, low fuel prices and low inter est rates to hold down prices.

The situation has changed as the utility has had to invest in additional generating capacity in the past few years to keep up with the Valley's growth, said Mark Bonsall, associate general manager of commercial and customer services.

Among the expenses have been expansion of the Kyrene Generating Station in Tempe and the San Tan plant in Gilbert, purchase of the Desert Basin power plant in Casa Grande from Reliant Energy for $288.5 million. Also SRP is adding transmission lines from the Palo Verde Nuclear Generating Station to the metro area.

"That has raised our aver age cost a bit," he said of the capital projects.

The latest rate proposal tar gets residences because that is the fastest growing customer segment and has required the most investments, Bonsall said.

SRP will open an informa tion room about the proposed increase at its headquarters at 1521 N. Project Drive. SRP officials also will hold public meetings to give customers a chance to comment. Infor mation will also be mailed to SRP's 850,000 customers, and more information will be available on the Internet at www.srpnet.com.

SRP's governing board is scheduled to act on the proposal April 26.

The increase will not take effect until November, the same time that lower winter rates kick in, to reduce the impact on customers, Bonsall said. Winter prices are about 25 percent lower than summer rates, he said.

Arizona Public Service also plans to raise rates and is seeking approval from the Arizona Corporation Commission for a 9.8 percent hike. Because SRP is a quasi-government entity rather than an investorowned utility, its rates are not subject to regulation by the commission. The following East Valley public meetings are scheduled to review SRP's proposed price increase:

Feb. 25: Residential and small business customers 6 p.m. to 9 p.m. - Dobson Ranch Library, 2425 S. Dobson Road, Mesa; March 4: Commercial customers 9:30 a.m. to 4 p.m. - SRP administration building, Mohave rooms, 1521 N. Project Drive, Tempe; March 17: Residential and small business customers 6 to 9 p.m. - SRP administration building, Mohave rooms, 1521 N. Project Drive, Tempe.