East Valley Tribune
By LYNN DUCEY
April 14, 2005

Salt River Project residential customers will see their bills go up about 4.7 percent this summer because of skyrocketing natural gas costs, company officials said Wednesday.

Leaders of the Tempe-based company decided on the rate hike after they examined SRP's expected operations and approved the firm's budget for fiscal year 2006 this week, said Mark Bonsall, SRP's chief financial executive.

While customers will also see their winter bills decrease by about 4.3 percent, higher electric usage in the summer will make the overall increase average out to about 1.6 percent.

That means a ratepayer with a monthly summertime electric bill of $129 will see it increase to about $135, said Aidan McSheffrey, SRP's manager of corporate pricing.

An average winter bill will decrease by about $3, from $68 to $65, McSheffrey said.

The change will take effect May 1 and will be reflected in May residential bills that customers receive in June, said Scott Harelson, SRP spokesman.

Company leaders said the hike stemmed from the continuing rise in the price of natural gas, which is used at many of SRP's power plants to generate electricity.

In addition, the Valley's booming population creates more demand for electricity and the company must buy more fuel to produce it, Harelson said.

To meet the demand, SRP bought the Desert Basin generation plant in Casa Grande and is expanding its San Tan plant in Gilbert to power new rooftops in the East Valley.

"For fiscal 2006, we are including the purchase of natural gas for the new San Tan units which this month will be commercially operating," Harelson said.

Bonsall said that although natural gas makes up about 12 percent of the energy used to make electricity, its price has gone up about 120 percent over the last three years.

The price of natural gas continues to rise, but the company - and, in turn, customers - should be insulated from further hikes, he said.

"For fiscal 2006, our energy purchases have been locked in place for the next 12 months. If conditions are as anticipated, it shouldn't change," Bonsall said.

If the company had not locked in rates for the 2006 fiscal year, leaders would be looking for an additional $50 million to buy the same amount of natural gas, he said.

This week's increase follows a 6 percent rate increase approved last fall that took effect in November.

It was the first time in 10 years that SRP customers saw price hikes, Harelson said.

Despite the increases, SRP customers still have among the lowest energy costs in the West, he said.

A quasi-governmental group, SRP does not have stockholders and does not post profits or issue dividends.

The firm reinvests earnings back into the company, Harelson said.