MEDIA ADVISORY
SRP Board approves delay in base-price increase
Management to proceed with fuel reduction and renewable energy fund
The SRP Board of Directors today approved a new pricing calendar that will delay an increase in the base-price portion of management's current price proposal. SRP management's new calendar will defer any increase in base prices until at least May 1, 2010.
The Board indicated that public input - critical of the timing of the proposed price increase during a challenged economy - was a factor in its decision to ask management to delay the base-price increase.
Base prices include the costs related to producing and delivering electricity excluding fuel, new capital infrastructure and the maintenance of SRP's aging generation, transmission and distribution systems.
The base-price increase proposed by SRP management was a significant part of an overall average 8.8 percent increase that would vary across all price plans, billing months and customer classes - residential, commercial and industrial.
Two other portions of the current pricing proposal - the Fuel and Purchased Power Adjustment Mechanism (FPPAM), which is a straight pass-through of actual fuel and purchased-power costs to SRP customers, and the Systems Benefit Charge (SBC), which funds increasing investments in renewable-generating resources, energy-efficiency programs and smart meters - will still be considered by the Board.
SRP Chief Financial Executive Mark Bonsall told the Board this morning that management intends to consider six months of projected fuel expenses instead of 18 months, which will likely result in a 2.1 percent proposed reduction in the FPPAM. According to Bonsall, that will be offset by a 2.1 percent increase in the SBC - with the result being no net impact to customer electric bills on Nov. 1.
Board members also asked SRP management to continue to seek ways to cut costs and reduce expenses to help defray the size of any potential future price increases.
While pledging to address cost economies going forward, Bonsall said SRP this year has already taken significant steps to slash costs by eliminating more than 230 jobs, reducing its operating budget by more than $40 million, decreasing capital expenditures by more than $90 million -- which is expected to total more than $600 million over the next six years -- and deferring capital expenditures of $150 million.
The pricing process, which included a series of public open houses in August, will conclude with two special SRP Board of Directors meetings on Sept. 10 and on Oct. 1. Any approved changes to SRP prices would be effective with the November 2009 billing cycle.
Details about the pricing process can be viewed at the SRP Information Center, which is open weekdays until Nov. 1 from 8:30 a.m. to 5 p.m. at SRP's main administrative offices, 1521 N. Project Drive, Tempe. Information pertinent to the price proposal will be made available for inspection during those hours. The complete price proposal is also available for viewing online.
SRP is the largest provider of electricity to the greater Phoenix metropolitan area, serving about 935,000 customers in Maricopa and Pinal counties.
