Frequently asked questions about the price process

SRP's board of directors has approved an overall average 2.2% net decrease effective with the May 2019 billing cycle (the beginning of SRP's Fiscal Year 2020). The move incorporates and adds to an overall annual 1.5% decrease that was implemented, initially on a temporary basis, for Fiscal Year 2019 (May 2018 through April 2019).

On an overall average basis, the new prices will be 3.7% lower than the prices approved by the Board during the last price process in 2015 and 2.2% lower than the prices in effect for Fiscal Year 2019.

Browse all price plans to see how the proposed pricing changes may affect you. Please note: The information provided is for estimating purposes only.

The table below shows the average impact by customer class.

The decrease varies by customer class, price plan and usage. Because a decrease in fuel prices is the driver of the proposed decrease, those that use more electricity, and thereby more fuel – primarily commercial and industrial customers – would see greater decreases, on average, under the proposal.

The impacts vary by customer class, price plan and usage. Based on these factors, a small number of customers may see an annual increase in their bills. Browse all price plans to see how the proposed pricing changes may affect you. Please note: The information provided is for estimating purposes only.

While the per kWh price during the summer and summer peak seasons on these price plans is higher than that currently being charged, SRP is reducing the on-peak hours by changing them from 1–8 p.m. to 2–8 p.m.

A price increase was necessary in these seasons because the same amount of revenue must be collected in a shorter timeframe (the proposed six hours on-peak vs. seven hours on-peak).

SRP aims to make M-Power Price Plan prices equal to those of the Basic Price Plan. In order to do that, we had to raise the summer and summer-peak prices. However, the proposal includes a significant reduction in winter prices.

As a result of these changes, M-Power customers will see an average 2% increase in energy costs during summer and summer peak billing seasons, and an average 11.8% decrease in energy costs during the winter billing season. This works out to an annual average decrease of 2.9% for M-Power customers.

Customers on TOU would save an average of 4.8% annually compared to the Basic Price Plan. For EZ-3 customers, annual savings would average 3.7%. Savings could be more or less than these averages, depending on how much energy customers shift to off-peak hours.

We haven't raised prices since 2015. Since then, we've continually lowered prices. The last price change occurred in 2018 when SRP's Board of Directors approved two temporary price decreases for the summer and winter billing cycles that were equivalent to an overall annual 1.5% system average decrease on bills.

Some customers may perceive that price increases have occurred because energy prices are seasonal and change throughout every year. However, SRP has kept prices well below the rate of inflation for the past 30 years.

In terms of overall price levels, SRP continues to offer competitive prices. The graph below demonstrates how SRP compares with other utilities in Arizona and several other states in the Southwest, both before and after SRP's recently approved price decrease.

SRP provides more than electricity. It was formed more than 100 years ago in partnership with the United States to build Roosevelt Dam and the system of canals in the Valley and provide a stable water supply to the Valley. Today SRP operates the entire system of dams on the Salt and Verde rivers and manages groundwater supplies, providing water for municipal, irrigation and agricultural uses.

As the oldest multipurpose federal reclamation project in the U.S., SRP continues to perform its long-standing reclamation obligation that electric power operations can and should be used to keep water costs low and provide a stable and secure water supply. In our desert environment, a reliable and low-cost supply of water is critical to the Valley's economy and overall well-being. As such, a portion of SRP electric revenues that are available after the payment of operating expenses and debt service is used to provide partial support for SRP's water and irrigation operations.

Now in its second century of operation, SRP will continue to be instrumental in the growth of the Valley by managing water sources and providing inexpensive and reliable electricity.

SRP continues to focus on controlling costs in the areas of financing, operations and maintenance, and new capital expenditures while planning to meet future customer needs and facilitating a path toward a less carbon-intensive resource mix.

Some examples of cost-saving efforts include:

• As financial market opportunities arise, the refinancing of debt at lower interest rates to lower overall interest expense.
• Making a number of key asset decisions, which have resulted in lower costs for customers. This includes the purchase of natural gas-fired generating units at Gila River Power Station. These investments, which take advantage of lower fuel costs, have enabled SRP to provide customers with power at a lower overall fuel cost, which contributes to the fuel price decrease outlined in the proposal.
• Growing operations and maintenance expenses by only 0.2%. By comparison, the economy, in general, has experienced an annual average growth rate of 1.8% based on the Consumer Price Index.
• Making specific decisions to shut down coal resources when market conditions, generating resource availability, and fuel contracts allow this to be done economically without risking reliable operation of the grid. Since 2016, SRP has planned for and taken several temporary economic unit shutdowns that resulted in lower overall retail costs. These occurred at Springerville Generating Station Unit 4 (SGS4) in May 2016 and April/May 2017, and at Coronado Generating Station Unit 1 in April/May 2018. The next planned occurrence is for April/May 2019. These actions have resulted in estimated savings of over $9 million.

No, as a political subdivision of the State of Arizona, SRP is a municipal utility and therefore its prices are not regulated by the Arizona Corporation Commission (ACC).

SRP is a political subdivision of the State of Arizona. SRP's publicly elected Board of Directors has the authority to establish electric prices. The Board reviews and decides upon any proposed changes to SRP's price plans, after providing notice to customers and other interested parties and affording them the opportunity to provide comments to the Board.

SRP's Board formally adopted the following series of Pricing Principles in January 2000:

• Cost Relation: Prices need to reflect cost of service.
• Sufficiency: Prices need to maintain SRP's financial health.
• Gradualism: Changes should be evolutionary, not revolutionary (avoid large price adjustments).
• Equity: Have customers pay their share of the costs we incur on their behalf.
• Choice: Promote pricing options that help customers manage their energy cost.

SRP does not have stockholders or pay dividends. We are a community-based, nonprofit utility. Revenues are reinvested back into our electric grid for the benefit of all customers.

Since May 2015, approximately $450 million has been spent on maintenance improvements and replacements of transmission and distribution equipment. As SRP's transmission and distribution system ages, two ongoing areas of focus are the wood pole replacement project and the underground cable replacement project.

SRP's generating assets also require maintenance and improvements. From May 2015 to April 2018, about $100 million was spent on emission controls at Four Corners Generating Station ($60 million) and Craig Generating Station ($37 million). This spending was driven by regulatory requirements to install Selective Catalytic Reduction (SCR) systems.

SRP has spent about $130 million on new metering systems since May 2015. These include new meters for M-Power customers, as well as meter replacements for end-of-life and current prepay meters, to improve customer functionality and security and to reduce operations costs for meter exchanges.

SRP implemented the EPCAF in November 2009 and used it to track revenues and recover expenses relating to:

• Energy efficiency and demand reduction programs adopted by SRP;
• Renewable energy resources obtained or developed by SRP;
• Improvements and initiatives that are not otherwise recovered through base prices that specifically relate to carbon dioxide emissions reductions as directed by the SRP Board, including, without limitation, those undertaken as a result of legislation or by regulation.

In the nine years since the EPCAF was established, renewable energy and energy efficiency have become a core part of SRP's business. This no longer requires a special line item.

Since SRP's goals have changed to incorporate increased sustainability into all aspects of the organization, SRP's board eliminated the EPCAF as a separate, unbundled component of retail price plans. The costs of renewable energy and energy efficiency will instead be recovered through base prices and the FPPAM.

In October 2017, the Board approved "SRP 2035," a comprehensive set of sustainability goals that addresses SRP's business activities in five priority areas: carbon emissions reductions, water resiliency, supply chain and waste reduction, grid modernization, and customer and employee engagement and community involvement. Details on the five pillars of the SRP 2035 goals are available.

Recognizing responsibilities to future generations, the commitment to sustainability at SRP means:

• Strengthening ongoing stewardship of natural resources;
• Proactively addressing customers' and communities' priorities; and
• Maintaining a strong commitment to fiscal responsibility, while responding to a rapidly changing industry.

The goals identified within the SRP 2035 framework build upon existing plans and practices; introduce new areas of focus; and position SRP to meet changing customer and stakeholder expectations about what it means to be a sustainable utility. SRP will actively pursue these meaningful goals and transparently report progress in achieving them. SRP 2035 will make the company better at what it already does and will enhance the focus on the environmental, economic and social well-being of the customers and the communities SRP serves.

The items above are by no means a comprehensive list of our commitments.

SRP has a mix of renewables, such as wind, solar, geothermal and biomass energy, and hydropower, and has undertaken a number of conservation and energy efficiency measures. We have commitments and investments supporting the transition to sustainable resources, including the following:

• Agreements with the Navajo Tribal Utility Authority to purchase renewable attributes associated with the energy produced at solar facilities on Navajo Nation land.
• In September 2016, SRP entered into a 25-year agreement with Apple to purchase the output associated with the 52 MW Bonnybrooke Solar Facility, which is owned and operated by Apple.
• SRP entered into a 20-year agreement, in April 2017, with a subsidiary of NextEra Energy Resources to purchase the energy and renewable attributes associated with the Pinal Central Energy Center, which is a 20 MW solar and 10 MW/4-hour integrated battery storage project.
• SRP entered into a 20-year agreement with a subsidiary of the AES Corporation to toll a new 10 MW/4-hour battery storage project that would be charged from the grid.
• SRP has agreed to purchase a 25 MW/4-hour battery energy storage system from Tesla to be installed at the Agua Fria Generating Station.
• SRP has recently signed agreements to purchase the output and renewable attributes from two new 100 MW solar projects, which are planned to be utilized for a Sustainable Energy Offering to a group of SRP's largest commercial and industrial customers.
• SRP plans to add 1,000 MW of new utility-scale solar energy (inclusive of the 200 MW mentioned above) to its system by the end of April 2025.

In addition to optional pricing plans, which help customers manage their electricity bills, SRP offers a combination of energy-saving advice and rebates at savewithsrp.com for residential customers and savewithsrpbiz.com for business customers.

SRP offers rebates on the purchase of energy-efficient appliances and equipment, including lighting, cooling systems, smart thermostats, insulation, shade screens and motors, and recently opened the SRP Marketplace, which offers energy-efficient products online with instant rebates. Saving advice and rebate information are available at savewithsrp.com, savewithsrpbiz.com and srpmarketplace.com (Opens in a new tab) .

As a community-based, nonprofit utility, our communications, including paid media, are designed to educate and inform customers about a variety of topics, including ways to save energy; discounts and rebates; billing and payment programs; electric and water safety; water conservation; investments to improve reliability; and customer service enhancements.