According to Chief Financial Executive Aidan McSheffrey, the reduction in the proposed price increase is the result of an opportunity to sell a portion of SRP’s output from the Hudson Ranch Geothermal Plant in Southern California’s Imperial Valley.
Under SRP’s Sustainable Portfolio goals, SRP must meet 20 percent of its retail electricity requirements with sustainable resources by the year 2020. This target includes annual aggregate energy-efficiency savings, renewable energy and hydroelectric generation. The target for fiscal year 2012 is 9 percent and increases at a rate of nearly 1.4 percent per year until the year 2020. According to McSheffrey, because SRP is currently exceeding those goals through fiscal year 2012, the sale of a portion of Hudson Ranch geothermal energy will reduce expenses and benefit SRP customers now.
The sale will result in a $9.1 million reduction of expenses for SRP’s Environmental Programs Cost Adjustment Factor in fiscal year 2013 and $14.7 million in fiscal year 2014.
The revised pricing proposal was presented to the SRP Board this morning during a public meeting. SRP’s Board will consider management’s revised recommendation, input from the Board’s consultant and the public before voting on the measure on Sept. 27.
SRP prices have not increased in more than two years and revenues are not keeping pace with several higher anticipated costs. As a result, SRP is proposing a price increase to:
- Maintain reliable service. Key electric generating facilities are due for major scheduled maintenance. SRP needs to make significant investments in this important infrastructure.
- Pay for new renewable resources. An increasing amount of the energy SRP delivers is produced by solar, wind and geothermal sources. These sources are important to achieving SRP’s sustainability goals but are more expensive than traditional power plants.
- Complete required environmental upgrades. Federally mandated improvements to the Coronado Generating Station in St. Johns will enable SRP to further decrease emissions and continue to operate a low-cost generating unit that supplies power to the Valley.
As a not-for-profit public power utility, net revenues earned by SRP are reinvested in the company to help keep prices lower. Positive net revenues help maintain SRP’s high credit ratings and provide the capital necessary to fund the construction and maintenance of the electrical facilities necessary to provide reliable service.
SRP is the largest provider of electricity to the greater Phoenix metropolitan area, serving more than 950,000 customers in Maricopa and Pinal counties.