SRP Plans Rate Increases

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 investments in power plants and transmission lines to meet the growing demand for electricity 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 average 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 general rates by 11 percent since 1991 as it took advantage of excess generating capacity, low fuel prices and low interest 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 average cost a bit," he said of the capital projects.

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

SRP will open an information 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. Information 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 is planning to raise rates and is seeking approval from the Arizona Corporation Commission for a 9.8 percent hike.

The first commission hearing on that proposal is scheduled for April 26 and could last for several weeks, said commission spokeswoman Heather Murphy. The commission plans to act on the proposal by the end of this year, she said. Because SRP is a quasi-government entity rather than an investor-owned utility, its rates are not subject to regulation by the commission.