SAN FRANCISCO June 19, 2006

Standard & Poor's Ratings Services said that the expected permanent closing of the 1,580 MW Mohave coal-fired plant is unfavorable for Salt River Project (SRP), but should not meaningfully erode credit quality. SRP owns a 20% interest in the plant, or about 316 MW of nameplate capacity. In late 2005, Mohave stopped operating after the owners were unable to negotiate continued access to a tribal aquifer that provides water for the plant's slurry pipeline. Majority owner Southern California Edison announced today that it will not pursue returning the plant to service.

Mohave typically meets about 4.6% of SRP's peak firm demand, and in 2005 was about 4.2% of the utility's total supply portfolio. In anticipation that the plant would be temporarily offline, SRP has procured some replacement power through the year that it had assumed Mohave would return to service. Any purchases required to replace the lost capacity and energy would be expected to substantially exceed Mohave's production costs. However, SRP's rate-setting autonomy and its competitive retail rates should allow it the flexibility to adjust rates to reflect any cost increase the closure may necessitate.