ML17297B657
| ML17297B657 | |
| Person / Time | |
|---|---|
| Site: | Palo Verde  |
| Issue date: | 08/23/1982 |
| From: | Pfister J SALT RIVER PROJECT |
| To: | |
| Shared Package | |
| ML17297B653 | List: |
| References | |
| NUDOCS 8208270398 | |
| Download: ML17297B657 (32) | |
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Background===
Salt River Project, named for the major river that supplies water to the Phoenix metropolitan area, has played a leading role in the growth of the Salt River Valley, providing water and power to area residents. The Project comprises two organizations the Salt River Valley'Water Users'ssociation (the Association) and the Salt River Project Agricu!tural Improvement and Power District (the District).
The Association is a private Arizona corporation. It participates in the management of the 13,000.square.
mile watersheds of the Salt and Verde rivers, in cooperation with the U.S.
Forest Service. The Association administers water rights of the Project's 250,000<cre area and operates and maintains the irrigation transmission system which carries water to agricultural, municipal, industrial and residential users.
The District, a political subdivision a
of Arizona, operates under contracts with the United States and provides electricity to residential, commercial, industrial and agricultural power users in a 2,900 square-mile service area in parts of Maricopa, Gila and Pinal counties.
In line with the long standing reclamation principle, SRP uses a portion of its electric revenues to help support its water operations. This practice helps keep water delivery charges to farmers, cities and homeowners at reasonable levels. And SRP also maintains electric rates that are competitive with those of other utilities in the area.
Contents 1
Highlights 2
Letter from management 4
Coal, natural gas help stabilize fuel costs 8
Low runoff augmented by pumping, conservation 12 Today's decisions willensure tomorrow's supplies 14 Education, research.
Being a good corporate citizen 16 Financial commentary 18 Statistical review 20 Combined financial statements 24 Notes to combined financial statements 28 Board and council members PGBLISHER SRP Communications 6 Public Affairs Department EDITOR Carol Jennings DESIGN AND ILLGSTRATION Harvey Oblander PHOTOGRAPHY Chet Snellback PRODGCTION Communications Services Division salt R'ner proJect Is an Equal opportunity Employer
Highlights For the Years Ended April 30, 1982, 1981 and 1980 Sources Residential Commercial and Industrial Sales for Resale Agricultural Pumping, Street and Highway Lighting, and Public Authorities..
Water and Irrigation Revenues Other
($000)
Fiscal Year 1982 Dollars Percent
$261,621 39.4X 232,128 34.9 130,020 19.6 26,892 4.0 8,781 1.3 5,021
.8 TOTAL Uses Fuel Gsed for Generation Purchased Power Other Operating Expenses Taxes and Tax Equivalents.
Depreciation and Amortization.
Maintenance Net Interest for Indebtedness Miscellaneous Deductions (Income)
Reinvested TOTAL.
"Water Operations*
Assessed water accounts Water runoff (acre. feet)
Water in storage, Dec. 31 (acre-feet)
Sources of water for deliveries (acre. feet).
Power Operations Number of Power Customers.
Average Annual Use Per Residential Customer (KWH).........
Average Annual KWH Revenue Per Residential Customer (Cents)
Energy generated, purchased, interchanged and wheeled (KWH)
Peak load for Project customers (KW)
Financial Data Electric Revenues Water and Irrigation Revenues Total Operating Revenues Taxes and Tax Equivalents Total Operating Expenses Net Revenues Plant Investment, Gross Long.Term Debt 1982 341,412 12,798 6.55 14,677,919,000 2,266,000
~ 655,682 8,781 664,463 64,589
~ 460,907 158~2 S3,265,863
$2,430,688 s664,463
$165,288 18,223 98,797 64,589 64,502 49,508 45,382 (168) 158,342
$664,463 1981 178,796 566,245 1,116,338 1,222,376 1981 330,251 12,310 5.78 13,292,600,000 2,057,000 4 534,357 5,312
~ 539,669 58,134 S
400,323 93,530
~2,843,247
$2,383,366 100.0X 24.9%
2.7 14.9 9.7 9.7 7.5 6.8
.0 23.8 100.0%
1980 177,171
. 2,897,443 1,480,332 1,446,277 1980 313,135 12,557 5.28 12,054,266,000 1,911,000 444,887 4,696 449,583 45,199 324,507 93,587
~2,493,501
~2,019,998
'Statistics on mater are computed on a calendar year basis
Letter from management Salt River Project's financial performance during the 1981 82 fiscal year was one of the best in its history.
The long.planned conversion to low.
cost coal fired generation, aggressive marketing of excess energy, record summer temperatures and effective control of costs were the major contributing factors.
Debt service coverage at yearwnd was 2.02, up from 1.74. SRP used commercial paper and short-term notes to help minimize the impact of high interest rates.
Solid operating and financial performance brought the company an improved revenue bond rating of AA from Standard 6 Poor's Corp., and an upgraded general obligation bond rating of Aa1 from Moody's Investor Services Inc. SRP's revenue bond anticipation notes also carried the highest possible rating, MIG.l.
Net revenues rose 69.3 percent from the previous year, reflecting the April 1981 rate increase, an increase in the number of customers and strong sales for resale. SRP continued to successfully sell to other utilities electricity not needed by customers, taking full advantage of the coal.fired generating units that have come on line in the last few years.
The coal.fired generation 79.4 percent of total supply this past year-and increased availability of natural gas allowed SRP to almost totally avoid using oil as a fuel for electric generation. And by the end of the fiscal year, the only SRP station that relied exclusively on oil for fuel was converted to use natural gas as well.
Looking to the future, SRP is examining rate structures that reflect the way generating costs vary during a day to see if customers are able to shift some of their electric use to the hours when demand is lowest.
Sale of 225,000 kilowatts of capacity at the Palo Verde Nuclear Generating Station awaited necessary financing by the prospective buyer at the end of the fiscal year. The transaction is expected to be completed in the second quarter of the 1982.83 fiscal year. Even with the sale, SRP will remain a major participant in the Palo Verde project and a continued supporter of nuclear power.
What started out as a dry year ended with surplus runoff on the Verde River side of the Salt River Project system of dams. Although some water releases were necessary during the spring runoff season, the ample runoff helped restore an important source of water for the City of Phoenix. Water credits for Phoenix accumulate when the water rises on the spillway gates of Horseshoe Dam.
SRP faced one of its most challenging and important projects during the 1981 82 fiscal year: a technical evaluation of the plans made by the G.S. Bureau of Reclamation to solve some of Central Arizona's water problems. Nearly every department of the Project participated in the study.
The results were endorsed by the board of governors and passed along to the Arizona Governor's Advisory Committee, which selected a plan judged technically sound by SRP.
Two other aspects of water planning water quality and groundwater depletion also occupied SRP's attention during the year. A task force examined possible water quality impacts of introducing Colorado River water into the Salt River Valley. Also, Water Group employees put in extra hours to make sure that shareholders within the SRP boundaries understood and complied with the requirements of the state's Groundwater Management Act.
SRPs employees compiled an outstanding safety record to earn the company third place in the American Public Power Association's safety competition.
Under a two.year contract signed in December 1980, SRP had stable relations with its hourly employees and the representatives of IBEW Local Union 266.
Salaried employees received merit-based increases in February 1982.
SRP remained committed to employee development. Several new training and development programs were added to the assistance and training programs already offered to employees. New programs included Career Life Planning, Management Reinforcement Workshops and redesigned training for equipment operators.
Affirmative Action programs for employees and members of the community continued during the fiscal year. In the Career Opportunities for Project Employees program, employees received in house training for other positions at SRP. And the Student Career Opportunities Program gave high school seniors an opportunity to evaluate career choices.
A new method of evaluating the performance of supervisory personnel was instituted during the fiscal year in an effort to focus on the quality of supervision as well as the accomplishment of tasks.
'The end of the fiscal year marked Karl Abel's retirement as president of the Salt River Project. During his 10 years in that office, Mr. Abel led the company through the uncertainties of the Arab oil embargo and into the enviable situation of having ample coal fired generating capacity and almost no dependence on oil. During his tenure, the company's financial position continued to improve despite the pressures of outside economic forces and the need for rapid capital expansion to meet customer needs.
His successor, elected in April, is John Lassen. Mr. Lassen has been vice president during Mr. Abel's term as SRP president. Marcel Boulais, chairman of the councils of the Salt River Project for the past decade, was elected vice president.
As the new fiscal year begins, the management of the Salt River Project would like to note that credit for the achievements of the past, as described in this report, belongs to the company's employees.
It is their dedication, creativity and tenacity that has allowed the Salt River Project to achieve its goals of providing reliable supplies of water and power at reasonable prices.
Salt Riuer Project President Karl F. Abel, seated, Vice President John R Lassen, left, and General Manager AJ. Pfister.
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Coal, natural gas help stabilize fuel costs 1982 14.7 Mhon KNIH IIII I 'g Project Energy Sources Year Ending 1
2 Misc.
April 30, Hydro Gas Oil Coal Nuclear Purch.
1980 12.0X 7.5%
7A% 69.IX' 45X 1981 11.4 10.7 0.5 75.8
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1.6 1982
&3 10.8 79A
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15 1983 9.5 9.8 0.1 80.6 1987 7.9 7.9 2.0 683 13.9 I Includes hydro purchases and ural generation fiom South Con.
2 Includes USBR IYauajo Entitlement purchase, Power plant construction projects begun a decade ago neared completion during 198142, allowing SRP to focus on maintaining existing generating units and developing new fuel sources.
Only the Palo Verde Nuclear Generating Station which was four-fifths complete and the third unit of the Coronado Generating Station remained on the generation facilities construction agenda during the fiscal year.
SRP made substantial progress in its efforts to reduce the cost of fuels used for electric generation. During the fiscal year, SRP finalized plans to develop its own sources of coal and increase its ability to substitute less-expensive natural gas for fuel oil.
Trapper Coal Nine Throughout the year, SRP worked on plans to become a part owner of the Trapper Coal Mine. The mine is adjacent to the Craig Generating Station near Craig, Colorado.
Contract execution was authorized by SRP's board of directors in May 1982. SRP will be responsible for 29 percent of the $45 million purchase.
Trapper Mine has the potential to produce about 70 million tons of surface mined coal. The property also includes 120 million tons of underground coal.
fhe transaction is expected to be completed during the 1982-83 fiscal year. Further, approval is required from the State of Colorado and the G.S.
Department of the interior.
New Nexico coal exploration In October, SRP obtained a lease from the State of New Mexico for 6,384 acres of land in western New Mexico in order to explore for coal reserves.
Exploratory drilling is scheduled to begin during the summer of 1982 to determine the potential for coal mining. Ifa coal mine is developed, SRP could use the fuel at its Coronado Generating Station, only 36 miles away.
Fuel conversion completed A S3.3 million conversion project completed at the end of the fiscal year is expected to save S3 million a year in fuel expenses at the Santan Generating Station, southeast of Phoenix.
The conversion allows the 288,000.
kilowatt station to burn natural gas as well as diesel oil as fuel. Natural gas was scarce when the station was completed in 1975. However, decontrol of natural gas has made new supplies available.
Greater availability of natural gas made it possible for SRP to nearly eliminate oil as a fuel for electric generation in 1981.82.
Coal is base Coal.fired generators remained the basis for SRP's reliable supply of electricity and stable rates during fiscal 198142.
Coal produced 79.4 percent of the electricity used by SRP's customers during the year. It was the highest percentage ever. Ihe four coal fired generating units that came on line during the three preceding years gave SRP a temporary excess in generating capacity. This capacity was turned into profitable sales to other utilities.
SRP continued to work for cost.
effective environmental standards for coal fired generating stations. In February, SRP, representatives testified before Congress, suggesting that environmental regulations dealing with'missions from coal plants should be based on valid scientific studies. All coal fired stations owned by SRP comply with current environmental regulations.
A coal. mixing system for the Coronado Generating Station neared completion during the fiscal year.
Beginning in September 1982, the system will increase the station's efficiency and enhance environmental protection by blending the several kinds of coal used at the station into a consistent fuel mixture.
Low level construction continued on the third unit of the Coronado Generating Station. Current projections indicate SRP customers will need the power from the unit in 1991; construction schedules can be accelerated or delayed ifprojections change.
SAiYTAIYATSUIYSETSRP's recent inoestment in the Santan Generating Station toill be repaid during the first year. The station ulas conoerted to bum less expensive natural gas as ioell as expensioe diesel oil. After inoesting $3.3 millionin the conoersion, SRP expects to saoe $3 million to 46 millionin fuel costs during the fiat year.
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1982 341.412 Customers Customer Growth SRP continued to add new customers during the year, showing a growth rate of 3.4 percent.
Year ending Total April 30, customers 1980 313,135 1981 330251 1982 341.412 Today's projections show SRP wll have about 630,000 customers by the year 2000.
Naj or maintenance performed The Coronado station's second generating unit underwent its first regularly scheduled major overhaul late in 1981. Maintenance of this sort is scheduled every three years for each of the station's units. A lack of major problems plus extensive computerization of work schedules helped Coronado crews put the unit back in service on schedule.
SRP crews also replaced all coils (windings) in the 44,000.kilowatt generator stator at Mormon Rat Dam. Ihe turbine rotor in Kyrene Generating Station's Gnit ll underwent extensive testing in an effort to extend the equipment's useful life.
Nuclear energy willfuel the 1980s SRP expects to begin receiving power from the Palo Verde Nuclear Generating Station in late 1983. The first of three 1,270,000-kilowatt units is 97 percent complete. The second unit is scheduled to begin operation in 1984 and the third in 1986. Overall, the station is 79 percent complete. Arizona Public Service Co.
is project manager.
SRP is project manager for the transmission facilities associated with the Palo Verde station. Major e
components of the Palo Verde transmission system were completed during the year, including the Palo Verde switchyard, the 75 mile-long, 500.kilovolt Palo Verde to Kyrene transmission line, and the 500 kilovolt/230 kilovolt Kyrene substation.
Total cost for the three projects was
~55.5 million.
SRP expects to conclude its sale of 5.91 percent of the station to the Southern California Public Power Authority in the second quarter of the 198243 fiscal year. 'Ihe Nuclear Regulatory Commission approved the transfer of the construction permits during fiscal 1981 82. When Palo Verde begins commercial operation, SRP willown 17.5 percent of the station.
When the station was planned in the early 1970s, SRP projected it would need 1.1 million kilowatts of generating capacity from the station in the mid.1980s. A reduced population growth rate, rising energy costs and energy conservation changed those projections. Last year, SRP decided to sell 225,000 kilowatts of the station's capacity rather than burden customers with paying for capacity they won' need until well after 1990."
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GROWTH SLOWED, IYOTSTOPPED-Economic difficulties made themseloes knotun in the Phoenix area during the fiscal year, pushing housing starts in the SRP temtory to a level 16.7 percent beloto that of the previous year. But the diuersity of the Valley's economy kept the area groiuing, attoiuing SRP to add 11,000 neiu customels to its lines.
SRP examines DC transmission A proposed direct current transmission system would link SRP with California markets by 1988, providing an estimated ~100 million in benefits by the year 2000.
In December 1981, the board approved participation in a two year feasibility study for the 2.2 million-
'ilowatt system. SRP initiallywould use 200,000 kilowatts, doubling its capacity to exchange electricity with California and the Pacific Northwest.
ln addition, direct current transmission is more efficient than alternating current transmission over long distances. And the line would help ensure a stable supply of "electricity for SRP customers in the event that a major SRP source of power generation was out of service.
Growth slows, but it doesn't stop New home construction slowed during the fiscal year. The number of residential dwelling units authorized for construction in the SRP electric service area was 16.7 percent below the previous fiscal year.
Nevertheless, SRP added 11,000 new customers to its lines for a year end total of 341,412, compared to 330,251 at the end of the previous fiscal year.
The hottest summer on record in Phoenix pushed peak demand for electricity to a record of 2,266,000 kilowatts on Aug. 26, 1981.
Board members approved plans for future expansion of service facilities in the eastern portion of the SRP temtory. The expansion is the first step in a long range plan to decentralize SRP's customer. related operations to handle projected growth, improve customer service response time and minimize transportation and other costs. The board also decided to move thd Mesa electric service
~ business office closer to the population center of the area.
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A program to assist builders and developers began during the fiscal year. Under the "single point contact" program, one SRP representative is assigned to coordinate between each customer and the many other SRP departments that might be involved in providing the service.
New equipment, facilities and programs were added during the fiscal year to enhance SRPs ability to deliver electricity to its growing customer population.
In December, the board of directors authorized the purchase of a $ 15.5 million computerized Energy Management System capable of remotely controlling SRP's power facilities. The system will monitor and control substations and generating units, facilitate decisions about the most economical mix of generation, purchases and sales, and evaluate potential electric system configurations.
When the system arrives in 1985, it will be housed in a new Power Operations building. The new facility was in the design stage at the end of the fiscal year and is scheduled for completion during 1984. A 54,000.
square foot addition to SRP's administration building was completed during the past year.
SRPs drafting specialists used computer. assisted drafting to boost their productivity during the fiscal year.
The S500,000 system produces engineering and mapping drawings in about one third the time of previous methods.
Meter readers increased the number of meters read per day by 14 percent through an incentive program conducted during the fiscal year. And 360 customer service employees began an extensive training program on a newly implemented computerized system for handling customer inquiries and service requests. The system will increase the amount of customer information available via computer terminals, allow a faster response to customer inquiries and to requests for electric service, and reduce the amount of paperwork necessary to handle customer transactions.
1981 10? 105 Acres Low runoff augmented by pumping, conservation 1981 136.116 Acres
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Year Ending Dec. 31, 1979 1980 1981 1985'000'Aojedcd Land Gse Agricultural Acreage 109223 105,771 102.105 85.000 25,000 Qrban Acreage 128,998 132350 136,116 153221 231221 Water statistics are computed on a calendar year basis. Water reuenues and operating expenses are computed on a fiscal year basis.
After three wet years, Mother Nature proved that she can be stingy, too.
Water runoff into SRP reservoirs during 1981 was only 566,245 acre.
feet (af) or 48 percent of the 69-year average. It was the 11th driest year since 1902.
As reservoir levels dipped, Valley residents were reminded of the importance of the six SRP storage dams. Reservoir contents declined from 71.7 percent of capacity (1,480,332 af) on Jan. 1, 1981, to 55.2 percent of capacity (1,116,338 af) on Jan.
1, 1982.
Reservoir levels would have dropped farther if it had not been for SRP's system of 250 deep well pumps.
In the event of a prolonged drought, these could provide a large part of the Valley's water needs. Pumping increased from 65,648 af in 1980 to 337,424 af in 1981.
Fortunately, the rainstorms of February and March 1982 helped to replenish reservoir storage. In fact, some 81,123 af of water could not be contained in the lakes on the Verde River and had to be released to the Salt River channel below the dams at low rates of flow.
Water staff works with Phoenix officials Although SRP has never been completely out of water, the dry year served to highlight some of the crucial water issues that SRP and the metropolitan Phoenix area will have to face in the coming decades.
The year's low water runoff placed the City of Phoenix in danger of running out of gatewater credits at Horseshoe Dam. The credits, which accumulate when water rises on the city-financed gates, are used to supply areas of Phoenix that are outside of SRP water service boundaries.
SRP officials worked with the city to formulate a plan to increase the supply of water for offProject residents until Central Arizona Project water becomes available to these areas in 1985.
Although spring runoff in 1982 restored the city's gatewater credits, Phoenix and SRP are continuing to work on conservation and development plans to ensure the city' long term water supplies.
Overall use decreases; deliveries to cities increase Urbanization took another 3,666 acres of farmland in 1981. At year end, 57 percent of the 238,221.acre SRP area was urbanized. Although the land's use changed, the water rights stayed with the land.
In many cases, as lands go out of cultivation, cities, rather than individuals, pay the SRP water charges.
SUNRISE ATROOSEVELT LAKE-Rooseoelt Lake is the backbone ofthe Salt Riuer Project mater supply. It can store nearly lmice as much mater as ail the'other SRP lakes combined.
When full, the lake is 23 miles long.
Its size and scenic beauty make Rooseuelt Lake, a fauorile recreation spot as mell as an important source of mater.
Salt Riuer Project Watershed and Irrigated Area ASH FORK
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1981 265.002 Acrekeet E
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1'omestic Water Deliveries
%of 1981 1980 Change 5g6430 5,085.93 15X 18.617.94 13.565.22 37K 2821.00 226957 24%
1859.93 1,86231 OX 32,067.50 28,614.58 12K 22.985.21 20,602.90 12X 5,165.00 3,411.53 51%
175,65135 171,778.07 2%
Scottsdale Glendale Peoria Glhert TelYlpe Mesa Chandler Phoenh Total 265,002.23 247,190.11 7%
Ailnumbers are in acrcfcct. except percents of change.
Acting as agents of landowners, the cities take the lands'hare of water from SRP canals, treat the water and deliver it back to municipal and industrial customers who are shareholders.
This continued, beneficial use of water helps to maintain the lands'ater rights.
In keeping with the dry year, SRP water deliveries totaled 994,294 af, compared to 1,203,080 af in 1980.
Non agricultural water deliveries totaled 381,457 af compared to 362,758 af in 1980. The total includes 265,002 af to cities for domestic use (compared to 247,190 af in 1980) and 116,455 af for parks, playgrounds, schools, churches and residential irrigation (compared to 115,568 af in 1980).
Agricultural water use totaled 440,047 af, a 24 percent decrease from the 579,650 af used in 1980 when surplus water was available due to high runoff.
Other deliveries were 64,431 af to decreed lands, which include Indian reservations (compared to 67,762 af in 1980); and 108,358 af in contract deliveries (compared to 192,909 af).
Sources of water included 870,262 af from reservoirs and 337,424 af from wells. Nineteen percent was lost to evaporation, seepage and leakage.
Water rates rise in 1982 A 7 percent increase in water assessments took effect in January 1982. Inflation was the major cause of the need for the increase.
Water assessments have more than tripled in nine consecutive increases since 1973. The assessment helps pay the operating costs of the Salt River Valley Water Users'ssociation, which operates the water delivery portion of the SRP. All types of land within the Project pay the same assessment.
The assessment of ~14.50 per acre allowed each acre to receive two acre.
feet of water during the year. The 1981 assessment was $13.50 per acre.
A third acre foot of reservoir water was allocated for a 47.25 fee, up 50 cents from the previous year.
Charges for pumped water increased from $21.50 last year to $25.
Delivery fees for irrigation
. customers increased from $22.96 per account plus 16 cents per acre to
$26.79 per account plus 19 cents per acre. Domestic water and city contract charges increased from $ 1.75 per account to $1.90 per account.
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WATER FOR HOMESSalt River Project ivater can be available in two forms. At right, a residence receives im'gation-once a month in winter and twice a month in summer. Only about 6 percent ofSRP's water is used to irrigate lawns and other small acreage.
Most ofthe SRP water used by residences stops first at a city owned treatment plant and is delivered as drinking mater.
Investing in water conservation Computerized deliveries helped to prevent an estimated 70,000 af in water losses during 1981. Ifthat amount had to be pumped from wells, it would have cost an additional S1.75 million at 1981 pumped water rates.
Much of the savings occurred through use of new computer terminals in the water dispatching center. The terminals are linked to canal gates to ensure that proper amounts of water are released to delivery facilities. Before the computer's use, less precise measurement of flows made delivery in excess of orders more likely.
Water savings also occurred through the ongoing canal lining program. During the annual canal dry-ups, SRP lined 4.5 miles of the Eastern Canal, 1.25 miles of the Western Canal, 2 miles of the Arizona Canal and.25 mile of the Grand Canal, the most lining installed in a single year. Total cost of the canal lining and maintenance work was 42.4 million, which will be recovered in reduced water losses.
More than 50 percent of SRP's 131 ~
mile canal system has been lined since 1948.
SRP evaluates water control plans Backed by its 80 years of water management experience, the Salt River Project performed extensive technical evaluations of the plans formulated by the G.S. Bureau of Reclamation for solving Central Arizona's water problems.
Hundreds of hours of study, involving nearly every area of the
. Project, were devoted to examining which plan would best meet Arizona's future water needs (See Page 12 for more details).
In September, the board of directors accepted management's endorsement of four of the eight plans, and passed along SRP's findings to the Governor's Advisory Committee studying the issue.
The plan endorsed by the committee and by G.S. Interior Secretary James Watt was one which SRP found could accomplish the necessary tasks while avoiding some of the environmental and social consequences of some of the other plans.
SRP supports Groundwater Act SRP's staff worked overtime to help area residents comply with the state' Groundwater Management Act.
One provision of the act required landowners who applied well water to two or more acres of land before passage of the act to file for a
'grandfathered groundwater right."
Office hours were extended prior to the deadline to help customers in their required research for historic water use information.
Vice President John Lassen represented SRP on the Groundwater Gsers Advisory Council appointed by Gov. Bruce Babbitt.
The intent of the act is to prevent the depletion of underground water
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supplies by bringing groundwater recharge and demand into balance.
Water quality studied Testing in late 1981 by the State Department of Health Services revealed that an industrial solvent called trichloroethylene (TCE) had entered some groundwater supplies in the metropolitan Phoenix area.
High concentrations of TCE were found in three SRP wells used for irrigation purposes. Since TCE evaporates rapidly and none of the water is used for domestic purposes, SRP is not barred from using the wells.
SRP is continuing to monitor well water quality in cooperation with the Arizona Department of Water Resources.
Water rights reviewed Because much of the Valley's water comes from upstream sources, SRP closely reviewed applications for upstream water rights filed with the Arizona Department of Water Resources.
SRP reviewed approximately 45 applications and protested 17 during the year. ADWR made 11 decisions, mostly in favor of SRP interests.
Today' decisions will ensure tomorrow's supplies Water. Will there be enough for future generations?
Will devastating floods occur in the years ahead?
These and other questions will mark the 1980s as the decade of
'ater issues, just as the 1970s were the decade of energy problems.
Arizonans have taken strong steps toward solving potential water problems. The Arizona Groundwater Management Act was designed to reduce groundwater overdraft and was intended to balance withdrawals and recharge. The act will require all water users to be more careful about how they use this precious resource.
The Central Arizona Project, which will bring Arizona's allotment of Colorado River water to our state' interior, will reach Phoenix in 1985.
And, after years of debate, there is a consensus within the state about which water control plan best solves several important problems.
But much work remains to be done.
Selection of a water control plan
'Ihe Governor's Advisory Committee on the Central Arizona Water Control Study (CAWCS) functioned well. It brought together diverse water interests to examine different plans recommended by the U.S. Bureau of Reclamation.
CAWCS dealt with three major goals: providing regulatoiy storage for the Central Arizona Project, protecting the metropolitan Phoenix area from flooding, and enhancing the safety of the Salt River Project dams. Dam safety began as a separate Bureau study, but was included in CAWCS when it became apparent that safety was related to water storage.
With so many competing interests and viewpoints, the level of agreement reached by the advisory committee demonstrates the Bureau's thoroughness in formulating the eight plans from dozens of options.
According to SRP's technical evaluation of the eight plans, Plan 6 would do the necessary jobs without the environmental and social impacts of Plan 3the Orme Dam idea which SRP judged to be technically superior to other plans.
The Governor's Advisory Committee's choice of Plan 6 brought quick endorsements from many community leaders, including SRPs management and governing board.
Interior Secretary James Watt gave his approval too.
'Ihen, into this marriage of interests came a familiar problem. Money.
The New Federalism
'Ihings have changed in Washington. Funding is scarce, and the government is looking to the states for help.
The latest Bureau estimate is $890 million for completion of Plan 6. It involves:
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A new, larger Waddeli Dam on the Agua Fria River to provide regulatory storage for the CAP.
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A new dam to replace Horseshoe Dam for flood control and to handle the worst possible flood on the Verde River.
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A new or enlarged Roosevelt Dam to provide flood control and protect the dam during the worst possible flood on the Salt River.
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Larger spillways at Stewart Mountain Dam to handle the worst possible flood and modifications to protect the dam from the worst potential earthquake.
The three SRP operated dams-Horseshoe, Roosevelt and Stewart Mountainare owned by the U.S.
Government. Congress has assumed responsibility for funding dam safety in the past, but that may change.
Arizona leaders believe that all beneficiaries of the plan will be asked to help pay for it. In June 1982, Gov.
Bruce Babbitt appointed two task forces to study ways of raising as much as 25 percent of the construction cost.
If local funding is necessary, the next task is to allocate the benefits, and therefore the costs.
Horseshoe Lake Lake Pleasant,, New Waddell Dam Site
~, Cliff Dam Site Bartlett Lak New/Enlarged Theodore Roosevelt Lake ROOSeVelt Dam Agua Fria River Arizona Canal Phoenix Saguaro Lake Apache'Lake Canyon Lake Reconstructed Stewart Mountain Dam Salt River Three classes of beneficiaries are under consideration.
TAXPAYERS I/YMARICOPA COU/Y7Y.. Dost of the people who would benefit from flood control live in lvtaricopa County, and the county's flood control district already has the power to issue bonds and collect property taxes to finance flood control projects.
TAXPAYERS I/YMARICOPA, PIXEL A/ADPIMA COUIYTIES..CAP water users will receive the benefits of regulatory storage at Waddell Dam.
The Central Arizona Water Conservation District, which was created to administer the CAP, has the authority to tax property in the areas served by CAP.
SALTRIVER PROJECT WATER USERS...SRP operates the dams which have been identified as unsafe under new Bureau criteria. SRP water users would benefit from work done to protect the dams, as would ALLValleyresidents.
In real terms, SRP gains little from dam safety modifications since the dams would conserve no more water than at present.
SRP's board of directors has affirmed the Project's willingness to pay for any additions that benefit SRP water users.
Discussions continue as engineering proceeds.
Because the Bureau still is years away from beginning construction of any new dams, Arizonans have time to review these issues and establish priorities.
The governor's task forces also will consider local funding sources for elements of the CAP not included in Plan 6, such as the aqueduct that will carry water to Tucson and the distribution systems planned to take water from the aqueduct to users.
Gov. Babbitt is correct when he states that these projects need to be completed within a decade to ensure the future development of the state.
We can have plenty of water, ifwe manage our resources wisely. We have registered our concerns and put into motion the machinery needed to deal with them.
Jack Pfi er General ager
Education Research Being a good corporate citizen Sell Aver~
As%I%
JlafC~
9%CR SRPs efforts to be a good corporate citizen, as well as a supplier ofwater and power, led it into the schools with water safety and electric energy information, the deserts of Egypt with irrigation expertise, and the world ofthe elderlyand jobless with a program to help with energy costs.
Putting volunteerism to work Employees of SRP and Arizona Public Service Co. kicked off Project S.H.A.R.E, a program to help the needy, by donating more than $30,000. The companies matched these funds for a total of85,000, which was tumed over to
'Ihe Salvation Armyfordistribution to the elderly, handicapped and jobless to help pay energy. related bills, including those for minor energy related home repairs.
To keep the program funded, customers ofthe two utilities willbe able to voluntarilycontribute a dollar a month by adding it to their billpayments. Allfunds willgo directly to Project S.HA.R.E.
SRPs employees served their communities and their fellow man in other ways during the past year.
More than 250 employees represented the company by their membership in civic, professional and trade organizations.
Others served in chambers of commerce, the state legislature, and as loaned executives working to raise funds for Girl Scouts, Gompers Rehabilitation Institute and four area United Way organizations. SRP employees won awards for their support of Scouting activities.
The Junior Achievement companies advised by SRP employees placed second in sales in the Phoenixarea,and one ofthe groups was named Best Manufacturing Company.
SRP helped residents of Page, where SRP's Navajo Generating Station is located, reduce litter in their city and nearby recreational areas during a cleanup week in April 1982.
Besides contributions to Project S.H.A.RE., SRP employees donated a total of ~128,345 to various local charities via payroll deductions. And Arizona Blood Services gained 342 pints of blood in drives held at SRP.
General Manager A. J. Pfister began a term on the Arizona Board of Regents during the fiscal year, and Charles D.
Brumback, operations superintendent at SRP's Navajo Generating Station, was appointed to the Arizona Community College board of directors.
Listening to customers Thirty months of study of SRP rates and policies ended with the fiscal yearas SRP completed a review required by the federal Public Utilities Regulatory Policies Act (KIRPA).
Although the act makes provisions for public meetings, SRP carried that requirement one step farther and formed a 19-member customer task force representing SRP's various customer groups to make recommendations to the board of directors.
SRPs policies generally met the goals of PURPA, the board and task force agreed. The review process resulted in a new effort to communicate with Spanish-speaking customers, and in a formal affirmation of SRPs commitment to time~f day rates and load management practices.
Researching for the future Rates charged by SRP in the years ahead will be influenced by today' research into timeof4ay rates, which reflect the higher cost of generating electricity during periods of highest demand.
SRPs experimental program-which will be limited to 3,000 customers-allowed 1,764 customers to be billed under timeofciay rates in an effort tojudge customer acceptance and identify problems. Average savings during the summer months were $23.53 per month per home.
Load management experiments concluded during the year proved that SRP can cut peak demand forelectricity by up to one kilowattperhome by using a computerized system that turns appliances offand on. The study found the cost ofthe equipment today was greater than the potential savings. However, the costs and benefits ofload management equipment may change in the future.
Tests continued during the year on commercial-and residential sized solar-powered air conditioners equipment that uses the sun to help cure the problem it creates. Both use the Rankine cycle, in which the sun indirectly heats a gas that expands to drive a turbine.
A study of solar water heaters, partially funded by SRP, began during the fiscal year. Results will help customers considering the purchase of such units.
ice storage air conditioning entered its final stage of testing during the summer of 1981. Several residences using the equipment entered the timeof.day rate program to test the potential for savings. Ice storage air conditioning shifts electric use to the nighttime hours by 14
TEACHIIYGWATER SAFETySRP's own "Salt Riuer Pete" steps out of cartoon pages occasionally to teach Valley schoolchildren the rules for water sa ety around swimming pools, canals and lakes. At right, Pete appears on a local children's show lo present awards at the end ofa water safety poster contest sponsored by SRP. About 34,000 children received Pete's cartoon book and heard SRP's water safety presentations during the 1981 82 fiscal year.
using coolness from ice made during the night to cool the air during the day.
SRP contributed $1.56 million to the Electric Power Research Institute during fiscal 198142 to support industiy research efforts that are beyond the scope of any single utility. The institute studies all facets of power production, including environmental matters, transmission and distribution, synthetic and exotic fuels, solar energy, and economics and finances. EPRI's current emphasis on problem solving has provided SRP with useful information, particularly in the area of power plant reliability.
Conserving energy
~ for lower bills Energy auditors went into more than 2,000 homes during fiscal 1981
~
82 to offer advice on saving energy.
Their computerized audit told customers how long itwould take fortheir investment in insulation, weatherstripping and solar water heating to be returned tothem in the form ofenergy savings. Followup surveys indicate that at least one third of the homeowners audited act on some of the auditor's suggestions.
Sharing knowledge about water and power About 54,000 Phoenix area schoolchildren know a little more about water and power safety, thanks to SRPs continuing children's education program.
Another 61,000 people-from service groups to senior citizens'lubs heard presentations by SRP public affairs staff and members of the volunteer Speakers'ureau on a wide range of water and power issues.
Close ties to the development of the Phoenix area led SRP to establish a History Center and a model of an early water users'ssociation office. The History Center became accessible to the sight. and hearing impaired during the past fiscal year through Braille publications and a videotape translated into sign language.
<amer:iu: ~,sumr-Laai O~
~ 4 14tfft IW An advertising program focusing on energy conservation brought SRP a first.
place award from the Public Gtilities Communicators Association, which also gave the company's overall program an Award of Excellence.
SRP shared its water expertise with Egypt during the past year, sending representatives to that country and hosting Egyptian water experts interested in learning about SRP's advanced water management techniques.
A new scholarship program joined SRP's existing programs during the fiscal year. Funds willgo to future engineers for SRP's generating stations in Page and St. Johns, and to members ofthe Navajo Tribe working toward professions that will benefit their community. In addition, students entered the business world by working as interns in various SRP departments.
For example, top high school seniors participated in the Student Career Opportunities Program, working 20 hours2.314815e-4 days <br />0.00556 hours <br />3.306878e-5 weeks <br />7.61e-6 months <br /> per week in various SRP, departments and receiving class credits and a salary.
City and county oAicials in Gila County, where Roosevelt Dam is located, were invited to meetings hosted by SRP and the U.S. Bureau of Reclamation to leam about possible modifications to the dam.
b f
Ji SRP representatives testified at Congressional hearings in Washington, D.C, and Phoenix on legislation affecting the company and its customers.
Testimony addressed bills on dam safety, reclamation reform, and modifications to the Clean AirAct.
Several SRP executives served on the governing bodies of major electric utility industry groups, including General Manager Pfister, a member of the Hectric Power Research Institute board. C. M.
Perkins, Assistant General Manager
~
Financial Services and SRP Treasurer, sermon as treasurer of the American public Power Association, and John McNamara, Associate General Manager - Power, served on the Western Systems Coordinating Council Executive Committee and the Western Energy Supply and Transmission Associates Management Committee. President Karl Abel was named a life member of the National Water Resources Association in 1981, becoming one of only about 50 people so honored.
15
Financial commentary
~P ReR Rncr Preiccc AerkeReral lnCernceeer eel Peecr Diuricc The nation's leading credit rating agencies upgraded SRP's bond ratings during fiscal year 1981 82. The Project's solid operating performance over the last several years, decreased borrowing needs, and reduction in future capital expenditures all were positive financial factors that contributed to this improvement in SRP's credit standing.
Standard 6 Poor's Corp. upgraded SRP revenue bonds from A+ to AA, and maintained its AAArating for SRP's general obligation bonds.
Moody's Investor Services Inc., which rates SRP revenue bonds an Aa, raised the ratings for existing SRP general obligation bonds from Aa to Aal.
General obligation bonds were issued prior to 1973. Revenue bonds have been used since then.
Debt service coverage for the fiscal year was 2.02 times, compared to 1.74 times for the previous fiscal year.
This was the first time since 1972 that coverage exceeded the 2.00 level. In the five reporting periods preceding fiscal year 198142, (calendar 1977 through fiscal year 198041), coverage varied only slightly within the range 1.65 times to 1.77 times. Debt service is the sum total of principal and interest due on debt owed by SRP to the federal government, general obligation bondholders and revenue bondholders. Coverage is computed as the number of times debt service is "covered" by revenues available after the payment of operating expenses.
SRP conducted only one large revenue bond sale during the fiscal year. In October, SRP issued
$55 million in revenue bonds at an effective interest rate of 14.36 percent.
It was the highest rate ever paid by SRP. At the same time, SRP issued
$8.5 million in "minibonds." These bonds were sold in $500 denominations, primarily to SRP customers. These minibonds pay interest rates of 10.0 percent and 10.75 percent on 1986 and 1988 maturities, respectively.
During the second quarter of 1982.
83, SRP expects to receive approximately 4260 million from the sale of 5.91 percent of the Palo Verde Nuclear Generating Station. In March, SRP issued 4165 million in one-year revenue bond anticipation notes to cover financing requirements until the receipt of the proceeds from the Palo Verde sale. It is anticipated that proceeds from the Palo Verde sale will retire the bond anticipation notes and help finance future capital expenditures.
In the official statement accompanying the issuance of these notes, it was estimated that the Palo Verde sale would reduce the Project's 1982.1987 Improvement Program by some $480 million.
The bond anticipation notes carried an interest rate of 8.25 percent. It was estimated that long.term bonds sold at the time would have had an interest rate of at least 13.5 percent. By selling the notes, SRP estimates the savings in interest costs will be in excess of
~8.5 million. SRP's notes were rated MIG.1-the highest possible rating-by Moody's Investor Services Inc., and AA by Standard 6 Poor's Corp.,
reflecting SRP's sound financial status.
SRP's S225 million commercial paper program continued to finance SRP's fuel reserves and a portion of construction work in progress during the fiscal year. The maximum amount remained outstanding during most of the fiscal year.
Electric, water rates adjusted Electric rates remained stable throughout the fiscal year. A 12.8 percent increase took effect in April 1981, the end of the previous fiscal year. In October the fuel cost adjustment factor was increased from 0 to 1.827 mills per kilowatt.hour. The factor is used to reflect increases or decreases in the costs of fuel, as these costs vary from the base amount included in the electric rates.
Water rates were increased by an average of 7 percent in January 1982.
Operating revenues increase Operating revenues totaled ~664.5 million, an increase of $124.8 million, or 23.1 percent, from the previous year's total of ~539.7 million.
Electric operating revenues of
$655.7 million were 22.7 percent higher than the 1980.81 fiscal year' figure of $534.4 million. The increase
Q R
~
~
'ii i was mainly due to continued strong sales of excess energy to other utilities.
"Higher than normal summertime
" sales, more customers and the 12.8 percent rate increase in April 1981
'also increased revenues.
Energy sales of 13.5 billion kilowatt-hours topped last year's total of 12 billion kwh by 12.5 percent.
Revenues from sales for resale increased 15.5 percent, from ~112.6 million in 1980 81 to $130.0 million in 1981.82.
Due in part to record summer heat, revenues from residential sales increased 23.1 percent, from $212.5 million in fiscal 198081 to ~261.6 million during the past fiscal year.
The average revenue received per kilowatt.hour sold to residential customers rose from 5.78 cents to 6.55 cents.
Commercial and industrial sales revenues rose by 27.1 percent to
$232.1 million, up from $182.6 million.
Sales for street and highway lighting, agricultural pumping and public authorities generated 426.9 million, up from ~21.9 million during th'e previous year.
Revenues from water deliveries increased from $5.3 million to 48.8 million. The 66 percent increase mainly was due to increased use of pump water, which carries a higher delivery charge than surface water.
Operating expenses rise Operating expenses increased from 4400.3 million in fiscal 1980.81 to 4460.9 million in fiscal 1981.82, an increase of 15.1 percent. Of that, fuel and purchased power costs totaled
$183.5 million, compared with $160.0 million during the previous year. The increased fuel costs mainly resulted from the high demand for electricity by SRP customers during the summer and sales to other utilities year. round.
Other operating expenses totaled
$8.8 million, up 31.4 percent from the previous year's
$75.2 million.
Inqreased sales plus inflation accounted for the rise.
Maintenance costs stabilized, in part because no new generating units came on line during the fiscal year.
The 1981.82 total of $49.5 million was 2.8 percent less than the 1980.81 total of $50.9 million. Depreciation of facilities totaled $64.5 million, an increase of S8.4 million; taxes and tax equivalents increased 46.5 million to
~64.6 million.
Net financing costs increased 13.3 percent, from $112.4 million to $ 127.3 million, despite a S9.9 million increase in investment income.
Net revenues of $158.3 million were 69.3 percent higher than the $93.5 million during the previous fiscal year.
Statistical Review (Sooo)
Project General Operating revenues Electric Water and irrigation Operating expenses Net financing costs less capitalized interest Other deductions (revenues), net.
Net revenues Construction expenditures.
Electric and irrigation plant, gross Contributions of power revenues to support water operations Taxes and tax equivalents Employees at year-end.....;
1982 S664,463 655,682 8,781 460,907 45,382 (168) 158,342 395,270 3,265,863 1981 S539,669 534,357 5,312 400,323 47,460 (1644) 93,530 302,702 2,843,247 13,676 64,589 4,776 4,870 58,134 4,580 12 Months Ended April 30 1976 S225,268 220,961 4,307 182,662 31,060 259 11,287 234,01 2 1,229,617 7,341 30,869 3,325 1971 S85,422 83,335 2,087 74,856 5,148 194 5,224 74,703 433,573 9,600 9,571 2,522 12 Months Ended December 31 Water*
Total storage and pumping capacity (acre4eet)...
Storage capacity (six reservoirs) installed pumping capacity.
Water in storage January 1 (acre-feet)..
Project storage only.
Runoff (acre. feet)
Water in storage December 31 (acre feet).
Project storage only.
Total water deliveries (acre feet)
Gravity supply Groundwater supply (pumping by SRP)
Groundwater supply (pumping by others).....
Gse of water (acre feet)
Agricultural.
Grban.
City domestic Subdivision irrigation Other nonagricultural irrigation (schools, parks, churches, etc.)
Decreed deliveries Contract deliveries Seepage and evapotranspiration Canals, total (miles)
Lined Laterals, total (miles)
Lined or piped Drainage and waste ditches (miles).
Lined or piped Assessed area (acres)
Number of assessed accounts Number of times water delivered to water users..
1981 2,891,177 2,063,948 815,229 1,480,332 1,227,055 566,245 1,116,338 895,118 1,222,376 870,262 337,424 14,690 896,802 440,047 381,457 265,002 62,908 53,547 64,431 108,358 228,082, 131 70 884 758 243 63 238,221 178,796 456,129 1980 2,891,711 2,063,948 827,763 1,563,309 1,290,971 2,897,443 1,480,332 1,227,055 1,446,277 1,370,310 65,648 10,319 1,446,277 579,650 362,758 247,190 57,831 57,736 67,762 192,909 243,197 131 64 880 749 247 60 238,221 177,171 423,989 1976 2,841,818 2,072,050 769,768 1,040,000 771,440 817,419 976,725 711,353 1,190,720 848,734 335,988 5,998 1,190,720 451,377 295,123 187,044 56,753 51,326 58,464 82,467 303,289 131 59 878 715 251 52 238,266 166,048 500,607 1971 2,896,542 2,072,050
'24,492 1,090,552 784,312
~
706,356 1,014,578 723,247 1,207,201 723,493 476,924 6,784 1,207,201 480,779 219,895 127,843 51,052 40,999 56,011 65,244 359,907 131 50 880 594 279 47 238,264 146,541 447,079
'Statistics on water are computed on a calendar year basis 18
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Salt River Project Agricultural Improvement and Power District and its agent, Salt River Valley Water Gsers'ssociation Combined Balance Sheets For the Years Ended April30, 1982 and 1981 Assets GTIUIYPLANT, at original cost (IYotes I, 2, 3 and 4):
Plant in service Electric lmgation General Total plant in service....
Less
~ Accumulated depreciation on plant in service Construction'work in progress SEGREGATED FGNDS, consisting of cash and U.S.
Government obligations set aside inaccordance withresolutions of bond issues:
Debt service funds, excluding $49,724,000 in 1982 and
$45,891,000 in 1981 for payment of accrued interest (fYote 5)
Construction funds.
CURRENT ASSETS:
Cash Temporary investments, at cost, held primarily for constructio'n.
Deposit in debt service fund for payment of accrued interest on bonds........
Trade and other accounts receivable, less reserves of $1,754,000 in 1982 and
$1,420,000 in 1981 for doubtful accounts Fuel stocks, at average cost Materials and supplies, at average cost Ptepayments, interest receivable and other DEFERRED CHARGES AND OTHER ASSETS (fYote 1)..
1982
$1,842,713 74,072 74,500
$1,991,285 416,046
$1475,239 1,274,578
$2,849,817 156,656 156,656 8,773 168,849 49,724 39,205 78,293 34,918 10,822
$ 390,584 58,310
$3,455,367
($000) 1981
$1,822,013 70,756 63.705
$1,956,474 356,384
$ 1,6OO,O9O 886,773
$2,486,863 146,920 70 146,990 873 109,129 45,891 45,532 94,033 28,106 10,930 334,494 58,392
$3,026,739 The accompanying notes are an integral part ofthese combined balance sheets.
20
Capitalization and Liabilities LONG-TERM DEBT (IYote 5):
Electric system revenue bonds.
General obligation bonds and other ACCGMGLATEDNET REVENGES, invested principally in utilityplant:
Balance, beginning of year Net revenues for the year Balance, end of year Total capitalization.
CGRRENT LIABILITIES,excluding $23,938,000 in 1982 and
$22,105,000 in 1981, representing current portion of long term debt which is to be paid from segregated funds:
Bond anticipation notes (JYote 8)
Notes payable to banks.
Accounts payable Accrued taxes and tax equivalents..................
Accrued interest Customers'eposits.
Other current and accrued liabilities.
DEFERRED CREDITS AND RESERVES 1982
~1,996,822 433,866
~2,430,688.
S 471,438 158,342 629,780
$3,060,468
~
165,OOO 35,000 76,323 38,360 52,574 9,334 12,863 4 389,454
(~000) 1981
$1,940,844 442,522
>2,383,366
~ 377,908 93,530
~ 471,438
~2,854,804 66,826 35,490 46,382 7,713 9,542 165,953 5,982 COMMITMENTSAND CONIlNGENCIES (IYotes 3 and 6)
S3,455,367
~3,026,739
Salt River Project Agricultural Improvement and Power District and its agent, Salt River Valley Water Gsers'ssociation Combined Statements of Net Revenues For the Years Ended April 30, 1982 and 1981 OPERATING REVENGES:
Electric Water and irrigation.
Total operating revenues 1982
~655,682 8,781
$664,463 (see) 1981
~534357 5312
$539,669 OPERATING EXPENSES:
Power purchased Fuel used in electric generation..........
Other operation expenses Maintenance Depreciation and amortization (Note 1)
Taxes and tax equivalents Total operating expenses NET OPERATING REVENGES S 18,223 165,288 98,797 49,508 64,502 64,589
$460,907
$203,556 4 20,852 139,112 75,175 50,927 56,123 58,134
$400,323
$139346 FINANCING COSTS:
interest on bonds at coupon rates.
Amortization of bond discount, issue and refinancing expenses Interest on other obligations interest earned on investments and deposits................
Net financing costs Less
~ Allowance for funds used during construction (Note I)
Financing costs less allowance for funds used during construction OTHER INCOME (DEDGCTIONS), NET NET REVENUES FOR THE YEAR.
$145,452 2,940 22,885 (43,940)
$127,337 (81,955)
~ 45,382 168
~158,342
$130364 2,662 13,478 (34,080)
~112,424 (64,964)
~ 47,460 1,644
~ 93,530 The accompanying notes are an integral part ofthese combined statements.
22
Salt River Project Agricultural improvement and Power District
'< and its agent, Salt River Valley Water Gsers'ssociation
.Combined Statements of Sources of Funds for Additions to GtilityPlant For the Years Ended April 30, 1982 and 1981
($000)
GROSS ADDITIONSTO QTILITYPLANT, excluding allowance for funds used during construction.
FGNDS GENERATED FROM OPERATIONS:
Net revenues for the year Add - Depreciation (including charges to clearing accounts) and other charges not requiring current funds Deduct
~ Allowance for funds used during construction not providing current funds Total funds generated from operations before retirement of debt.
Less
~ Repayment of electric system revenue bonds, general obligation bonds and U.S. Government debt.
Net funds generated from operations FUNDS OBTAINED FROM FINANCING:
Proceeds of bond issues Advances from G.S. Government for rehabilitation of irrigation plant Contributions in aid of construction Other long term borrowings, net of repayments Short term borrowings.
Total funds obtained from financing.
~Other-Proceeds from sale of utilityplant.
Increase in segregated funds set aside for debt service Decrease in segregated funds set aside for construction.
Decrease (increase)'in temporary investments held primarily for construction..
Net funds obtained from financing.
CHANGES IN OTHER ITEMS AFFECTING FGNDS:
Increase (decrease) in accounts payable..
Decrease (increase) in accounts receivable Decrease (increase) in fuel stocks and materials and supplies Increase in deposits for payment of accrued interest on bonds Increase in accrued interest Change in other assets and liabilities, net.
Net change in other items
~
FGNDS GSED FOR ADDITIONSTO GTILITYPLANT.
1982
~395,270
$158,342 72,573 (81,955)
$148,960 (25,798)
~123,162
~ 61,809 12,446 9,686 200,000
$283,941 32,241 (9,736) 70 (59,720)
~246,796 9,497 6,327 8,928 (3,833) 6,192 (1,799) 4 25,312
$395,270 1981
~302,702
~ 93,530 62,883 (64,964)
S 91,449 (21,785) 4 69,664
~168,843 388 11,406 214,5]1 (120,000)
$275,148 (11,477) 225 7,492
$271/88 4 (17/86)
(3,875)
(5,918)
(2,902) 789 (9,058)
> (38350)
$302,702 7he accompanying notes are an integral pert ofthese combined statements.
23
Salt River Project Agricultural Improvement and Power District and its agent, Salt River Valley Water Gsers'ssociation Notes to Combined Financial Statements For the Years Ended April 30, 1982 and 1981 (1) Summary of slgniTrcant accounting policies:
(a) Principles of Combination The combined financial statements include the accounts of the Salt River Project Agricultural Improvement and Power District ("the District") and the accounts of its agent, the Salt River Valley Water Gsers'ssociation, together referred to as the Salt River Project ("the Project" ), and a whollyawned subsidiary, Salt River Generating Company. All significant intercompany transactions have been eliminated.
(b) The ProJ'ect's Board ofDirectors sexes as its regulatory agen4 (c) UtilityPlant, Depreciation and Maintenance The accounting records of the Project are maintained substantially in accordance with the Gniform System of Accounts prescribed for electric utilities by the Federal Energy Regulatory Commission. Gtilityplant is stated at the historical cost of construction. Construction costs include labor, materials, services purchased under contract, and allocations of indirect charges for engineering, supervision, transportation, and administative expenses.
An allowance for funds used to finance construction work in progress is capitalized as a part of the electric and general plant. This allowance is deducted from net financing costs in the combined statements of net revenues and added to utilityplant. Capitalization rates of 9.62% and 8.48% were used for the years ended April30, 1982, and April 30, 1981, respectively.
Depreciation expense is computed on the straight. line basis over estimated useful lives of the various classes of plant. Rates in effect resulted in provisions approximating 3A4% for 1982 and 3.42X for 1981, on the average cost of depreciable electric plant; and 1.99% for 1982 and 1.99% for 1981 for depreciable irrigation plant. When property representing a retirement unit is replaced, removed, or abandoned, the cost of such property is credited to the appropriate utilityplant account, and such cost together with removal costs less salvage is charged to accumulated depreciation.
The Project charges to maintenance expense the cost of labor, materials, and other expenses incurred in the repair, restoration of condition and replacement of minor items of property.
(d) Bond Expense Bond discount, premium, bond issue and refinancing expenses are being amortized over the terms of the related bond issues.
(e) Employees'etirement Plan The Project has a retirement plan covering substantially all employees. The plan is funded entirely from employers'ontributions and the earnings of the invested assets. The estimated unfunded frozen liability, as determined by the 24 plan's actuary using the "entry age normal cost" valuation method, with frozen initial liability, was $10,444,489 as of January 1, 1982. This amount is being funded and amortized over a period ending in 2011. The employers'ontributions to this plan totaled $,857,810 for 1982 and
$8,444,821 for 1981.
AtJanuary 1, 1982, the Plan's assets exceeded the actuarially computed value of the vested benefits at the same date. The actuarially computed present value of the vested and nonvested benefits was $58,991,962 and $10,481,622, respectively. The market value of the Plan's net assets was
$77,973,977 at January 1, 1982. The assumed rate of return in determining the actuarial present value of vested and nonvested plan benefits was 7-1/2%.
(f) Reoenues Meters for residential, commercial and small industrial customers are read cyclically and sales recorded only when billed. This system of billing results in earned but unbilled revenues which amounted to $12,500,000 at April 30, 1982, and $11,800,000 at April30, 1981. For large industrial customers, meters are read near monthcnd and billings recorded on the accrual basis. Electric revenue billings are adjusted periodically for changes in costs of fuel and purchased power. Revenues from water and irrigation operations are recorded when earned.
(g) Electric Rates Gnder Arizona law, the District Board of Directors has the exclusive authority to establish electric rates. The District is required to follow certain procedures, including certain public notice requirements and holding a special Board meeting, before implementing any changes in the standard electric rate schedules. There were no general rate increases during the current fiscal year.
(2) Possession and use ofutilityplant:
The Gnited States of America retains a paramount right or claim in the Project which arises from the original construction and operation of the Project's facilities as a Federal Reclamation Project. The Project's right to the possession and use of, and to all revenues produced by, these facilities is evidenced by contractual arrangements with the Gnited States.
(3) Construction program:
Etectrtc generating facilities..
Transmission and distrtbution Imgation plant.
Other constnrction (a) Balances shoton for construction urork in progress represent expenditures for neto facilities required to sen7lce anticipated customer needs, and consist of:
(tooo}
Aprtt 30 1982 1981
>1211 r420 S836A$ 9 51,736 34,081 6.057 4,677 5365
'1206
'~
Total
>1274578 4886.773
r' Construction expenditures planned for fiscal years 1983 through 1987 approximate:
e (In Millions)
Allowance for Funds Construction used During Construction Total 1983 S349.7 SiO53 S455.O 1984 226.0 56.1 282.1 1985 225.0 653 2903 1986 2152 44.7 259.9 1987 205A 50A 2558 These expenditures will be financed in part by the sale of a portion of the District's interest in the Palo Verde Nuclear Generating Station (see Note 3(b)) to the extent such proceeds are not pledged to retire the 1982 Series Bond Anticipation Notes (see Note 8), from the sale of certain of the District's properties, and from funds currently on hand and future net revenues. The balance of required funds will be provided by the sale of revenue bonds.
At April 30, 1982, necessary commitments had been entered into for delivery of materials and services on construction projects. In addition, various firm commitments exist under coal and fuel oil supply contracts.
(b) Palo Verde lYuclear Generaling Station (PVYGS) - The Project has a 29.1% interest in PVNGS. However, the Districthas entered into an arrangement with the Department ofWater and Power of the Cityof Los Angeles which provides for the transfer of a 5.7X interest in PVNGS when Unit I goes into commercial operation. From information now available, the Project cannot assess whether the construction schedule used forUnits I, IIand IIIwillbe affected by delays in the issuance oflicenses as a result of the Three Mile Island incident.
On April21, 1982, the District was notified by the construction agent of PVNGS that the scheduled in service date for Unit I had been postponed from May 1983 to late 1983.
Projected construction expenditures include a contingency allowance to reflect the possibility of one. year delays in the completion of Units II and III, and the possibility of more stringent regulatory requirements related to nuclear facilities.
There can be no assurance that this provision will be adequate to cover possible increased costs associated with any major changes mandated by regulatory agencies as a result of the Three Mile Island incident.
On April 27, 1982, the Nuclear Regulatory Commission commenced hearings on the applications for operating licenses for Units I, II and III. Although the District does not anticipate any unusual difficultyin obtaining the operating licenses, permits, and other approvals necessary for PVNGS, there can be no assurance that they will be obtained.
On April 14, 1981, the Salt River Project Board of Directors approved a sale to the Southern California Public Power Authority (SCPPA) of approximately 225 megawatts (a 5.91K interest) of the Palo Verde Nuclear Generating Station.
The transfer of the construction permit has been approved by the Nuclear Regulatory Commission. It is anticipated that the transaction will be completed sometime during the second quarter of the fiscal year ended April 30, 1983. The sale price, assuming the transaction occurs on August 25, 1982, is estimated to be ~259,000,000. The consummation of the transaction is subject to the obtaining by SCPPA of the required financing. (See iYole 8).
(4) Interest in jointly owned electric utilityplants:
The Project has entered into various agreements with other electric utilities for the joint ownership of electric generating and transmission facilities. Each participating owner in these facilities must provide for and furnish the financing for its ownership share. The following schedule reflects the Project's ownership interest (at cost) in jointly owned electric utilityplant at April 30, 1982.
Phnt Name (In Milions)
Ownership Phnt Constmcthn Share In Accumulated Wodt in Percent Servke Deprechthn Progress Four Corners (New Mexico)...
10.0 S222 S8.2 S21.5 Mohave (Nevada)............
10.0 34.8 10.3 9
Navaio (Arizona).............
21.7 2072 42.8 1.2 Ihyden (Cohrado)...........
50.0 642 13.1 2.1 Coronado (Arizona)..........
70.0 6608 44.2 14.8 Craig (Colorado).............
29.0 2245 14.0
.8 Palo Verde (Arizona) (Ifote 3).
29.1 3.6 2
I 079.6 Sl 2173 S1328 Sl.l 20.9 The District acts as the operating agent for the participants in the Navajo and Coronado Projects, and, as operating agent, pays the costs of operations for each project and bills each participant including itself for its share of such costs.
The District's share of direct expenses of the jointly owned plants is included in the corresponding operating expenses in the attached combined statements of net revenues.
(5) Long-term debt:
Ehctric System Interest Revenue Bonds (a):
Rate 1973 A 6 B..........5 to 6 I/2 1974 A6 B..........5.7 to 7.6 1976 A.B,C 6 D......4.7 to 7.2 1977 A, B Refund ing 6 C...........42 to &I/8 1978 A.B6 C........4.6 to 7 1979 A,B6 C........4.3/4 to 7 I/4 1980 A,B6 C........6 I/4 to 9 I/4 1981 A..............9 to 14 1981 B.............. 10 I/4 to 14 1981 C..............10 to 103/4 Onamortlzed bond discount.......
Total electric system revenue bonds otzstanding.............
General Oblgatlon Bonds and Qnited States Qovemment debt, 0% to 6SS (b).................
Commercial paper chssified as long.term debt, 6.625K to 7.625K (rfole 7).
Other, 7.77'o 9.75SS........
Total long.term debt..............
(Sooo) 1982 S 138.130 140,000 401.970 Future 1981 Maturitles S 140220 1983.2011 140,000 1983.2012 403200 1983.2016 390,415 314.855 280,755 227,132 75,000 55,000 8518 392365 316A35 280,967 227245 75,000 1983.2017 1983.2018 1983-2019 1985-2020 1987.2021 1987.2021 1986 1988 2.031.775 1,975,432 (34.953)
(34588) 1,996,822 1,940+44 208.237 226379 1982.2005 224.553 174,090 1982 1.076 41853 1983.1 985 S2,430,6M S2383366 (a) Electric system revenue bonds are secured by a pledge of, and a lien on, the revenues of the electric system after deducting "operating expenses,"
as defined in the bond resolutions, subject to prior liens of general obligation bonds of $196,346,833 and amounts due the United States of ~11,890,294. In all years to date electric revenues, after deducting "operating expenses" as defined in the bond resolutions, have been more than sufficient to meet all debt service requirements.
(b) General obligation bonds are a lien upon the real property included in the District and are additionally secured by a pledge of revenues from the operation of
/
the electric system. If the net electric revenues, as defined in the bond resolutions, are*not sufficien to meet the principal and interest payments, the bonds and interest are payable from a levy of taxes on the real property.
25
'The annual maturities of bonds and other long term debt outstanding (excluding commercial paper) as of April 30, 1982, due in each of the fiscal years ending April 30, 1983 through 1987 are $23,938,000; $25,514,000; $27,300,000;
$32,211,000 and ~30,448,000, respectively.
Interest and amortization of discount on the various issues outstanding during the year resulted in an effective rate of 6.76% for 1982 and 6.43X for 1981. This rate approximates 7.28K over the remaining terms of the bonds.
The debt service portion of segregated funds includes
$38,026,000 at April 30, 1982, and 433,504,000 at April 30, 1981, restricted for operating reserve requirements under bond resolutions.
Electric system revenue bonds totaling $265,113,500 principal amount are authorized, but unissued. Electric system refunding revenue bonds not to exceed
$390,000,000 principal amount are also authorized, but unissued. (See lYote 8).
- 6) Litigation:
~
~
noironmental:
Various pending litigation or administrative proceedings involving environmental matters could affect interests of the Project in present and proposed generating facilities. In general, these lawsuits seek to impose higher air quality standards for generating plants. If ultimately decided adversely to the interest of the Project, the outcome of the lawsuits could result in increased construction costs, increased future operating costs, and a possible loss in the operational reliabilityof certain generating plants. All of these effects would increase the costs to be passed on to customers through increased electric rates.
lYaoqjo Tax:
ln 1977 and 1978, the Navajo Tribe promulgated three tax resolutions affecting electric generating stations, in which the District has an interest, located on the Navajo Reservation. The District and other participants in the affected generating stations filed lawsuits challenging the resolutions in Federal District Courts for Arizona and New Mexico. As a result of action by the Tribe to honor its convenants not to tax the participants in the electric generating stations on the reservation, the Arizona lawsuit was dismissed as moot, as will be related claims in the New Mexico suit.
No taxes are currently being imposed on the District. The District continues to challenge in the New Mexico lawsuit the potential pass. through of taxes by on.reservation fuel suppliers to the District's off-reservation plant, Coronado Generating Station.
Other.
Principally as a result of certain water flooding in March and December 1978, and February 1980, various lawsuits have been filed against the Project alleging that the Project has a responsibility in regard to flood control and a liabilityin regard to flood damage.
The ultimate liability, ifany, is not determinable, but management expects that a significant portion of any liabilities which might result from flood damage claims will be covered by insurance.
(7) Revolving credit agreement/
commercial paper program:
The District has a revolving credit agreement (the "Agreement" ) with a group of twenty.one banks led by First interstate Bank of Arizona, NA. Gnder the terms of the 26 Agreement, the District may borrow up to $225,000,000 until August 15, 1983. If the Agreement is not renewed prior to August 15, 1982, the District may continue to borrow but must reduce its outstanding borrowings to not more than
~1 12,500,000 by August 15, 1983. Following August 15, 1983, the District may not make additional borrowings and must repay all outstanding borrowings by August 15, 1984.
Borrowings under the Agreement initiallybear interest at a rate equal to 60X of the lead bank's prime rate as established and announced from time to time. No compensating balances are required under the Agreement.
A commitment fee of 3/8 of 1% per annum is payable on the ~225,000,000 principal amount of the agreement.
'The District's Board has authorized the issuance of up to
~225,000,000 in short. term promissory notes (the "Notes" ).
The Notes are being sold in the tax exempt commercial paper market. The Notes will mature in no more than 270 days from the date of issuance and in no event after August 15, 1984. The Notes are issued in minimum denominations of $50,000 in bearer or registered form without coupons, and bear interest from their date at an annual interest rate not to be in excess of 15%.
The indebtedness of the District evidenced either by the Notes or borrowings under the Agreement is an unsecured obligation of the District payable from the general funds of the District lawfullyavailable therefor, subject in all respects to the prior lien of General Obligation Bonds, Revenue Bonds and other indebtedness of the District secured by revenues or assets of the District. No specific revenues or assets of the District are pledged to the payment of the Notes or borrowings under the Agreement and the Notes and such borrowings are not payable from taxes.
Proceeds from the sale of the Notes are used for construction expenditures and to finance the District's fuel inventories. As of April 30, 1982, the District had no borrowings outstanding under the Agreement. As of April 30, 1982, the District had $224,553,000 of the Notes outstanding at an average interest rate of 7.28%. Borrowings under both the Agreement and Notes are being accounted for by the District as long.term debt.
'The District's Board has limited the total amount of promissory notes which may be outstanding at any one time under the Agreement and in the tax.exempt commercial paper market to an aggregate of $225,000,000.
(8) Bond anticipation notes, 1982 series:
On March 17, 1982, the District issued ~165,000,000 principal amount of Salt River Project Bond Anticipation Notes, 1982 Series ("1982 Series Notes" ). The 1982 Series Notes mature March 15, 1983, carry an 8 1/4% coupon rate and were sold at par in a negotiated offering in $5,000 denominations in bearer form.
The 1982 Series Notes and the interest thereon are payable from and secured by a pledge of (i) a portion of the proceeds of Electric System Revenue Bonds sold by the District from its present authorization of $265,113,500 and (ii) a portion of the proceeds of the sale by the District of a 5.91% interest in the Palo Verde Nuclear Generating Station to the Southern Caiifornia Public Power Authority ("SCPPA").
In addition, the principal of and interest on the 1982 Series Notes are payable, to the extent necessary, from the general fund of the District. It is the expectation of the District that the principal of and interest on the 1982 Series Notes will be
~aid at maturity from the proceeds of the SCPPA sale. The l982 Series Notes are not secured by a lien on revenues of the District.
The 1982 Series Notes were issued to finance construction expenditures of the District. In addition, a portion of the proceeds of the 1982 Series Notes was used to pay financing costs in connection with issuance of the 1982 Series Notes.
(9) Irrigation and water operations:
Irrigation and water operations expenses, including depreciation, exceeded the assessments, delivery fees, and other revenues therefrom by approximately ~13,676,000 for 1982 and $4,870,000 for 1981. These amounts do not include expenditures for additions and improvements to irrigation plant and for repayment of long term debt.
Auditors'eport To the Board of Directors, Salt River Project Agricultural Improvement and Power District, and Board of Governors, Salt River Valley Water Gsers'ssociation:
We have examined the combined balance sheets of SALT RIVER PROJECT AGRICGLTGRALIMPROVEMENTAND POWER DISTRICT (a political subdivision of the State of Arizona) and its agent,,SALT RIVER VALLEYWATER GSERS'SSOCIATION, together referred to as the SALT RIVER PROJECT, as of April 30, 1982 and 1981, and the related combined statements of net revenues and sources of funds for additions to utilityplant for the years then ended.
Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the financial statements referred to above present fairly the financial position of the Salt River Project as of April 30, 1982 and 1981, and the results of its operations and sources of funds for additions to utilityplant for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.
Phoenix, Arizona, ARTHGRANDERSEN 6 CO.
June 14, 1982.
27
Board Members The 10 members of the Board of Governors of the Salt River Valley Water Gsers'ssociation are elected every two years by the shareholders (property owners) of the Association.
The Board of Directors of the Salt River Project Agricultural Improvement and" Power District consists of 14 members. One District Board member is elected from each of the 10 SRP geographical areas, and four members are elected at-large. District board members serve four-year terms.
Board members establish the policies for the management and conduct of Salt River Project's business affairs.
District 1 Rudolph Johnson District 2 Alex M. Conovaloff District 3 Bruce B. Brooks District 4 Gilbert R. Rogers District 5 John M. Williams Jr.
District 6 Thomas P. Hurley Distn'ct 7 William P. Schrader Distn'ct 8 Thomas M. Owens Jr.
District 9 W. Larkin Fitch District 10 Otto B. freely At-large Dr. Stanford F. Hartman William W. Arnett Fred J. Ash John L Burton Jr.
Council Members Three council members are elected by SRP shareholders to two year terms in each of the 10 districts of the Salt River Valley Water Gsers'ssociation.
'Three council members are elected to staggered four.year terms in each of the 10 divisions of the Salt River Project Agricultural Improvement and Power District.
The councils enact and amend bylaws relating to the management and conduct of SRPs business affairs.
District I Robert L Cook Howard W. Lydic Emil M. Rovey District 2 Marcel J. Boulais Conrad Gingg C. C. Pendergast Jr.
District 3 M. B. Brooks Jr.
John E Anderson Elvin E Fleming District 4 Wiley R. Baker Levi H. Reed
!vy Wilson Jr.
District 5 Roy W. Cheatham Edmund Havarro Carl E Weiler Distn'ct 6 James L Diller James R. Marshall Dean W. Lewis District 7 Lester Mowry Wayne A. Marietta George B. Willmoth Distnct 8 Dwayne E Dobson J. B. Heely Martin Kempton
'District 9 Robert W. Birchett W. Curtis Dana Olen Sharp District 10 Orland R. Hatch Robert E. Zimmerman L. Max Pace
QffiCerS Elected Olricers Karl F. Abel President John R. Lassen Vice President Principal Officers and 0 A. J. Pfister General Manager Robert F. Amos Deputy General Manager Paul G. Abler Director, Human Resources John D. Jacobs Director, Information Systems James L Swartz Director, Operations Services John R. NcNamara Associate General Manager, Power Trent O. Meacham Assistant General Manager, Power Construction 6 Maintenance John O. Rich Assistant General Manager, Power Operations Stephen M. Chalmers Director, Engineering Services John M. Evans Manager, Electric System R. D. Johnson Manager, Generation Reid W. Teeples Associate General Manager, Water Don I Weesner Assistant General Manager, Water R. W. Mason Director, River Studies ther Executives Stanley E. Hancock Assistant General Manager, Communications 6 Public Affairs Leroy Michael Jr.
Assistant General Manager, Planning 6 Resources William G. Beyer Director, Project Planning Don G. Parlett Assistant General Manager, Customer Services Carroll M. Perkins Assistant General Manager, Financial Services Treasurer D. Michael Rappoport Director, Government Affairs Richard H. Silverman Director, Law 6 Land Paul D. Rice Corporate Secretary Consultants Legal Advisers Jennings, Strouss 6 Salmon Auditors Arthur Andersen 6 Co.
Bond Counsel Nudge Rose Guthrie 6 Alexander Financial Consultant Smith Barney, Harris Upham 6 Co.,
Incorporated
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