ML17305A293
| ML17305A293 | |
| Person / Time | |
|---|---|
| Site: | Palo Verde  |
| Issue date: | 12/31/1988 |
| From: | Boulais M, Lassen J, Pfister A SALT RIVER PROJECT |
| To: | |
| Shared Package | |
| ML17305A289 | List: |
| References | |
| NUDOCS 8910190238 | |
| Download: ML17305A293 (30) | |
Text
THE ATTACHED FILES ARE OFFICIAL RE-CORDS OF THE RECORDS 8 REPORTS MANAGEMENTBRANCH. THEY HAVE BEEN CHARGED TO YOU FOR A LIMITED TIME PERIOD AND MUST BE RETURNED TO THE RECORDS 8 ARCHIVES SERVICES SECTION P1-122 WHITE FLINT. PLEASE DO NOT SEND DOCUMENTS CHARGED OUT THROUGH THE MAlL. REMOVAL OF ANY PAGE(S) FROM DOCUMENT FOR REPRO-DUCTION MUST BE REFERRED TO FILE PERSONNEL.
-NOTICE-F88-5 ggUAL POR7 asxol9o2 e a9iosi QGQOO.":i28 PDR ADGGK PDC "Y"
I is to be the low-cost supplier among our competitors of high-value energy and water services. 'C Salt River Project is named for the Salt River, 240,000-acre area and operates and maintains which supplies water to the Phoenix , the irrigation transmission and distribution metropolitan area. ,
system.'This system carries water to municipal, We are the nation's third-largest public power industrial, agricultural and residential users.
utility and Arizona's largest water supplier. The District is a public power utility and a The Project consists of two compatible politica) subdivision of Arizona. It provides organizations the Salt. River Valley Water electricity to approximately 500,000 residential, Users'ssociation and the Salt River Project commercial, industrial and agricultural power Agricultural Improvement and Power District. users in a 2,900-square-mile service area in The Association is a private Arizona parts of Maricopa, Gila and Pinal counties.
. corporation. It administers water rights of SRP's
IGHLIGHTS Total Operating REVENUES/EXPENSES Fiscal 1989 Fiscal 1988 Revenues ($ 000)
(gee Page 16)
Total operating revenues ($ 000) 1,063,306 959,346 Total operating expenses ($ 000) 832 316 790 972 ,063,306 59,346 Net operating revenues ($ 000) 230,990 168,3?4 Other income ($ 000). 4,571 39,265 652,139 Net financing costs ($ 000) 223,798 191 378 Net revenues ($ 000) . 11,763 16,261 POWER OPERATIONS (See Page I 7) 37+64 Energy customers at year end 518,889 505,618 Total kilowatt-hour sales (000) 17,789,940 16,335,115 1978 1983 1988 1989 Average annual kilowatt.hour use/residential customer 12,988 12,824 Average annual residential revenues/kilowatt-hour (cents) 8.03 7.65 Electric Dollar WATER OPERATIONS Calendar 1988 Calendar 198?
(gee Page l6) einvested i fuel and Assessed water accounts 182,226 Water runoff (acre-feet) . 1,136,727'82,110 1,120,034 Project Plan
$ .16 Purchased Power Water in storage, Dec. 31 $ .25 (acre. feet) . 1,598,989 1,624,272 Operations Water deliveries (acre. feet) . 951,693 997,324 3nd Payment of Maintenance Interest
$ .20 SELECTED OTHER DATA
'.24 Fiscal 1989 Fiscal 1988 (See Page I6) axes Gross plant investment ($ 000) . 5,560,160 5,335,784 $ .12 Long-term debt ($ 000) . 3,505,163 3,251,724 Taxes & tax equivalents ($ 000)..... 125,171 121,154 Electric-revenue contributions to support water operations ($ 000) .. 34,069 29,22? Repayment of Principal on SRP Bonds Employees at year end. 5,599 5,805 $ .03
'ased on U.S.G.S. provisional records and subject to adjustment.
It8vspgI ONTENT5 SALT RIVER PROJECT Message from Management PUBLISHER SRP Communications &
Public Affairs Department ower .3 P.O. Box 52025 Phoenix, Arizona 85072-2025 ater... .7 (602) 2364266 ommunit 11 EDITOR Angela Yearta DESIGN Jeryl Jones inance ... 14 TYPESETTING Michele Jones Statistical Review . ~ 16 COMPUTER GRAPHICS Nysa Sanfmo.Parnsh Combined Financial Statements 18 PHOTOGRAPHY James Eastwood, Suzanne Knapp, Chet Snellback, Notes to Combined Financial Statements 22 Ed Toliver and Angela Yearta On the cover This abstract of SRP's Officers . 26 new Information Systems Building in Tempe represents our efforts to provide Board Members and Council Members 27-28 toff.the-line customer service and to As a special service, SRP is making this Annual Report information available through the Arizona State meet future industry challenges in an Library for the Blind and Physically Handicapped, 1030 N. 32nd St., Phoenix, AZ 85008, (602) 255.5578. efficient manner.
0 UR ONDHOLDERS AND HAREHOLDERS While Salt River Project's accounting ledger will record moderate results for fiscal year 1988-89, it was, nonetheless, an extremely important year for the Project.
We passed the $ 1 billion mark in revenues from electric and water operations in fiscal 1988-89. Total operating revenues were $ 1.06 billion compared to $ 959.3 million in 1987-88. After operating, financing and other expenses, we realized total net revenues of
$ 11.8 million in fiscal 1988-89, compared to $ 16.3 million in 1987-88.
While cash flow remained particularly strong, net revenues were lower than last year',
partially due to the added expenses of a companywide reorganization.
A $ 32.7 million "unusual" expense was recorded against income in fiscal 198849 due to the reorganization a top to bottom review of SRP's organizational structure, staffing levels, practices and procedures which consumed much of the fiscal year and will be wrapped up in the next. We believe the reorganization is critically important for us to continue providing high-value power and water services to our customers and shareholders in the future.
By effecting improvements in organizational structure and work practices, and reflecting moderate growth compared to historical standards, the reorganization will eliminate 791 positions companywide, and will result in estimated cash flow savings of
$ 50 million each year.
Ultimately, several hundred employees will be affected, but we'e going to great lengths to ensure they are treated fairly. The bulk of the $ 32.7 million expense was for John R. Lassen President enhanced severance packages and professional career continuation services offered to displaced employees. Some relatively minor, subsequent expenses of the reorganization may occur in the next fiscal year, though they will be more than offset by the savings of the program.
We see the reorganization as an opportunity to grow stronger in the increasingly competitive utility industry. Utilities are merging, and independent power producers and cogeneration facilities are gaining a stronger foothold in the energy business generally.
We recognize the importance of being prepared for the challenges of this changing environment.
Such changes are the reason that "complacency" is not in our vocabulary. Employing a theme of "Maximum Effectiveness," we are reprioritizing our work duties, eliminating what we feel are unnecessary functions, modifying our management structure and systems, and redirecting our services to better match customer and shareholder needs.
We are continuing to regionalize our offices to locate service employees closer to the customers they serve. We are emphasizing incentive programs which shift the SRP energy load to off-peak hours and save our customers money on their electric bills.
Our staff monitors the market to obtain competitive coal prices. Recently, we ended a contract with the Kaiser Coal Co., which will save our customers $ 200 million during the Marcel J. Boulafs Vice President next 16 years.
SRP also conforms to the Arizona Groundwater Management Act to reduce water consumption. We continue to support conservation efforts and to develop methods of supplementing our water supplies.
Streamlining our activities will help hold down costs, which will enable us to delay the need for an electric rate increase. We haven't had a rate increase since October 1987 when electric rates went up an average of 5.6 percent.
To the extent that we hold the line on the costs of electricity and efficiently manage our water resources, we can benefit the central Arizona economy. It's no secret that our state's economy is in a down cycle, and it behooves us to do what we can to help keep Arizona an economically attractive place to do business.
Our goal is to devote appropriate resources, time and money to economic development for a more prosperous future.
We are working to build on our positive standing in the public power industry.
Currently, the American Public Power Association (APPA) ranks SRP third in terms of electric customers. Last fiscal year, we served 518,889 customers, an increase of 13,271 customers from 198748.
A.J. Pflster General Manager APPA also ranks SRP third in kilowatt-hours (kWh) sold. During fiscal 1988-89, we sold almost 17.8 billion kWh, up from 16.3 billion kWh the previous year.
We delivered 951,693 acre-feet (af) of water to the irrigators and eight Valley cities in our 240,000-acre area in 1988, compared to 997,324 af in 1987.
The next decade holds exciting prospects for Salt River Project. Through our internal restructuring, we feel ready to tackle the challenges of the changing utility industry in the 1990s.
,1 OW-ER Competition in the energy business is driving Salt River Project's future. We have been gearing up for the new challenges through enhanced planning, increased research and development efforts, and a companywide reorganization. At the same Une biforking Foreman Robert Booth Is time, we'e keeping our customers'eeds and demands foremost in our minds. supervisor of a fourmember crew whkh constructs and maintains l2 kilovolt tkVJ power lines and Installs transformers. He SRP Tackles Future Challenges Today Is one of BSO Power Construction and Maintenance employees who ensurt.
Throughout the 1980s, we proceeded with construction of a third unit at that SRP customers have electricity when Coronado Generating Station in St. Johns, Ariz., and participated in construction of they need it.
the Palo Verde Nuclear Generating Station west of Phoenix. Our goal was to ensure an adequate and reliable energy supply for our rapidly growing customer population.
Then we began experiencing a slowdown in customer growth. For example, in fiscal year 1988-89, we added 13,271 electric customers for a system total of 518,889 customers. This was 5,000 fewer than the 18,297 customers added in fiscal year 198748 and about 17,000 fewer than the 30,000 customers added each of the previous four years.
Not only did customer growth slow, but the increasingly dynamic utility industry shifted to a buyer's market. An abundance of excess generation became available at attractive prices. So in February 1988, we deferred the in-service date of the Coronado Generating Station Unit III until 2004. The most recent Loads and Resources Study indicates that Coronado Unit III will be completed in 2005.
We signed power purchase contracts for 50 megawatts (MW) each from Tucson Electric Power Co. (TEP) and Arizona Electric Power Cooperative (AEPCO) beginning in 1990. The power purchases will increase to 100 MW from each utility in 1991.
The contracts are expected to save SRP $ 185 million between now and 2011, and defer about $ 420 million in construction costs.
Buying power from other utilities also means SRP will borrow less for construction during the next five years, and we will be able to maintain a favorable financial position.
Even with the slowdown in new customer accounts, we expect to add 200,000 more electric customers by 2000. That's an average of 16,600 customers per year. PJ yw~) r~
~ ~
To accommodate growth, last year we built two new distribution substations, added capacity at 10 existing substations and installed 630 miles of new distribution lines.
Coal is Still Top Energy Source Coal provided 61.7 percent of our electric generation last year. The majority of our coal-generated power comes from the Navajo Generating Station in Page, Ariz., and the Coronado Generating Station. We also participate in four coal-fired plants in Colorado, New Mexico and Nevada.
At Coronado Generating Station, we began a priority coal burn in July 1988. This inventory stabilization program was designed to limit the coal stockpile growth by burning, at a minimum, the coal delivered each year. The stockpile had grown substantially during the past three years.
By burning at least the annual deliveries of coal at Coronado, SRP will save $ 62 million in the next 15 years. Money will be saved on the expenses necessary to maintain a large stockpile including:
> interest on money used to buy the coal
> taxes on coal in the stockpile
v physical loss of the coal from the pile a small portion blows away and the quality diminishes as it is exposed to the environment
'tr fuel handling costs.
Kaiser Coal Contract Ended On Sept. 29, 1988, we terminated our contract with the Kaiser Coal Co. through which coal was supplied to the Coronado Generating Station. Ending the contract A bulldozer moves coal at the Coronado Generating Station In St. Johns, Ariz. will save our customers approximately $ 200 million during the next 16 years. The The plant burns up to 8,000 tons of coal per day. Currently, we are limiting contract, negotiated in 1978, provided for minimum annual purchases of 475,000 the coal sto<<kpiie growth to save tons of coal through 2004.
approximately S4 million each year until 2004. Under the termination agreement, we continued to purchase coal from Kaiser until the end of calendar year 1988. Our o
payments to Kaiser totaled $ 59 million.
c Fence Lake is Possible Future Coal Source an M' To secure possible future coal supplies for the Coronado Generating Station, we are studying coal deposits in the Fence Lake, N.M., area. Fence Lake is located about 40 miles east of o
e Coronado and contains approximately 117 million tons of i ~ surface mineable coal.
(r ~ SRP already has state and private leases for 11,000 acres in the Fence Lake area.
In September 1988, we filed an application for a federal coal lease in the area adjacent to the state leases. The application h
will undergo review and public comment before it can be approved.
In October, as a part of the review process, we selected Dames and Moore to conduct an environmental impact study. This study will result SRP has developed a new Corporate Munklpal Aesthetics Policy which in an Environmental Impact Statement (EIS). This is another step in SRP's possible enables cities to actively partldpate In acquisition of federal coal leases on an additional 6,840 acres.
decisions about the location and appearance of new electric facilities. The We have successfully burned 100,000 tons of Fence Lake coal at Coronado policy specifies that we will spend up to Generating Station to test the coal for heat, sulfur content and handling I percent of our gross revenues each year to respond to municipal requests in characteristics.
excess of our normal standards, based upon a selealon process In concert with the cities. We also will, based upon our Palo Verde Sets Records, Experiences Outages flnandal ability, match city funds made available for this purpose. We own 17.49 percent of Palo Verde Nuclear Generating Station, which is operated by Arizona Public Service Co. (APS). Last year nuclear power provided 19.9 percent of our electric supply.
Palo Verde Unit I began commercial operation on Jan. 30, 1986, and Unit II, on Fuel Sources Sept. 20, 1986. Unit III, the final of the three 1,270 MW electric generating units, 1988-89 began operating on Feb. I, 1988.
Fiscal Year Unit III had a spectacular year in 1988, setting an industry record for the longest continuous run the greatest number of days on line by an American-manufactured nuclear plant in the world during its first year of operation. Unit III Coal exceeded the 181.54ay record by operating 214 consecutive days until Aug. I, 61.7o/o 1988.
Oil 0.3/o In late March, the Arizona Corporation Commission released the results of an Ernst and Whinney prudency audit of Palo Verde construction costs. The Misc.
Nuclear 19.9'/o r purchases report concluded that costs due to poor management totaled $ 60 million, while benefits due to exceptional management totaled almost $ 293 million, or a net Gas 8.2'e Hydro benefit of about $ 233 million.
receive more than 600,000 kilowatts (kW) of power when all three Palo Verde 8.1'/o units are operating. In March 1989, however, all three Palo Verde units went out of service.
~
(
Units I and III are in refueling outages. Unit II has been out of service, pending completion of several work tasks including modification and testing of atmospheric dump valves, which are used to vent excess steam.
The units will be out of service until refueling has been completed and Nuclear Regulatory Commission (NRC) approval for restart has been obtained. Although the NRC recently has been critical of Palo Verde, SRP is optimistic that APS is taking the steps necessary to improve operations at Palo Verde and to regain the confidence of the NRC. Tradeshelper Karen 8oyfe rappels off the coal control building at Coronado We estimate the need for purchases of up to 300,000 kW of power from other Generating Station. An emergency medical technician (EMr], she teaches utilities to ensure adequate power reserves while Palo Verde is off line. SRP employees how to get into hard-to-When a generating unit is out of service, we replace the lost power with the reach areas during possible emergency situations. EMr training occurs each lowest cost alternate resource available. This may be from either our own system or month at the coal fired plant. Such other utilities in the Southwest. efforts help us meet our No. 1 corporate obf ective of safety first.
Our older Phoenix generating stations are regularly used for system peak load operation in order to supply the system requirements in the most economical combination available.
We arranged short-term contracts with several utilities to provide substitute capacity for the Palo Verde units while they were out of service during the summer of 1989. Our participation in the Western Systems Power Pool made it easier to arrange the contracts. 8/'
SRP's goal is to have a reserve generating capacity of 20 percent a standard used by many utilities.
Corporate Aesthetics Policy Beautifies Cities With the urbanization of our service area, Valley cities are making increased demands for improved appearances around electric facilities. Cities also are offering input about the location of our new facilities. Ojg+
In response, our Board of Directors in December 1988, approved a new Corporate Municipal Aesthetics Policy.
This highly participative policy will provide approximately $ 10 million annually to be shared by the cities for aesthetics.
Plant Mechanics Alfonso Mannle and Ed Reed work on a Combined Reheat Valve Photovoltaics Research Under Way ICRV] at the Navafo Generating Station In Page, Ariz. High-pressure steam flows SRP is participating in a research program which could turn photovoltaics through the valve into the turbine technology into a commercial state by the mid-1990s. The generator which produces electricity.
Photovoltaics for Utility Scale Applications project is designed to compare and evaluate photovoltaic systems in a utility setting.
We are working on this endeavor with the Department of Energy, the Electric Power Research Institute (EPRI), several other research organizations and a number of utilities. SRP is a member of the Technical Review Committee and will provide $ 100,000 in funding during the next four years. s~ 4I r SRP views the photovoltaic research as an important way to increase our understanding of new technology and its value to our customers.
In other areas of research, we developed a task force to investigate superconductivity. We also set goals to develop a longer range, strategic research and development (R&D) program and to continue participation in wide-ranging R&D activities through EPRI.
Transmission Access Enhances Competitive Edge In recent years, bulk supply power markets have become more vital. In addition
I to the traditional function of providing a short-term balance in power supply among a few utilities, today's bulk power supply markets can provide a less expensive, long-term supply for utilities. If we are to enhance our competitive positions in bulk power markets, we must expand our transmission access.
We are continuing to participate in the Mead-Phoenix Project, which initially was envisioned as a direct current (DC) line, proposed to extend from west Phoenix to near Boulder City, Nev.
SRP received the American Public Power We completed a feasibility study, and the Western Area Power Administration Association's Energy Innovator of the Year Award for the development of prepared a draft environmental impact study. We identified a transmission line thermal mass block. The block contains a polyurethane foam whkh helps to corridor and obtained a Certificate of Environmental Compatibility from the state of Insulate homes. Arizona. The participating utilities currently are working toward the initial construction of the project as an alternating current (AC) line, convertible to DC in the future. A decision to build the line could be reached in the early 1990s.
We also are considering participation in Western Area upgrades of the Colorado River Storage Project transmission system, which is the transmission system connecting hydroelectric dams on the lower Colorado River to the bulk power grid.
Finally, we are considering contracts for use of other utility transmission systems from the Four Corners region to our load center.
Our objective is to gain additional access to regional markets, including the ability to increase bulk power transfers with the Pacific Northwest.
East Valley Service Center Opens Service to our customers is the driving force behind the East Valley Service Center. We completed the center in the summer of 1988 as part of an ongoing plan to locate SRP's service employees closer to the customers they support.
hhxhOT thhueaeoh The center is a 64-acre site with four major buildings, totaling more than 178,000 square feet of floor space.
At the center, customers can turn on or off electric service, make billing inquiries, pay electric and irrigation bills, and establish new service.
More than 300 employees work at the service center. They are responsible for designing, building, maintaining and repairing SRP's electric distribution systems for the entire East Valley, including SRP's system of hydroelectric facilities extending up SRP's Electric Service the Salt River to Theodore Roosevelt Dam.
Area Similar service centers are in Fountain Hills, Scottsdale, Tempe and the West Valley.
Programs Save Customers Money We strive for a mutually beneficial t sdafc Apache let,
~ (,lubl relationship between our
~ customers'lectricity
'tiltbcrl usage patterns and our generating
~ Sup et rut
~ X nasstaff+
OQ hdtet florence kt. capability. Several SRP incentive programs Htydr h help shift electricity use to off-peak hours and help residential, commercial and Phoenix ~~ industrial customers save money.
Q Eleark Servke area served exetusNefy by salt River Proiea.
g Salt River Pro/crt provides full power requtremehts of Load shifting also helps reduce the need Arftona Publk Servke for resale. to build expensive, new generating stations.
Q salt Rivet ptoJttt provides full g fkeuk servke areas Some of these programs are Electric power requtremenu of fufnxe hot served by Sak Rivet PUblk scrvkc fot Ic5alc. Profert pttaca. Savings Time, the Energy Efficient Lighting makes dlrctt 5aks to Customers for all mrhrhg toads. Program and the Thermal Energy Storage Program.
The Salt River Project agricultural Improvement and Power District provides electrldty to power users In a 2,900.squar~ile service area in parts of Markopa, Gila and Pinal counties.
ATER Water distribution within the Salt River Project water service territory has changed during the past 20 years. Back then, we supplied 70 percent of our water to agricultural accounts and 30 percent to urban users. Today, those numbers have Staff Chemist David McKlnney tests flip-flopped. water samples in the SRP Water Quality Laboratory. He performs three to four Water demands, however, have not declined: High density urban housing, plus tests on the samples: each covers up to 30 organic compounds. Six to fo other business and industry demands have caused water demands to remain comparable tests each cover up to 20 inorganic compounds. Last year the lab received to those associated with agriculture. We recognize the need for innovation to ensure 3,860 water samples for analysis. Testing an adequate water supply to meet future demand. helps ensure a quality water supply.
Valley Residents Enjoy Wet Year in 1988 Thanks to Salt River Project's reservoir system and careful planning, Valley residents enjoyed an ample water supply last year while much of the nation was reeling from drought.
Our water originates from a 13,000-square-mile watershed (a natural drainage area) that drains into the Salt and Verde rivers.
Water is stored behind six dams and released as needed through 133 miles of main canals. Another 1,132 miles of smaller canals called laterals branch off the main canals to deliver water to users.
The Salt River Valley Water Users'ssociation operates our water system. Eight cities receive most of the water, treat it and deliver it to Valley residents. The Association also provides irrigation water to farmers and urban irrigators.
Runoff from snowmelt and rain into Salt River Project reservoirs totaled 1,136,727 acre-feet (af) during calendar year 1988. (An acre-foot is enough water to cover one acre of land to a depth of one foot, or approximately 325,850 gallons.)
Last year, runoff was 14 percent above normal and 16,693 af more than in 1987.
As a result, SRP's six reservoirs contained 1,598,989 af on Dec. 31, 1988, which was 79 percent of capacity but 25 percent above normal. Total Project water supplied to the Valley in 1988 was 1,053,717 af. Of this amount, 1,001,247 af was surface water and 52,470 af was groundwater.
After losses to evaporation, seepage and other factors, we delivered 951,693 af to the Valley, compared to 997,324 af in 198?. Of this total, 428,146 af were used for non-agricultural purposes such as municipal and industrial contracts, parks, churches and residential irrigation. Agriculture accounts received 311,338 af; decreed deliveries including Indian reservations totaled 54,537 af; and off-Project and non-member deliveries totaled 157,673 af.
Following the trend toward urbanization, 2,070 acres of land were converted from agricultural use to urban use in 1988. This amount, however, was less than the 3,501 acres converted in 1987.
SRP Plans for Future Water Supplies SRP continually looks to the future of Arizona's water supplies. Staff hydrologists, for example, reviewed and suggested changes to the Second Management Plan of the Arizona Groundwater Management Act. The act is designed to reduce groundwater consumption throughout the state. The second plan will begin in 1990 and run through 2000.
We are participating in site construction plans for the Granite Reef Underground Storage and Recovery Project. Underground storage is a method of water management.
The project entails injecting between 30,000 and 70,000 af of water into the riverbed three miles below Granite Reef Diversion Dam. If the pilot program is successful, SRP and others may recharge up to 200,000 af of water at Granite Reef ln January l989, we put f,788 sterile, within the next two or three years.
trlplold white amur fish Into portions of Other participants are the Salt River Pima-Maricopa Indian Community and the the Tempe and New Crosscut canals.
The fish are part of a pilot program to Arizona Municipal Water Users'ssociation (AMWUA).
convof aquatic weeds without using chemkals. The fish can eat twke their Staff also developed a groundwater model for water resource management weight ln weeds each day. The Arizona Legislature last year approved the use of planning at the Coronado Generating Station and worked with a statewide group of sterile white amur fish for weed control. representatives to draft legislation concerning in-state water transfers.
Weed control saves water and helps keep it clean. During 1988, SRP coordinated research to determine improvements for landscape flood irrigation practices. Employees studied 44 subdivisions and 16 other urban irrigation accounts in office records and field surveys. Employees are analyzing data to determine whether customers are using water efficiently. Findings will be used to develop policy aimed at improved water conservation and customer service.
SRP Supports Water Conservation In addition to recharge activities and conforming to legislative requirements, SRP supports community water conservation programs. One project is a demonstration garden at Mesa Community College. Completed in April 1989, the garden teaches students and the public about low water-use plants. The garden also will provide SRP with data about water usage of plants and turf.
Working with the city of Phoenix, SRP helped fund the preliminary design of a demonstration house to be built at the Desert Botanical Garden. The house will be used for water conservation experiments and load management testing. SRP and the city of Phoenix each donated $ 16,000 to University of Arizona architecture students who designed the house.
Charlie Ester and Cedl Pendergast are Cooperation Helps Government Organizations part of a fi~ember hydrology staff whl<<h monitors watershed conditions to SRP cooperates with local cities and state organizations to maintain the water hetter manage the Valley's water supply.
Last year we added eight new system. For example, in 1988 SRP completed design of the $ 28 million Tempe Canal measurement sites to enhance our Relocation Project. The project will make space for construction of the Price Road precipitation and soil moisture monitoring. Hydrofogy staff evaluate Freeway being built by the Arizona Department of Transportation.
Impacts to watershed yield through water planning studies of drought The project consists of two and a half miles of twin, 10-foot diameter, concrete frequency, forest fire polky and water yield patterns. pipelines to replace the existing Tempe Canal from the north side of the Superstition Freeway to the head of the Western Canal. Staff will build several major facilities to assure reliable deliveries to SRP water users.
SRP has coordinated an intergovernmental agreement for joint participation in the construction, operation and maintenance of the Central Arizona Project/Salt River Project interconnection. The interconnection connects the two water delivery systems at the Granite Reef Diversion Dam.
Water Quality: An Important Objective SRP works to ensure that Valley cities and irrigators receive both the quantity and quality of water they require.
t~ ~~ ~ I ~ ~ ~ ~ ~ ~ ~ I
~ ~ I t
~
~
I ~
~ ~ ~ ~ ~
t I I
~
~ ~
~
~ ~
I
~
~ I ~ I ~
I ~
I ~ ~
I ~ I t . ~ ~ ~ ~
t I
~ ~ ~ ~ ~
~ I ~ ~ ~ ~ ~ ~
~ ~ I I ' ' ~ ~
' ' I
~ ~ ~ t ~ . ~
~ I ~ ~ t ~
' ~ I' ~
~ ~
~
~ ~
~ ~ I ~ ~ ~ ~ I ~ ~ ~ ~,,
t
~
~
~ ~ ~
~ ~ I ~ t ~ I I ' I ~ I ~
~
~ ~ ~ t ~
~ ~ ~ ~ ~ I ' ~ I t ~ ~ I ~
~ ~ ~
~ ~
I ~ I ~ I ~ I ~ ~ I ~ ~ ~ ~
I t ~ ~ ~ ~ I ~ ~ ~ I ~ I ~ ~ I
~ ~
I I ~ ~ ~
I t ! e t t ~ ~
~ ~ ~ I I ~
~
~
~ ~
~ ~
- ~ -4 1
~ ~ ~ I ' ~ ~ II
~ ~ I t tlI ~ ~ t
~ ~
~ ~ ~ ~ I It t ~ ~ ~
~ ~
~ ~
~ ~
II . I
~ ~ ~ ~
~ ~ I ~ II I I ~ ~ . ~ I ~ ~ ~ I t ~ ~ I 1
~ ~
~ ~ II I ~
I t ~ ' ~ ~ ~ ~ ~
~ ~ ~ ~
l.
t ~ I ~
t~ ~ ~ I I ~ ~ ~
I ~ ~ ~ t ~ I
~ I ~ ~ I ~ ~ I
~ I ~ I I ~ ~ I ~ I t I ~
I ~
' ~ I ~
' I ' ~ ~ I ~
~ ~ ~ ~
~ ~
~ ~
~ ~ I I ~ t I~ ~ ~ ~ ~ ~ ~ I ~ ~ ~ ~ ~ ~ ~ . ~
I ' ~ ~ ~ I ~ ' ' ~ ~ I ~ ~
' ~ ~
I
~
~ ~ ~ t I~ ~
~ ~ ~
' I ~ . ~ I ' III ~ ~ I ~ ~
I ~ II ~ ~ t ~ t ~ ~ ~ ~ ~ ~ ~
appearance and purpose of Roosevelt Dam are in accordance with Plan 6, the preferred choice of nine flood control and regulatory storage options developed by the Central Arizona Water Control Study.
Modifications to the Verde River dams may include new spillways to prevent dam failure in a "probable maximum flood" and dam stability improvements to prevent dam failure in a "maximum credible earthquake." Various alternatives are being Canal lining is an important method of studied. Work would occur in the 1990s.
water conservadon. SRP uses cement to line canals and reduce water loss due to seepage. last year we lined 5.3 mlles of Employees Share Knowledge Internationally canals and piped 7.9 mlles of laterals.
At SRP, we welcome visitors from all over the world. In addition to offering tours and discussing current water operations, we have hosted 400 forei g n technical P ersonnel in seven on-th e job training programs and eight seminars. Four engineers and two university students from Egypt 570 participated in a technology transfer/share program at I' SRP under the Professional Employee Exchange n
r Program (PEEP). PEEP has been extended through 1991.
(
7 Modifications are under way at Theodore Roosevelt Dam. Work will include a foundation drainage tunnel, SRP'S Irrigated Area modified outlet works, modified spllhvays and a pfunge pool. The dam's height will be fnueased by about 77 feet. ModNcadons are scheduled to be finished by July l994. A new bridge ('.0l la lplaured below) also Is being construaed for better traffic flow.
Glend,tl(
(0 tsdale I'ho('nix Flagstaff Mesa
,.Phoenix (>ilb(rt
~ .'
Clhllldlet
~ Tucson The Salt River Valley Water Users'ssociation administers water rights of SRP's 240,000 acre area.
10
OMMUMTY Maintaining growth and quality of life in Arizona's communities is important to Salt River Project. We strive to make better places of the towns where our customers and employees live and work. Our efforts often begin with monetary gifts and are Customer Service Representative Lupe personalized through the volunteer efforts of our employees. Hidalgo emphasizes the Importance of providing excellent servke to the enure community. A two-year SRP employee, Contributions Benefit Communities she received a monthly employee recognltlon award for her efforts. Last As a political subdivison of the state of Arizona, SRP makes contributions in-lieu year, Customer Servkes answered f.250,000 phone calls.
of property tax payments each year to benefit the communities where its electric facilities are located. Recipients are school districts, cities, counties and the state.
Contributions are made in accordance with legislation passed by the Arizona Legislature in 1963.
Last fiscal year, SRP's in-lieu of tax payments to the nine Arizona counties where the Project has facilities totaled $ 50 million. Nearly half of these monies will go directly to school and community college districts.
In effect, SRP is the state's third largest property taxpayer. Based on the value of SRP's electric facilities in each county, property tax payments are computed with the same formula used for investor-owned utilities.
SRP Keeps Communities Clean, Safe and Active It was a corny idea, but somebody finally invented a better litterbag. As an environmentally concerned company, SRP had been involved in co'mmunity cleanups for years. Through the cleanups and our own operations, we were adding 500,000 litterbags to Arizona landfills yearly.
Because ordinary plastic bags take between 100 and 400 years to degrade, we decided to take cleanups one step further when a new technology became available.
We contracted with a company in Illinois that had a cornstarch formula which, when mixed with plastic, would make a trash bag capable of decomposing in 18 months.
SRP bought more than a half million of the degradable bags to give to customers and other Arizonans throughout the year to help keep the state clean.
For the second year, SRP participated in the Valley's voluntary "Don't Drive One In Five" campaign. We placed first among large companies for having the greatest number of employees participating during a one-week "Business Challenge" contest.
Nearly 17 percent of our employees found an alternate means of transportation.
Sponsored by the Regional Public Transportation Authority, the Clean Air Campaign was held during the high pollution season in the Valley, from October through January. The campaign encouraged motorists to leave their cars at home and use some other form of transportation, such as buses or car-pooling.
SRP not only emphasizes safety companywide, but also communitywide.
In an effort to make Phoenix and other communities safer places to work and live, SRP teamed up with three other utilities to form Arizona Community Watch.
Through the use of two-way radios or cellular telephones in their company vehicles, employees report crimes, suspicious activities, fires and other hazards in Valley area communities. This joint effort is designed to help police and fire agencies respond quicker and more frequently to accidents or crimes.
Arizonans Learn Through SRP Education Programs SRP also devotes time and energy to education.
For 25 years, SRP's Educational Services Division has been conducting programs
about water and electricity for teachers and students.
Last year more than 83,000 students and teachers learned from the educational services staff. Topics were: water safety, electric safety, electricity generation, and water and energy conservation.
Students illustrated their knowledge by entering 1,300 posters in SRP's annual water and electric safety poster contest.
Approximately 2,000 people from all over the world took part in 117 tours of SRP SRP's cornstarch litterbags made their canals, dams, power plants and other Project facilities.
debut at the annual Page Attacks Trash Cleanup in Page, Ariz. More than 5,000 Last year, SRP's Speakers Bureau employee volunteers talked to nearly 160,000 people used about 43,000 of the 40pound capacity litterbags to collect members of community groups.
approximately 200 tons of trash. SRP and the degradable litterbag won first place In the national "Take Pride in History Moves Forward America" program. SRP's entry was voted Na I of 457 entries from 44 Last year we took 22,000 people back in time on SRP's Time Machine. This states, The bag was a national entry museum on wheels enables us to share our story across the state. The machine after earning a first-place award ln the "Take Pride in Arizona" competition showcases SRP's history from the Hohokam people to modern day.
sponsored by the Governor' Commission on Arizona Environment.
The SRP History Center featured a special display of artifacts, consisting of Hohokam tools, ceramics and ornaments dating as far back as 450 A.D. The artifacts were uncovered from an ancient Hohokam village at an electrical substation site. SRP's staff archaeologist in January 1988 led the full-scale excavation.
Six thousand people toured the History Center last year.
SRP Contributes to Good Causes SRP contributes to many charities, educational institutes and civic groups throughout the state.
In support of higher education, we contributed
$ 50,000 to the Maricopa Community Colleges Foundation to be used for scholarships during five years.
SRP also supports the arts and cultural community.
Last year, the largest single grant went to the Phoenix Symphony. And, we have just completed a five-year pledge to the new Herberger Theater.
In the area of health and human services, SRP SRP's number one corporate obJectfve is contributed $ 30,000 to the renovation of Tempe St. Luke's Hospital. We also safety. As a result of this dedication to companywlde safety, in f988 we saw contributed to a special trust fund established with the Arizona Community no sfgnificant increase in lost-time or Foundation. The foundation helps impoverished, ill or abused children in Arizona.
preventable accidents. Crur record earned us second place In the American The SRP Board also approved a $ 10,000 contribution to the Crisis Nursery for a Pubfk Power Association's (APPA) annual safety contest. The APPA capital campaign.
represents more than l,750 utilities. We recognized the volunteer efforts of Susan Marie Lord, a freshman at Saguaro High School in Scottsdale. She received the Young Adult Volunteer Award. Susan, 15, Historians at SRP's Silva House museum offered an ans and crafts program to has volunteered for two years with the City of Scottsdale Recreation Division's school children. Students made turnaf-the<entury toys and Christmas Special Needs Program. This program is designed for developmentally disabled decorations. They also toured the home, children, ages 6 to 22, who are enrolled in special education classes.
which was built ln l900. The museum features early electric appliances and SRP also supports civic efforts such as the Futures Forum and the Arizona Town displays in homey settings. Last year Hall. The Futures Forum gathers Phoenix citizens to discuss the future of their city.
24.000 people took tours of the Silva House. The Arizona Town Hall was established in 1962. Approximately 125 prominent Arizona citizens meet twice a year to discuss a topic of major concern to Arizona's future.
We provided seed money for the International Desert Cities Conference to be held 12
4, in Phoenix in 1991. The conference is designed to ensure the survival of desert communities into the 21st century.
For the past seven years, SRP has supported Project S.H.A.R.E. (Service to Help Arizonans with Relief on Energy). This cooperative effort of The Salvation Army, Salt River Project and Arizona Public Service Co. helps needy citizens pay their energy bills.
Last fiscal year, customers of SRP contributed $ 147,251 to Project S.H.A.R.E.
SRP employees also recognized the importance of being active and charitable SRPs commitment to safety was exemplified this year when Salt River citizens. Pete's Water Safety Club inducted its 500,000th member. Nine-yearold Through payroll deductions to the Employees Booster Associations, Project Anthony Chavez, a thlrdgrader at M.C.
employees contributed $ 287,396 to 27 state and local organizations in Arizona last Cash School, received a plaque. The club's purpose Is to educate children year. about water safety. Children learn from presentations on water rescue At Coronado Generating Station, employees raised $ 1,700 for the St. Johns Senior procedures, safe swimming tips, and the Citizens through a 10,000-meter fun run. The event drew 700 participants. dangers of swimming In canals or strange places.
SRP employees last year served their communities through 118 business and service clubs and non-profit organizations. Employees were members of 381 trade, technical and non-profit organizations.
In an effort to beautify the community in which they work, employees of the West Valley Service Center last November picked up 150 tons of trash during the Tolleson Cleanup.
Outstanding Students Recognized Personal achievement and academic success are two areas which SRP actively promotes.
Each year we sponsor several scholarships to deserving students in Arizona communities. For example, the Coronado Generating Station engineering scholarship pays for all college expenses at the recipient's in-state university. The scholarship also includes an option for paid summer employment at the generating station.
Chosen by their principals as the top graduating seniors in their class, 62 high school seniors were honored at the sixth annual "Spotlight On Excellence" recognition dinner. The students were chosen from communities in which SRP owns or operates facilities. Last August SRP gave a cool welcome to the Valley's new professional football Younger students learn through SRP's annual Energy Fair. Winners receive U.S. team, the Phoenix Cardinals. It was a Savings Bonds. This year, students from 12 schools entered more than 100 projects. fans. for.fans proJect. We disuibuted I I0,000 colorful. hand+eld fans to Students interested in careers in science and engineering partake in the SRP- spectators at the first two games.
Audience members stayed cool while sponsored Explorer Post 170. Twice monthly, students hear guest speakers and take waving the fans which touted, "I'm a career-related field trips. Cardinal Fan." In line with an SRP adverdslng campaign, the back of the Last year, Explorer Post 170 earned two post achievement awards and two fan had a message supporting the individual merit awards for growth, leadership, contributions to the community and Arizona Heat Pump Council. The coundl has 60 heat pump contractors and outstanding club guidelines. dealers In the Valley.
There Really is a Better Way Making sure electricity and water are good values is a Project goal. In view of this goal, SRP strives to eliminate extra expenses when possible.
The Better Way Program is one such cost-saver. Since its inception in 1986, the program has saved us more than $ 2 million. Through employees'uggestions, we refine operations within the organization. By reducing operating costs, employees help hold down rates for SRP customers.
Employees receive monetary awards for their ideas.
INANCE SRP Revenues Pass Billion Dollar Mark in 1988-89 For the first time, SRP passed the billion dollar mark in fiscal year 1988-89, with Electric Customers combined operating revenues of $ 1.06 billion. That compares to $ 959 million in 198748.
518,889 After subtracting expenses, net revenues were $ 11.8 million, compared to $ 16.3 million 505,618 last year.
359.561 While net revenues declined, funds available for corporate purposes remained strong, climbing to $ 132.2 million, an increase of $ 19.2 million from the prior year.
288,902 An increase of 13,271 electric customers and above-average, hot weather during the peak summer months resulted in our electric revenues increasing by $ 102.9 million. This increase, however, was offset by the booking of $ 32.? million for a major corporate reorganization program and an increase in operating expenses and financing costs.
Reorganizing for a Strong Future I 978 1983 1988 1989 SRP's reorganization program eliminated 791 positions, 200 of which were unfilled 0 Relldentlal Q Commercial 8 Q Other slots. As a result, approximately 600 employees were eligible for an enhanced severance Industrial package. Management anticipates that cost reductions associated with the restructuring will save up to $ 50 million per year.
We restructured the organization to help retain a competitive edge in the utility industry. The program grew out of a corporate objective to improve management Water Delivered practices and processes to increase organizational efficiency.
Wlthln ProJect Boundaries The reorganization and a five-year financial plan are part of our strategic direction.
Agricultural vs. Urban Both will help us compete in the future.
The financial plan was designed to focus the Board's and management's attention on long-range operations. It has three principal targets:
3 Ps v Rate increases which, when combined with adjustments to the fuel escalator, do i asst not exceed the compound rate of inflation over time.
v A debt service coverage ratio of not less than 1.80. Our current ratio is 1.92.
v A debt ratio of 75 percent or less. We currently are at 71 percent. This ratio helps 1978 1983 1988 1989 maintain an AA bond rating from Standard 8t Poors and Aa rating from Moody's Investor Service.
13 Agricultural Urban 12 Why We Sell Bonds As Congress looks for ways to balance the budget this year, one area it is examining Total Electric Sales is the use of taxmempt financing by municipalities. A Supreme Court ruling in April 1988 gave Congress the green light to tax interest on state and local bonds.
SRP issues tax~empt electric system revenue bonds to build and improve electrical 28 81/ion facilities. We have raised $ 2.2 billion so far in the 1980s. Because these bonds are SRP's Bvh primary means of raising funds, and because public power systems as do other 13.1 Bi%on 16,3 ih15on kWh infrastructure systems require large amounts of external capital, SRP is joining the kwh American Public Power Association (APPA), the Large Public Power Council, and others 9.2 SitRon 4Vh in urging Congress to preserve taxmempt financing for local government entities.
We sell bonds to finance a $ 1.6 billion construction program which will occur during the next five years. We will build electric distribution facilities worth about $ 700 million 1918 1983 r 19SS 1989 during the five-year period.
The American Public Power SRP held three bond sales during 198IWI9:
Assoclatlon ranks SRP third ln v a $ 100 million revenue bond sale at 7.5 percent in October kilowatt hours (kWh) sold.
v a $ 21.8 million minibond sale at 7.2 percent in December v a $ 150 million revenue bond sale, including $ 9.5 million of capital appreciation bonds 14
~ i I
~
' tl I i '
~
' ~
~ I ~ I ~ I I I ~ ~
' I ~ I I~ I '
~ ~ e I~ I' Ir ~ I ~ I I~ ' ~ i I I ~ I I I'~
~
I I ~ I ~ I' ~ I I I II ~ ~
II I I I ~ ~ ~ ~ ~ ~ ~ . ~ ~
'I
~ ~ ~ . ~
~ ~ ' ~ I ~ ~ I e I
~ ~ ~ ~
~ ~ ~ t t ~ ~
~
' I ' ~ I I I ~ I ~ ~
~ ~ ~ . ~ ~
~ ~ I ~ I ~ ~ I ~ iI ~ i ~ I
~
~
~ ~ ~
~ ~
~ . ~ ~
~ I ~ ~ I e ~ I 'I ~ ~ ~ ~ r ~ ~ ~
I ~ ~ I I e I tel ~ ~
~ ~ ~ ~
I ' I' i ~
~ ~ ~ ~ ~ . ~
~ ~ ~ ~
~ ~
I ' ~ ~ ~ ~ . e ~ ~
I I ' I ~ I I I I' ' ~ ~ ~
~ ~ . ~ ~ ~
'r
. ~ ~ ~ e ~ ~ ~
I '
I
I t I ~
~ I'
~ ~
I It' 'r I I
I ~ 'I ~
~
~
e
', r ~
~ '
~
~ ~
~ r ~
' ' ' ~ ~ r
~ ~
~ I ~ I I
~
~ ~
I r ~ ~ I ~
I I ' . ~ I ' I I I ~ I I I
~ ~
I ~ I ~ ~ ~ Ii I ~ II ~
", aa 'g a cs
~P Fe/eN: ~>>J(
I
)r',/,
854 $4 QNr ~or>>
~.v.
TATISTICAL EVIEW (8ooo) 12 Months Ended PROJECT GENERAL 12 Months Ended April 30 December 31 1989 1983 19?S Operating revenues......,....,................. $ 1,063,306 $ 959,346 $ 652,139 $ 337,764 Electric 1,055,042 952,133 645,171 333,329 Water and irrigation. 8,264 7,213 6,968 4,435 Operating expenses. 832,316 790,972 457,905 246,897 Other income 4571 39,265 39,332 '24,730 Net financing costs . 223,798 191,378 73,611 49,804 Net revenues . 11,763 16,261 159,955 65,793 Additions to plant, excluding allowances for funds used during construction .
Utility plant, gross.,
5,599'988 341,617 5,560,160 361,881 5,335,784 297507 3,386,983 406,124 1,912,139 Contributions of electric revenues to support water operations..... 34,069 29,227 8,337 7,507 Taxes and tax equivalents .............,... .... 125,1?1 121,154 60,426 38,339 Employees at year end . 5,805 5,179 4,226
'Does nor include rempo rory employees.
sass 1987 1983 197S Total storage and pumping capacity (acre-feet)...... ~ 2,880,369 2,881,972 2,838,906 2,811,600 Storage capacity (six reservoirs).........,... . 2,019,102 2,019,102 2)019,102 2,063,948 Installed pumping capacity...,. 861,267 862,870 819,804 747,652 Water in storage Jan, I (acre-feet)....,.......,.... 1,624,272 1,691),741 1,630,000 511,093 Project storage only 1,391,376 1,464,527 1,345,252 288,660 Runoff (acre-feet) . 1,136,72?" 1,120,034 2,829,61? 3,389,051 Wafer in storage Dec. 31 (acre-feet)...,............ 1,S98,989 1,624,272 1,717,40? 1,839,399 Project storage only 1,329,773 1,391,3?6 1,455,375 1,548,742 Sources of water for deliveries (acre-feet) ...... ... 1,053,717 1,094,601 1)171,097 1,050,647 Gravity supply ....,................,.... 1,001,247" 1,039,457 1,124,554 977,988 Groundwater supply (pumping by SRP).......... 50,004 50,591 43,248 66,747 Groundwater supply (pumping by others) . 2,466 4,553 8,295 5,912 Use of water (acre-feet),...., 951,693 997,324 1,118,166 1,050,647 Agricultural....,....,....,....,,.... ....... 311,338 336,527 454,516 400,707 428,146 417,914 364,435 291,549 City domestic. 313,997 304,532 251,110 198,228 Subdivision irrigation . 62,669 61,872 58,988 49,615 Other non.agricultural irrigation (schools, parks, churches, etc,),............... 51>480 51,510 54,338 43,706 Decreed deliveries 54,537 50,783 52,298 43,052 Contract deliveries 157,673 192,100 6,177 127,195 Seepage and evapotranspiration.....,.....,... ~ 102,024 9?,277 156,325 188,144 Canals, total (miles). 133 133 132 131 Lined . 96 97 71 62 Laterals, total (miles) 907 899 887 880 Lined and piped 817 807 766 738 Drainage and waste ditches (miles)............,... 232 236 244 251 Lined and piped . ,............ ...,...... 88 88 70 58 Assessed area (acres) . ~ 238,266 238,170 238,172 238,220 Number of assessed accounts 182,226 182,110 180,455 171,875 Number of times water delivered to users.......... 486,307 475,364 479,996 429,276 Water statistics are computed on a calendar year basis.
~* Based on U.S.G.S. provisional records and are subject to adjustment.
16
12 Months Ended POWER 12 Months Ended April 30 December 31 1989 1988 1983 19?8 Energy Sources (kWh)
Net nuclear generation, 3,864,274,000 2,? 14,798,000 Net steam generation'. 12,691,834,000 11.599,545,000 11,399,943,000 7,221,663,000 Net gas turbine generation 28,239,000 4,694,000 16,206,000 59,793,QQO Net combined cycle generation ......, .. 8?5,447,000 762,125,000 287,629,000 385,269,000 Net run of river generation...,......, .. 348,404,000 357,928,000 613,694,000 367,924,000 Pymped storage generation .....,...... 168,280,000 174,844,000 199,069,000 105.960,000 Total net generation' 17,976,478,000 15,613,934,000 12,516,541,000 8,140,609,000 Purchased........, ,. 1,064,999,431 1.986,621,174 1,735,645,332 1,808,603,941 interchange received... 112,182,828 127,353,000 87,348,000 249,0?4,000 Wheeling received 244,548,617 10,572,500 8,154,668 7,725I059 Total energy 19,398,208,876 17,738,480,674 14,347,689,000 10,206,012,000 disposition (kWh)'"
sources'nergy Residential..... ~ 6,095,740,065 5,755,597)879 3,982,669,563 3,278,867,939 Commercial & Industrial 7,201,161,575 6,806,397,526 4,386,224,953 3,945,048,976 Irrigation pumping, 276,195,168 226,113,617 192,420,700 206,269,684 Street & highway lighting,...,,....,,. 106,249,527 103,537,571 46,948,183 39,400,289 Public authorities 314,981,553 293,322,023 338,755,364 289,204,179 Interdepartmental. 95,397,871 85,065,218 61,423,824 66,240,885 Sales for resale . 3700,213,776 3,065,080,688 4,079,623,799 1,340,060,575 Total sales ..... .....,........,... 17,789,939,535 16335,114>522 13,088,066,386 9,165,092,527 Interchange delivered . 70,079,883 130,817,000 74,340,000 124,787,000 Wheeling delivered 243,539,088 9,958,127 7,433,303 7,307,903 Energy losses. . 1,059,965,370 1,012,817,025 895,845,311 759,125,570 Energy for pumped storage operation .... 234,685,000 249,774,000 282,004,000 149,699,000 Total disposition of energy.....,.... 19,398,208,876 17,738,480,6?4 14,347,689,000 10,206012,000 Peak overall power system (kW) ...,..... 3,476,000 3,234,000 2,619,000 2,196,000 Date and time (M~, July 25, 5 p.m. Aug. 4, 6 p.m. Aug. 2, 6 p.m. July 14, 3 p.m.
Peak Project customers (kW) 3,060,000 2,840,000 2,172,00Q 1,854,ooo Date and time (MSTI. July'5, 5 p.m. Aug. 4, 6 p.m. Aug. 20, 5 p.m. July 20, 6 p.m.
Generating capability (kW)"
Nuclear.....,..........,, . 641,190 427,460 ~ 0-Steam', 2,411,115 2,411,115 2,283,250 1,548,250 Gas turbines,. 393,000 393,000 393,COO 378,000 Combined cycle, 288,000 288,000 288,000 288,000 Hydroelectric conventional 96,400 96,400 95,000 94,000
'Hydroelectric pumped storage .. 137,000 137,000 137,000 140,000 Total operating capability'... 3,966,705 3,752,975 .3,196,250 2,448,250 Contract purchase at peak ..., 237,544 51?,744 329,547 461,813 2,910,063 Total resources'.. 4,2Q4,249 4,270,719 3,525,797 Electric customers-year end"'esidential 469,330 457,235 332,790 268,107 Commercial & Industrial...,... 40,556 39,358 25,092 19,274 Other . 9,003 9,025 1,679 1,521 Toiai ~ e ~ s c a ~ 518,889 505,618 359,561 288,902 Average annual kWh use/
residential customer'" 12,988 12,824 12,277 12,799 Average annual residential revenues/kWh (cents) .... ....,,,.... ..... 8.03 7.65 6.47 4.72
'ncludes SRP participation in jointly owned projects
'" Unit capabilities during summer peak
"'nergy disposition kWh through total sales, electric customers year end, average kWh use and average annual revenue are estimated figures.
17
OMBINED ALANCE HEETS Salt River Project As of April 30, 1989 and 1988 ASSETS (8000) 1989 1988 UTILITY PLANT, at historical cost (iVotes I, 2, 3 and 4):
Plant in service:
Electric.............. $ 4,587.139 $ 4,305,817 Irrigation 107,119 10],122 Common 220,123 203,356 4,914,381 4,610,295 Less-Accumulated depreciation on plant in service 1,135,244 995,525 3,779,13? 3,614,770 Plant held for future use 298,934 309,343 Construction work in progress . 267,02? 333,795 Nuclear fuel, net of amortization 79.818 82,351 4,424,916 4,340,259 OTHER PROPERTY AND INVESTMENTS:
Non-utility property and other investments. 34,448 30,222 Segregrated funds, net of current portion 111,656 100,263 146,104 130,485 CURRENT ASSETS:
Cash and temporary investments, at cost 261,855 198,119 Current portion, segregated funds 82,145 77,026
'fiade and other accounts receivable, net . 57,960 50,824 Fuel stocks, at last-in, firstwut cost,. 86,554 99,104 Materials and supplies, at average cost 80,509 71,575 Other current assets .... 24,809 20,763 593,832 517,411 DEFERRED CHARGES AND OTHER ASSETS (Votes I and 5),....... 212,791 145,902
$ 5,377,643 $ 5,134,057 The accompanying notes are an integral part of these combined balance sheets.
CAPITALIZATIONAND LIABILITIES (8000)
,1989 1988 LONGTERM DEBT (Notes 5 and 8):
Electric system revenue bonds, net of current portion.......,... $ 3,129,380 $ 2,891,391 Commercial paper and other . 375,783 360,333 3,505,163 3,251,724 ACCUMULATED NET REVENUES:
Balance, beginning of year 1,442,926 1,426,665 Net revenues for the year.... 11,763 16,261 Balance, end of year ., 1,454,689 1,442,926 TOTAL CAPITALIZATION, 4,959,852 4,694,650 CURRENT LIABILITIES:
Current portion, long-term debt .. 32,360 26,993 Accrued plant deferral costs, current portion (Note 3) 25,448 105,200 Accounts payable 93,076 79,326 Accrued taxes and tax equivalents...,. 45,477 44,305 Accrued interest . 74,425 70,381 Customers'eposits... 23,765 24,647 Accrued reorganization costs, ............ 31,613 Other current liabilities,. 27,863 27,654 354,027 378,506 DEFERRED CREDITS AND OTHER NON-CURRENT LIABILITIES(Notes 3 and 7) 63,764 60,901 COMMITMENTS AND CONTINGENCIES (Notes 3, 5 and 7) .....
$ 5,377,643 $ 5,134,057 The accompanying notes are an integral part of these combined balance sheets.
19
OMBINED TATEMENTS OF ET EVENUES Salt River Project For the years ended April 30, 1989 and 1988 (8000) 1989 1988 OPERATING REVENUES (Note I)
Electric...., $ 1,055,042 $ 952,133 Rater and irrigafion..... 8,264 7,2IB Total operating revenues 1,063,306 959,346 OPERATING EXPENSES:
Purchased power 15,327 26,626 Fuel used in electric generation. 254,907 216,093 Qfher operating expenses....... 193,925 I?4,251 Maintenance..........,..... , 92,334 101,530 Depreciation and amortization (Note 150,652 151,318 Taxes and tax equivalents.. ~ 125,171 121,154 Total operating expenses . 832,316 790,972 Net operating revenues . 230,990 168,374 OTHER INCOME:
Allowance for equity funds used during construction 4,694 20,005 Interest income .. 29,585 24,949 Other deductions, net . (45) (5,689)
Total other income 34,234 39,265 Nef revenues before financing costs 265,224 207,639 FINANCING COS IS:
Inferest on bonds.. 204,378 189,296 Amortization of bond discount, issue and refinancing expenses, 7,005 6,096 Interest on other obligations. 22,668 18,409 Less-Allowance for borrowed funds used during construction. (10,253) (22,423)
Net financing costs......., ......................,,....... 223,798 191,378 NET REVENUES BEFORE UNUSUAL AND EXTRAORDINARY ITEMS 41,426 16,261 UNUSUAL ITEM Expenses of corporate reorganization program (Note jo)........... (32,687)
NET REVENUES BEFORE EXTRAORDINARY ITEM 8,739 16,261 EXTRAORDINARY ITEM Gain on exfinguishment of debt (Note 5) 3,024 NET REVENUES. $ 11,763 $ 16,261 The accompanying notes are an integral part of these combined statements.
OMBINED TATEMENTS OF ASH LOWS Salt River Project For the years ended April 30, 1989 and 1988 (8000) 1989 1988 NET CASH FLOWS FROM OPERATING ACTIVITIES:
Net revenues . $ 11,763 $ 16,261 Noncash items included in net revenues:
Depreciation and amortization 150,652 151,318 Amortization of bond related expenses . 7,005 6,096 Gain on sale of plant and debt extinguishment (4,390) (242)
Decrease (increase) in fuel stocks and materials and supplies . 3,616 (20,238)
Decrease (increase) in other assets, net. (19,694) 15,014 Increase (decrease) in accounts payable 13,750 (6,102}
Increases in: Accrued taxes and tax equivalents... 1,172 2,871 Accrued interest. 4,044 6,620 Accrued reorganization costs . 31,613 Other liabilities, net. 2,189 10,639 Termination of coal contract . (59,410)
Net cash provided by operating activities 142,310 182,237 NET CASH FLOWS FROM INVESTING ACTIVITIES; Additions to utility plant, net of AFUDC (341,617) (361,881)
Allowance for funds used during construction ................,...., (14,947) (42,428)
Additions to non-utility property . (4,226) (12,475)
Decrease in note receivable 28,969 Contributions in aid of construction 40,527 18,518 Proceeds from sale of plant . 2,342 433 Net cash used by investing activities............,... (317,921) (368,864)
NET CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of bond issues . 264,614 266,347 Proceeds of other, long-term debt, net of repayments, 22,333 1,191 Repayment of principal on bonds ., (27,229) (26,915)
Repayment of principal on U.S. debt (Note 5). (3,859) (886)
(increase) decrease in segregated funds. (16,512) 34,318 Net cash provided by financing activities 239,347 274,055 NET INCREASE IN CASH AND TEMPORARY INVESTMENTS.........,...,. 63,736 87,428 BALANCE AT BEGINNING OF YEAR IN CASH AND TEMPORARY INVESTMENTS, 198,119 110,691 BALANCE AT END OF YEAR IN CASH AND TEMPORARY INVESTMENTS.. $ 261,855 $ 198,119 The accompanying notes are an integral part of these combined statements.
21
s OTES TO OMBINED INANCIAL TATEMENTS Salt River Project For the Years Ended April 30, 1989 and 1988 (I)
SUMMARY
OF SIGNIFICANT ACCOUNTING $ 23,743,000 at April 30, 1989 and 1988, respectively. For large POLICIES: industrial customers, meters are read near month-end and billings Principles of Combination recorded on the accrual basis. Electric revenue billings are (a)
The combined financial statements include the accounts of the adjusted periodically for changes in costs of fuel and purchased Salt River Project Agricultural Improvement and Power District power, Revenues from water and irrigation operations are (the District) and the accounts of its agent, the Salt River Valley recorded when earned.
Water Users'ssociation (the Association) and a whollywwned (I) Electric Rates subsidiary, Salt River Generating Company, together referred to as Under Arizona law, the District's Board of Directors has the Salt River Project (the Project). All significant intercompany exclusive authority to establish electric rates. The District is transactions have been eliminated. The Project follows the required to follow certain procedures, including public notice accounting principles promulgated by the Financial Accounting requirements and holding a special Board meeting, before Standards Board. implementing changes in standard electric rate schedules. The current rates have been in place since October, 1987.
(b) Regulatory Agent The District's Board of Directors serves as its regulatory agent. (g) Nuclear Fuel The District amortizes nuclear fuel to fuel expense on a unit (c) Utmty Plant, Depreciation and Maintenance The accounting records of the Project are maintained of production method.
substantially in accordance witlt the Uniform System of Accounts Under the provisions of the Nuclear Waste Act of 1982, the prescribed for electric utilities by the Federal Energy Regulatory District is charged one mill per kWh on its share of electricity Commission. Utility plant is stated at the historical cost of produced by PVNGS. The District records this charge as a current construction. Construction costs include labor, materials, services year expense.
purchased under contract, and allocations of indirect charges for (h) Decommissioning engineering, supervision, transportation, and administrative The District reserves for the cost of decommissioning PVNGS expenses. based on an outside engineer's study. The total estimate to An allowance for funds used to finance construction work in decommission the District's share of PVNGS is $ 148 million. This progress (AFUDC) is capitalized as a part of the electric and estimate will be reviewed and adjusted periodically.
general plant. This allowance is deducted from net financing Decommissioning funds collected from the ratepayers of costs in the combined statements of net revenues and added to approximately $ 6 4 million are mamtained as a segregated fund.
utility plant, Capitalization rates of 6.70% and 8.75X were used The corresponding liability is classified as an other noncurrent in 1989 and 1988, respectively. liability.
Depreciation expense is computed on the straight-line basis (I) Income Taxes over the estimated useful lives of the various classes of plant. The District is exempt from federal and state income taxes.
Rates in effect resulted in provisions approximating 3.10X and (j) Reclassifications 3 42Ã for 1989 and 1988, respectively, on the average cost of Certain 1988 amounts have been reclassified to conform to the depreciable electric plant, and 1.46K and 1,43% for 1989 and current year presentation.
1988, respectively, for depreciable irrigation plant.
As of May I, 1988, the District prospectively revised its (2) POSSESSION AND USE OF UTILITYPLANT:
estimate of the depreciable life of the Palo Verde Nuclear The United States of America refains a paramount right or Generating Station (PVNGS) from 27 years to 35 years. The claim in the Project which arises from the original construction revised life more closely approximates industry standards for and operation of certain of the Project's facilities as a federal nuclear plant depreciation. This change reduced depreciation reclamation project. The Project's right to the possession and use expense for the year ended April 30, 1989, by approximately of, and to all revenues produced by, these facilities is evidenced
$ 12,000,000. by contractual arrangements with the United States.
When property representing a retirement unit is replaced, removed or abandoned, the cost of such property is credited to (3) CONSTRUCTION PROGRAM:
the appropriate utility plant account, and such cost, together with Balances shown for construction work in progress (CWIP) removal costs less salvage, is charged to accumulated represent expenditures for new facilities required to service depreciation. anticipated customer needs, and consist of:
The Project charges to maintenance expense the cost of labor, materials, and other expenses incurred in the repair and replacement of minor items of property.
(Thousands) 1989 1988 (d) Bond Expense Bond discount, issue and refinancing expenses are being Electric generating facilities........... $ 70,497 $ 49,280 amortized over the terms of the related bond issues. Transmission and distribution.....,... 88,914 113,071 Irrigation plant 30,542 22,039 (e) Revenues Meters for residential, commercial and small industrial Other construction.................. 77,074 149,405 customers are read cyclically and sales recorded only when 826?,027 8333,795 billed. This system of billing results in estimated earned but unbilled revenues which amounted to $ 26,415,000 and 22
~ s. ~
Construction expenditures planned for fiscal years 1990 The District has entered into various agreements with other through 1994 are shown below. electric utilities for the joint ownership of electric generating and transmission facilities. Each participating owner in these facilities thousands) must provide for the cost of its ownership share. The following schedule reflects the District's ownership interest (at cost) in 1990 $ 282,873 1991 289,454 jointly owned electric utility plants at April 30, 1989:.
1992 336,092 1993 349,967 ??hsssssds) 1994 377,515 Ownership Plant Share Jn Accumulated These expenditures will be financed primarily by funds Plant Name Percent Service Depreciation CWIP currently on hand, future net revenues and the sale of revenue Four Corners (NM).... J0.00% $ 84;828 $ 21,890 $ 6,122 bonds. Mohave (NV).......... 10.00 46,202 18,456 1,276 ln 1988, the Board of Directors approved deferring the jn- Navajo (AZ)........... 21.70 216,958 91,364 7,430 service date of Coronado Generating Station Unit 3. This action Hayden (CO)...., ... 50.00 67,425 28,386 509 was taken as a result, of a study which concluded that the Craig (CO)...,. .....29.00 225,345 63,703 642 deferral would allow SRP to realize savings in future revenue Palo Verde (AZi .....,.17.49 1,573,376 130,550 11,557 requirements. The unit is currently scheduled for commercial 82,214,134 $ 354,346 $ 2?,636 operation in 2005.
Coronado Unit 3 costs of $ 280.5 million were transferred to Plant Held for Future Use in accordance with a resolution The District acts as the operating agent for the participants in approved by the Board of Directors on June 13, 1988. Costs the Navajo Project. As operating agent, the District utilizes incurred include both construction costs incurred to date plus an advanced billings to the participants, based on ownership estimate of costs necessary to defer the in.service date of percentage, to pay the cost of operations. A separate operating Coronado Unit 3. The resolution provided that these costs would fund is maintained by the District to process Navajo Project be included in the amounts to be recovered from consumers over transactions.
the depreciable life of Coronado Generating Station, subject to the The District's share of direct expenses of the jointly owned rate adjustment procedures set forth in the Arizona Revised plants is included in operating expenses in the combined Statutes. statements of net revenues.
The District has entered into two long-term power purchase agreements to replace a portion of the power which would have (5) LONG-TERM DEBT:
been supplied by Coronado Unit 3. Each contract is for 50 MW of firm power starting June 1990, increasing to 100 MW beginning in June 1991 and expiring in the year 2011. Interest thousands)
Minimum payments under these purchased power contracts Rate 1989 1988 Maturitles are as follows for the fiscal years ending April 30:
Electric System Revenue Bonds..... 4.9-11.5% $ 3,257,583 $ 3,010,96I 1990-2029 (Thousands)
Unamortized Bond 1990 $ Discount.......,... (95,843) (92,57'?)
1991 12,507 1992 26,151 Total Revenue Bonds Outstanding .. 3,161,740 2,918,384 1993 27,288 U.S. Government 1994 27,288 Non-Interest Thereafter 515,050 Total 8608)284 Bearing Debt..... 6883 Commercial Paper and Other ...,. 6.0.7.6% 375,783 353,450 Projected construction expenditures include contingency Total Long Term allowances to reflect potential cost increases. Deb't s ~ > ~ ~ ~ ~ ~ ~ ~ ~ ~ $ 3,53?,523 $ 3,276,? 77 During the fiscal year ended April 30, 1989, the District paid approximately $ 59 million to terminate a contract with Kaiser Electric system revenue bonds are secured by a pledge of, and Coal Company. The termination will result in substantial savings a lien on, the revenues oi the electric system after deducting since the District will no longer be obligated to buy coal from Kaiser for Coronado Units I and 2. The termination cost is being operating expenses, as defined in the bond resolution.
amortized to fuel expense over the remaining 15 year life of the The debt service coverage ratio, as defined in the bond resolution, is used by bond rating agencies to help determine the original contract.
financial health of the District. For the years ended April 30, At April 30, 1989, commitments had been entered into for 1989 and 1988, debt service coverage was as follows:
delivery of materials and services on construction projects. Jn addition, minimum long. term commitments of approximately $ 1.8 billion exist under coal and fuel oil supply contracts.
The Project has committed to spend approximately $ 45 thousands)
(except for ratios) million over the next six years for its share of a project to build 1989 1988 or modify dams on the Salt and Verde Rivers for flood control, to Revenues available for debt service .... $ 449,968 $ 408,442 ensure dam safety and provide water storage associated with the Total debt service requirements ....... 234,386 214,634 Central Arizona Project. Debt service coverage ratio.....,..... 1.92 1.90 (4) INTERESTS IN JOINTLY OWNED ELECTRIC UTILITYPLANTS:
23
The annual maturities of long-term debt (excluding The discount rate used in determining the actuarial present commercial paper) as of April 30, 1989, due in the fiscal years value of the projected benefit obligation was 9.0X for both 1989 ending April 30, are as follows: and 1988. The rate of increase used to determine future compensation levels was 5.5X for fiscal years 1989 and 1988.
(Thousands) The expected long-term rate of return on assets is 9.75X for both 1989 and 1988.
1990 $ 32,360 1991 34,128 The following schedule reconciles the funded status of the Plan with amounts reported in the Project's combined financial 1992 1993 1994 Thereafter 39,368 44,786 50,554 3,057,170 statements as of April 30:
thousands) 1989 1988 83,258) 366 Plan assets at fair value,......... ... $ 293,451 $ 252,294 Actuarial present value of projected Interest and amortization of discount on the various issues benefit obligation:
results in an effective rate of approximately 7.26X over the Vested benefit obligation .......... (145,579) (120008) remaining terms of the bonds. Nonv'ested benefit obligation ....... (6,519) (8,76?)
At April 30, 1989, the Project has authority to issue additional Accumulated benefit obligation ..... (152,098) (128,775) electric system revenue bonds totalling $ 488,976,593 principal Excess of projected benefit amount and electric system refunding revenue bonds totalling obligation over accumulated
$ 1,518,405,000 principal amount. benefit obligation................. (51,615) ~(48,338 From time to time, the District defeases electric system revenue bonds, sometimes resulting in a loss. The District's Board Projected benefit obligation ........ (203,713) (177,713) of Directors has determined that such losses should be recovered Plan assets in excess of projected from the ratepayers during the period of reduced debt service benefit obligation 74,581 requirements. Accordingly, under the provisions of Statement of Unrecognized net assets ............. (60,702)
Financial Accounting Standards No. 71, the losses will be Unrecognized net gain....., (5,963) amortized on a monthly basis over the life of the refunded Prior service cost not yet bonds. Included in Deferred Charges and Other Assets is recognized in net periodic
$ 96,399,000 and $ 99,138,000 of unamortized defeasance losses, pension cost .. 2,175 1,415 at April 30, 1989 and 1988, respectively. Prepaid Pension Cost 8 13,564 8 9)331 In 1984, the District refunded its then outstanding general obligation bonds. Although the refunding constituted an in-substance defeasance of the prior lien on revenues which secured The Project also has two defined contribution plans, the said bonds, the general obligation bonds continue to be general Salaried Employees'hrift Plan and the Hourly 401(k) Plan. Both obligations of the District, secured by a lien upon the real plans receive employee contributions and partial employer property included in the District, a guarantee by the Association, matching contributions. Employees are eligible for participation in and by the District's taxing authority, As of April 30, 1989 the the appropriate plan upon completion of one year of service.
amount of defeased general obligation bonds outstanding was Employer contributions to these plans were $ 2,700,000 and
$ 105,735,000. $ 2,100,000 in the fiscal years ended April 30, 1989 and 1988.
In fiscal year 1989, the Project extinguished approximately In addition to providing pension benefits, the Project provides
$ 6.9 million in outstanding debt with the United States Bureau of certain health care and life insurance benefits for retired persons.
Reclamation with a payment of approximately $ 3.9 million. This Substantially all of the Project's employees may become eligible transaction resulted in a $ 3 million gain which has been reflected for those benefits if they reach normal retirement age while as an extraordinary item in the combined statement of net working for the Project, retire from the Project, are eligible for revenues for the year. pension benefits, and have completed a minimum of 5 years regular employment. The cost of retiree health care and life (6) EMPLOYEE BENEFIT PLANS: insurance benefits is recognized as expense as the premiums The Project has a Jetiremenf. plan (the Plan) covering and/or deposits to the mustee are paid. For 1989 and 1988, those substantially all employees. The Plan is funded entirely from costs totalled $ 2,100,183 and $ 1,696,765, respectively.
Project contributions and the income earned on invested assets.
No contributions were required to be made to the Plan in fiscal (?) LITIGATIONAND OTHER CONTINGENCIES:
years 1989 and 1988. Plan assets consist primarily of stocks, U. S. Environmental:
obligations, corporate bonds, real estate funds, and a guaranteed At any given time, litigation or administrative proceedings or investment contract. studies involving environmental matters could affect the Project Net periodic pension cost as of the dates of the latest actuarial and its present and proposed generating and operating facilities.
report (April 30) is made up of the components listed below as Many normal activities in connection with the operation of the determined using the projected unit credit actuarial cost method: Project generate hazardous wastes, which in the last 10 years, thousands) 1989 1988 have been the. subject of substantial federal, state, and local legislation imposing strict liability on generators, transporters, storers, and disposers of hazardous waste for clean.up costs and damages which result from substance release or contamination, Service cost . $ 9,061 $ 8,902 regardless of time or location. Increased operating expenses due interest cost . 15,735 14,751 to adverse environmental decisions would be passed on to Actual return on assets,...........,. (47,941) 1,345 customers through electric rates.
Net amortization and deferral ......... 18,911 (28,775) The District's principal generating stations, due to their Net periodic pension income ..... 3(4,234} 3(3,TTT) proximity to large national parks, monuments and wilderness areas, may be subject to provisions relating to visibility 24
< protecffon. Currently, the U.S. Environmental Protection Agency is 1990. As of April 30, 1989, the District had $ 375,000,000 of the evaluating whether the Navajo Generating Station is a source of Promissory Notes outstanding at an average interest rate to the visibility impairment requiring installation of environmental District of 6.96%.
controls. Installation would require significant additional The District maintains a revolving credit agreement (the expenditures, which would be passed on to customers through Agreement) with a consortium of nineteen banks to provide increased electric rates. liquidity support for the Promissory Notes. Under the terms of Payments to Certain Property Owners in the the Agreement, the District may borrow up to $ 375,000,000 Association's Service Areas Now Provided Electric Power through October 15, 1990. The District must repay all outstanding by Others: borrowings by October 15, 1990. Borrowings under the The Articles of Incorporation of the Association provide for the Agreement initially bear interest at a rate equal to 0.625K plus indemnification of certain property owners in the Association's the weekly average rate for three-month Certificates of Deposit, as service areas now provided electric power by others if they are published in the Wall Street Journal, plus certain adjustments. As required to pay substantially more for power than they would if of April 30, 1989, the District had no borrowings outstanding they were furnished electric power by the Association. A reserve under the Agreement.
for these payments has been established which, in the opinion of The indebtedness of the District evidenced by the Promissory management, adequately covers the Project's liability as of April Notes and/or borrowings under the Agreement is an unsecured 30, 1989. obligation.
Other Litigation: The District also maintains a revolving credit agreement with In the normal course of business the Project is a defendant in Fuji Bank, Ltd to support the District's mini.bond program. Under various litigation matters, In management's opinion, the ultimate its terms, the District may borrow up to $ 40,000,000 at the resolution of these matters will not have a significant adverse Federal Funds Rate plus one-quarter to one. half percent. The effect on the Project's financial position or results of operations. agreement expires on November 14, 1990. There were no borrowings outstanding under this agreement at April 30, 1989.
Indian Matters:
From time to time, the District is involved in litigation and (9) ASSOCIATION OPERATIONS:
disputes with various Indian tribes on issues concerning royalty Association expenses exceeded revenues by approximately payments, taxes, and water rights, among others. $ 34,069,000 for 1989 and $ 29,227,000 for 1988.
Resolution of these matters may result in increased operating expenses which would be passed on to customers. (10) SRP'S ORGANIZATIONALASSESSMENT AND RENEWAL:
(8) REVOLVING CREDIT AGREEMENT/
In 1989, the Board of Directors approved a program to review COMMERCIAL PAPER PROGRAM: the Project's organizational structure in conjunction with revised The District's Board has authorized the issuance of up to growth estimates for the Phoenix metropolitan area. This program
$ 375,000,000 of short-term promissory notes (the Promissory will result in the elimination of approximately 800 salaried and Notes), which are sold in the tax-exempt .commercial paper hourly positions. The related severance benefits have been market. The Promissory Notes will mature in no more than 2?0 expensed in the current year.
days from the date of issuance and in no event after July 12, Independent Auditor's Report To the Board of DIrectors, Salt River Project Agricultural Improvement and Power District, and Board of Governors, Salt River Valley Water Users'ssociation:
We have audited the accompanying combined balance sheets of SALT RIVER PROJECT as of April 30, 1989 and 1988, and the related combined statements of net revenues and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards, Those standards require that we plan and perform the attdit to obtain reasonable assurance about whether the financial statements are free of material misstatement, An audit includes examiningon a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Salt River project as of April 30, 1989 and 1988, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.
Phoenix, Arizona Arthur Andersen &. Co.
June 15, 1989 25
FFICERS ELECTED OFFICERS John R. Lassen President Marcel J. Boulais Vice President PRINCIPAL OFFICERS AND OTHER EXECUTIVES A.J. Pfister Carroll M. Perkins General Manager Associate General Manager John R. McNamara Financial & Information Services Group Associate General Manager Mark B. Bonsall Corporate Engineering and Power Group Corporate measurer Robert J. Conlon and Assistant General Manager Assistant General Manager Financial Services Corporate Engineering John D. Jacobs John O. Rich Assistant General Manager Assistant General Manager Information Systems Power Operations Leroy Michael John H, Steffen General ManagerJr.'ssociate Assistant General Manager Planning & Resources Power Construction & Mainte nance C.A. Howlett D.S. Wilson Assistant General Manager General Manager Jr.'ssociate Customer Services & Marketing Water Group D. Michael Rappoport Richard Juetten Assistant General Manager Assistant General Manager Government Affairs Water Resources &. Services Richard H. Silverman Don G. Parlett Assistant General Manager Associate General Manager Law & Land Corporate Services Group Oren D. Thompson'ssistant Paul G. Ahler General Manager Assistant General Manager Communications & Public Affairs Human Resources Paul D. Rice James L. Corporate Secretary General Manager Swartz'ssistant Operations Services CONSULTAN'I'S *Effectiue June I, 1989, Oren Thompson tuas named Associate General Manager, Water Group; Legal Advisers Jennings, Strouss &. Salmon D.S Wilson Jr. tuas named Associate General Auditors Arthur Andersen and Co. Manager, Planning and Resources; James I Stuartz nota reports to the Corporate Engineering Bond Counsel Mudge Rose Guthrie and Potuer Group; and Leroy Michael Jr. is an Alexander and Ferdon Associate General Manager on special Financial Consultant Lazard Freres and Co. assignment.
26
OARD EMBERS Rudolph Johnson Clarence C. Pendergast Jr. Bruce B. Brooks Gilbert R. Rogers District I District 2 District 3 District 4 John M, Williams Jr. Thomas P. Hurley William P. Schrader Joe Bob Neely District 5 District 6 District ( District 8 Olen Sharp Dwayne E. Dobson William )V. Arnett Fred J. Ash District 9 District 10 Atlarge At-large Board members establish policies for the management and conduct of Salt River Project's business affairs.
The 10 members of the Board of Governors of the Salt River Valley Water Users'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 who serve staggered four-year terms. One District board member is elected from each of the 10 SRP voting divisions, and four members are elected at-large.
Traditionally, members of the Association board campaign for John L Burton Jr, Eldon Rudd At large At large similar positions on the District board.
27
Robert L Coot Ihward W. Lydh Ddtrkt I Distrkt I Carl E. IVeBer Wayne A. Ihrt hrry D. Ibvcy Marth Kerapton Gexd Qcinom Ddtrkt $ Dtstrkt 2 Dtstrkt 2 Cocrocd Vxe Osoinnoo Distrkt S Joha E, Anderson John A. Vanderwey Wayne A. Marhtta tester L Mowry Ddtrkt 3 Ddtnct 2 Dktrkt 2 Ddtrkt 2 leal H. Reed OUNCIL Mart V. Pace Dtstrkt 4 TMnkte EMBERS Byron G. %IRhsoa Roy W. Cheathasn W. Cnrth Dana lee L Trettastea Dtstrkt 4 Diekt 5 Dick( 9 Dtstrkt 9 The councils enact and amend bylaws relating to the management and conduct of SRP's business affairs.
Three council members are elected
=- .-'a =!0 by SRP shareholders to two-year terms in each of the 10 areas of the Salt River Oriand IL Hach rATBhrn P. Schrader Jr.
Valley Water Users'ssociation. Three Dtstskt I0 Distrkt 10 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.
Traditionally, Association council members seek identical positions on the District council.
G Me lilith Dtstrkt I0 28