ML18192A380

Salt River Project 1977 Annual Report

ML18192A380
Person / Time
Site:	Palo Verde
Issue date:	04/21/1978
From:	Salt River Project
To:	Office of Nuclear Reactor Regulation
References
Download: ML18192A380 (28)

Text

5I gHHi cO poKK MOTICE THE ATTACHED FILES ARE OFFICIAL RECORDS OF THE DIVISION OF DOCUMENT CONTROL. THEY HAVE BEEN CHARGED TO YOU FOR A LIMITED TIME PERIOD AND MUST BE RETURNED TO THE RECORDS FACILITY BRANCH 016, PLEASE DO NOT SEND DOCUMENTS CHARGED OUT THROUGH THE MAIL. REMOVAL OF ANY PAGE(S) FROM DOCUMENT FOR REPRODUCTION MUST BE REFERRED TO FILE PERSONNEL.

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'lI'ECORDS FACILITYBRANCH

For 75 years, thc Salt River Project Palo Verde Nuclear Generating Station has played a leading role in the growth of the Valley of the Sun, by Navajo Generating Station providing the utility services of water Coronado Generating and power to area residents. Station SRP was one of the first projects authorized under the National Recla- Verde River mation Act of 1902. It consists of two Granite Reef Diversion Darn organizations-the Salt River Project Horseshoe Dam Agricultural Improvement and Power Bartlett Dam District (the District), and the Salt Stewart Mountain Dam River Valley EVater Users'ssociation Mormon Flat Dam Horse Mesa Darn (thc Association).

Theodore Roosevelt Dam The District is a political subdivi-sion organized under the laws of the Theodore Roosevelt Lake State of Arizona and operates as a federal reclamation project under con- Salt River tracts with the United States of Project watershed Atncrica. The District provides electric service to residential, commercial, indus-trial and agricultural power users in a 2@00.square-mile service territory in parts of Maricopa, Gila and Pinal counties.

The Association is a private Arizona corporation. It participates m thc management of thc 13,000-square-mile oioea watersheds of the Salt and Verde GN<<l AtACNC JCT, rivers, in cooperation with the U.S. SLOACNCC JCT.

Forest Service. Thc Association administers water rights of the Project's 250,000-acre area. It also operates and maintains the irrigation transmission and distribution system which carries SRP water to municipal, agricul-tural and industrial users.

Following the long-standing reclama- Electrical Service Area Served Exclu-tion principle, SRP uses electric sively by Salt River Project Contents revenues to help support its water and Salt River Project Provides Full Power Page Requirements of Arizona Public irrigation operations. This support Service for Resale. Project Makes Highlights. I helps keep water delivery charges at Direct Sales to Customers for All Letter from management ......... ...... 2 Mining Loads reasonable levels. At the same time, EVatcr. 4 Salt River Project Provides Full Power the Project maintains competitive rates Requirements of Arizona Public Power. 8 for the electric service it provides. Service for Resale Electrical Service Areas Not Servedby Financial section ..................... ...... I3 Salt River Project Statistical review 22

~ ---- Salt River Project Irrigated Area Officers, board 5, council ........ 24

1977 highlights Sources: Dollars Percent Residential .. $ 134,535,916 43.2%

Commercial and industrial. 108,827,999 35.0 Sales for resale 43,977,961 14.1 Agricultural pumping, street and highway lighting, and pllbllc autlloritlcs.. 15,934,527 5.1 Water and irrigation revenues. 5,466,506 1.8 Other. 2,344,324 .8 Total .. $ 31 1,087,233 100.0%

Uses:

Fuel used for generation. $ 67,486,314 21.7%

Purchased power. 17,766,614 5.7 Other operating expenses. 45,427855 14.6 Taxes and tax equivalents .. 34,256,598 11.0 Depreciation and amortization. 30,818,245 9.9 Maintenance. 24,628,415 7.9 Net interest on indebtedness. 37,451,163 12.1 Miscellaneous deductions. 43,359 Reinvcsted. 53,208,570 17.1 Total. $ 311,087,233 100.0%%uo Operations 1977 1976 Assessed water accounts. 168,736 166,048 Water runoff (acre-feet)* 367,122 817,419 Water in storage, Dec. 31 (acre-feet). 325,087 711,353 Sources of water for deliveries (acre-feet).. 1,209,197 1,190,720 Number of power customers. 268,891 257,941 Average annual use per residential customer (kwh). 13,108 12,597 Average annual kwh cost pcr residential customer (cents). 4.25 351 Energy generated, purchased, interchanged and wheeled (kwh) . 10,294,543,000 9,260/30,000 Peak load for Project customers (kw).. 1,731,000 1,732,000 Revenues 1977 1976 Electric $ 305,620,727 $ 220,961,215 Water and irrigation. 5,466,506 4807,032 Total operating revenues. 311,087,233 225,268,247 Taxes and tax equivalents.. 34,256,598 30 869 311 Total operating expenses . 220,384,141 182,703,113 Net revenues. 53,208,570 11,287,259 Plant investment, year-end gross. 1,473,519,826 1,229,617,294 Long-term dcb t.. 1,428,270,291 1,186,565,170

• Based on U.S.G.S. provisional records and subject to adjustment.

Letter from management It was hotter and drier than usual last new billing system which provides During thc past year, the Project's year in semi-arid Arizona. The heat much more information about power net revenues reached an all-time high of and thc drought played parts in both usage. SRP also offered a program $ 53.2 million. The net revenues will thc water and power operations of the which allows customers to level their bc used to help meet construction costs Salt River Project, as SRP began its 75th monthly power bills and pay the same and rcpayinent of debt principle.

year of operation. The lack of mois- allioullt eacll liloll'tll. In short, 1977 was a successful year ture served to sharpen awareness of thc Another cost-saving action by SRP for SRP to launch its 75th Anni-Project's significance to thc continued was the sale of a portion of its fore- versary celebration. It was a year when growth and dcvclo'pmcnt of thc Valley cast excess generating capacity to the the Project was keenly aware of its of thc Sun. Los Angeles Department of Water and roots, while keeping an eye on the future.

SRP runoff records reveal that Power (LADWP). The sale will provide It is because of the vision of the people 1977 was the second driest year since coal-generated power to LADWP from who founded the Project that the 1903. Despite this dire statistic, the thc Coronado Generating Station and Valley continues to blossom despite its Project's water-storage system pro- reduce the Project's total revenue re- dcsert location.

tected its service area from the severe quirements by scvcn to eight percent But, as farsighted as those pioneers water rationing experienced in some over the next 10 years. It will also were, it's highly unlikely they even parts of the West. The foresight of the eliminate that portion of any futuro dreamed that within 75 years thc pioneers who began SRP 75 years ago rate increases otherwisc required for value of crops raised each year on assured the Valley of an adequate water debt-service coverage on the financing Project lands would excccd 10 times thc supply in a short-supply year. of that part of thc plant sold to amount of the original loan it took Along with the drought came LADWP. In 1982, when thc Palo to build Roosevelt Dam. Or, that pcr-higher average tempcraturcs. How- Verde Nuclear Generating Station acre yields of wheat, cotton and alfalfa ever, the maximum daily temperatures begins producing electricity, LADWP will would exceed twice the national avcr-werc sommvhat lower than nom>al trade its sharc of Coronado back to agc. Or, tliat a townwith a population which tended to reduce the peak kilo- SRP in exchange for 5.7 percent of Palo of 5,544 in1900would grow into a city watt (kw) deinand on SRP's system. Verde. of 682,000 by 1977, with more than 1.3 In addition, the copper mines werc on Taking advantage of favorable million residents sharing the land area strike during the normal peaking money-market conditions, SRP held a within SRP boundaries. In 20 years, period, and many customers made a special bond sale during 1977 to some 2.2 million people are expected to special effort to conserve energy during refund three issues of bonds bearing be living in the Valley area.

the peak periods. These three factors high interest rates. Savings in the first six In 1911, when Roosevelt Dam was resulted in a peak demand of 1,731,000 years are projected at about $ 1.5 completed, SRP's total assets werc a kw-1,000 kw lower than the million annually, and will total little morc than $ 10 million, or thc previous year and considerably lower approximately $ 23.2 million in amount of the loan needed to build than anticipated. debt-service payments during thc next thc dam and its related facilitics. At thc SRP actively helped customers con- 37 and a half years. end of 1977, the Project's gross plant serve energy during 1977. The utility Construction and improvements of value exceeded $ 1.4 billion. Projections was the first in Arizona, and one of thc other electrical facilities were financed indicate that SRP's plant value will more first in the nation, to offer free home by money from other bond sales than double within five years, to energy inspections to customers. Called held during the year. Major projects approximately $ 3.6 billion.

Power Saver Service, the program is currently under way include the Coro- As in thc past, with the basic designed to help consuiners cut energy nado and Craig coal-fired generating principles upon which SRP was costs by showing them how to make their stations and the Palo Verde Nuclear founded, thc Project will continue homes more energywfficient. Generating Station. 'She use of serving the people in the Valley with Continuing its efforts to cut operating economical fuel by these projects will water and power through the last costs and improve its efficiency to help stabilize thc cost of producing quarter of the 20th century-and customers, the Project implemented a energy for SRP's custoiners in thc future. well beyond.

In 1911, when President Theodore Roosevelt dedicated the dam named for him, Salt River Project's assets were slightly more than $ 10 million.

Last year, keeping up with the demands of customers required an investment of more than $ 312 million.

Leading the Project In meeting the challenges of water and power needs were President Karl Abel (rear), Vice President John Lassen (left) and General Manager Jack Pfister.

75 years of leadership in water development For three-quarters of a century, SRP the Project's board of governors to take thc gauge and related equipment used to has played a leading role in thc several precautionary measures to pro- monitor the reservoir's water level and genesis and growth of the Salt River tect water supplies for 1978 and future applying a protective coating to thc Valley. The Project's 75th year was no years. pipes, valves and other metal equipment exception. Once again, thc Project In October, the board reduced the used to release water through thc dam.

achieved its basic purpose of storing 1978 allo tmcnt of stored and devclopcd The work cost approximately and developing water, and delivering it water from three to two-acre-feet-per- $ 291,000. Rcfilling of Bartlett to thc Valley, despite thc desert climate. acrc and enacted a moratorium on new, began Sept. 30, 1977.

special pump-right contracts.

SRP meets the challenge Thc board also placed water-use Project opposes of a hot, dry year restrictions on residential irriga- 160-acre limitation Arizona and other parts of thc West- tors, by reducing thc number and dura- During 1977, SRP took a strong stand ern United States continued to tion of irrigation deliveries for about against the 160-acre limitation for experience the parching effects of the 26,000 subdivision accounts. lands which can receive water from a drought which began in 1975. In fact, The provisions were lifted in early federal reclamation project 1977 was the second driest year since The Project's position is that due to 1978 when runoff and reservoir storage 1903, according to SRP runoff improved significantly. the temis of the legislation which records. Only 367,035 acre-feet (af) of authorized the construction of the Salt water flowed into Project reservoirs on To help meet rising costs, the board River Project, thc proposed regulations thc Salt and Verde rivers. A normal flow increased the annual water assessment are not applicable. Also, the Project (based on 30-year averages) would from $9 to $ 10 pcr acre. believes that the interpretation of the have been 925,492 af. (One acre-foot Paying the assessmcnt entitles a 1902 Reclamation Act by a California equals 325,850 gallons.) Project water user to two<ere-feet of court is impractical in light of water per acre. When runoff condi- modern farming costs. SRP has asked the The dry year left the largest of the tions improved in carly 1978, a third Secretary of thc Interior and the Project's six reservoirs Roosevelt acre-foot-per-acre of reservoir water was Arizona Congressional delegation to Lake-at its lowest level since 1958. At made available for a delivery fcc of the end of the year Roosevelt held only support legislation which recognizes

$ 5 pcr acre-foot. the economic realities of agricultural pro-125,264 af of its 1,381,580-af capacity.

duction in today's world.

Together, the Salt and Verde SRP drains Bartlet t Lake water-storage systems contained only for dam inspection Composition of land using water 24.7 percent of capacity at the end of In February, the Project began changes; demand remains constant the year. In an average year, they would draining Bartlett Lake to inspect a Since 1903, the way land has been have contained 45.3 percent of capacity. valve and other operating equipmcnt at used within the Project service area Despite the drought, Valley resi- the bottom of Bartlett Dam. The has changed dramatically. Then, nearly dents were able to continue using water inspection was pcrforined by SRP staff all thc land was used for agricultural at normal volume. This was mcmbcrs and the U.S. Bureau of purposes. Within SRP boundaries, the due largely to SRP's water-storage system Reclamation. average rate of urbanization from which saved water from wet years in Monitoring equipment was installed 1965 to 1975 was 4,000 acres per year.

the early 1970's for use in dry ones. In to estimate thc amount of sccpage from A total of 2,764 acres was converted addition, the percentage of water from the darn. Crews also conducted a silt from agricultural to urban use during wells increased somewhat. survey to check the amount of silt 1977. At year-end there were 119,046 build-up at thc bottom of the reservoir. acres in the Project area being used Board enacts Thc survey showed there was essentially for agricultural purposes and 129,481 precautionary measures no loss in storage capacity since the acres being used for other purposes.

Uncertainty about when the contin- last survey in 1965. Other work Despite the declining amount of uing drought would end proinpted done on Bartlett included replacing farmed land within SRP boundaries,

Land Use In Salt River Project 260 Total Project Acres 220 Non-Ag Acres 180 O

r 140 100 Ag Acres ~

119,046 129,481 1977 60 0

1950 1960 1970 1980 2000 Year Uncontrolled, destructive flows of the Salt River were once common. Today, SRP's reservoirs on the Salt and Verde rivers store most of the water from rain and snow which falls on the Project's 13,000 square mile watershed. The water is released as it is needed to meet the demands of Valley water users. The Project's facilities also provide a variety of welcome recreational side benefits.

Canal banks can be used by joggers, blcyclists and horseback riders.

Boaters, swimmers, skiers and fishermen can pursue their sports on the six SRP lakes.

water deliveries have remained rela- the past 30 years an average of 65 supply of surface water for the Valley.

tively constant for more than 30 years. A percent of water delivered by the Project In recent years, illegal upstream fully-urbanized Project area is expected has come from thc lakes. uses of water have been increasing to require approximately the saine rapidly. In 1957, approximately 3,000 af amount of water that is used today. Project defends per year was being illegally diverted; That's because the density of urbaniza- shareholders'atei'lgllts that quantity had risen to 36,000 af per tion is directly related to per-acre water A paramount objective of SRP is to year by 1977. Estiinatcs indicate that consumption. maintain the integrity of the water unchecked, this amount will increase to Water'deliveries in 1977 totaled rights of the lands within its boundaries. 120,000 afby the year 2000.

910,506 af, 2.6 percent more than in Under federal reclamation law and state To protect the rights of its share-1976. This total was divided among water law, these water rights are holders from the growing number of four categories: nonagricultural uses; permanently attached to the land illegal upstream uses, the Project has peti-decreed lands; agricultural uses; and itself-not to thc owner of the land. tioned the State Land Department to contract deliveries. Such rights cannot be transferred from detenninc and adjudicate all water SRP water used for nonagricultural thc land regardless of whether thc rights on thc Salt and Verde river purposes, including municipal and indus- watershcds.

land is used for agricultural or urban trial uses, parks, playgrounds and resi- purposes. Thus, administration of To support its petitions, SRP has com-dential irrigation, increased to those rights is a land-related concept piled the most complete record of 316,325 af in 1977, from 295,123 historic water use available in Arizona which benefits thc existing user af in 1976. and is ready to support its share-whether agricultural or municipal and Dcliverics to cities increased 10.0 per- holders'laims to water from thc Salt and docs not favor one type of usc over the cent. During 1977 these deliveries Verde systems through judicial or otlici'.

totaled 205,921 af compared with administrative action. Work in this area Surface water rights in Arizona are 187,044 af the previous year. Other will continue to help protect water sup-based upon the doctrine of prior nonagricultural uses required 110,404 af, plies which belong to Valley lands, and appropriation. Basically, this doctrine assure that the taps won't run dry in up from 108,079 a fin 1976. ineans that the first person to take water Water used by decreed lands, which Valley cities.

from a surface water source and put thc include Indian reservations, totaled water to beneficial use has a right for-66,158 af, compared with 58,464 af last ever to continue to usc that Water helps the Valley bloom year. amount before another person can take Water-the primary reason for SRP's existence-is as important now as Agricultural water orders declined in water from the source. The doctrine of 1977 to 441,103 af compared with prior appropriation was fimilyestab- it was 75 years ago. It willcontinue to bc 451,377 a fin 1976. lished in the early territorial days and just as significant in the years to Contract deliveries for 1977 totaled was the legal basis for a court decision come. Water helped bring life to the 86,920 af compared with 82,467 af which adjudicated thc relative water Valley, and thc Project helped bring water.

'he in 1976. These deliveries include city uses rights of certain lands within the SRP on nonmember lands; this quantity is area. That decision, known as the Kent replaced by the cities froin other Decree, was issued in 1910 by Judge sources such as city pumps. Edward Kent.

Of thc total deliveries during SRP has a statutory obligation to 1977, 65 percent came from lakes protect the water rights of both its compared with 69 percent in 1976. urban and agricultural shareholders.

Wells produced thc remaining per- Continuing encroachments on these centage in both years. The increased use rights include upstream diversions and of wellwater was necessary because the impoundments. If allowed to go un-drought reduced the quantity of checked, unlawful upstream diversion of water available in the reservoirs. During water would drastically reduce thc

Domestic Water Use (in acre. feet)

%of 1977 1976 Change Phoenix Tenrpc 20,856.31 8.3 Glendale OM~i 9,446.18 20.1 ntesa 15~519.81 6.1 Scot tsdalc 2,491.91 (9.6)

Chandler OcX@gg 1,064.27 17 A Peoria 983.73 12.1 Gilbert 874.12 67.3 Total 187,044.30 10.1

> gage/

• R tI t

r For many years, SRP processed its customer accounts slowly and tediously, by hand. Today, the Project relies on a sophisticated computer accounting system. The system also allows the Project to give consumers more complete information about their water and power use.

Producing power for people for more than seven decades SRP's involvement in power produc- windows, and determine ifthere is any The new format provides information tion was a product of its conccm for heat-loss from the water heater. Advi- about amounts due, average daily water development and storage. During sers provide customers with their indivi- power use for the current month, the construction of Roosevelt Dam, dual power-usc histories, and teach previous month, and the same between 1905 and 1911, hydroelectric them how to read their electric month of the previous year. These generators werc installed for two pur- meters and establish an energy budget. figures can help customers plan an energy poses. First, the power could be used to In addition to the professional inspec- budget by showing them how their operate pumps and bring additional agri- tion and advice about cutting costs, power use has changed.

cultural lands into production. Second, the service offers customers a chance to Under the revamped billing system, the power could bc sold to help pay buy additional insulation and offers SRP also offers a program called the for water operations. The first low-interest loans from SRP to finance Budget Payment Plan that can give custo-power delivery to Phoenix residents the purchase. Customers also may buy mers tighter control over their family from Roosevelt Dam's generators took insulating jackets for water heaters and budgets. The plan is a method of leveling place in 1909. weather-stripping kits for doors from the customers'ayments so they pay the same Today, the Project produces project. amount each month, winter or summer.

power for more than 268,000 custo- More than 10,000 custoiners took ad- And, they know in advance just how mers. SRP still uses hydroelectric vantage of the free scrvicc in 1977. much that payment willbe.

power; but today other energy sources SRP estimates it will perform another One way the ncw billing system including coal, oil and natural gas, pro- 13,000 inspections during 1978. Insu- saves money is by eliminating mailing of duce the inajority of electricity used by lation sales through thc program totaled separate discontinuance notices. Thc dis-the Project's customers. 1,227 in 1977. Morc than 2,200 continuance notice is printed on the The cost of producing and supplying weather-stripping kits and nearly 850 bill. This process will save about electricity is rising, and SRP recognizes water heater insulating jackets were sold. $ 50,000 annually in printing, hand-the increase puts a burden on custo- The service has thc potential to do ling and postage costs.

mers. During 1977,SRP continued morc than help reduce customers'lec- The system is designed to permit to help customers combat rising prices tric usage. It also can help save dollars direct entry of information into the with a new program aimed at teaching in the fu turc. Rcduccd peak computer, which will eliminate excess consumers how to effect energy con- power usc can result from actions taken paperwork and result in faster, more effi-servation in their homes. in response to Power Saver Service cient service to customers. Altogether, recommendations. Such a reduction the new billing procedure is expected Free home inspections helps the Project cut thc nccd for addi- to save SRP about one-half million aid conservation efforts tional generating units. Lowering the dollars in its first five years of need for ncw units can decrease construc- operation.

SRP was the first Arizona utility, and onc of the first in thc country, to tion costs, and thus help hold down offer home energy inspections to cus- the size of rate increases needed in the Excess capacity sales tomers. This free service is offered future. aimed at cut ting costs through the Project's Power Saver Service Early in 1977, SRP began nego-program which began in April, 1977. New bills tell customers tiating to sell portions of its forecast Thc purpose of thc inspection is to about their energy use excess generating capacity. The sale was pinpoint areas of energy-waste in In the fall of 1977, thc Project's power sought as a result of a loadgrowth homes and offer suggestionsabouthow bills took on a different look with study that predicted the Project would to correct them. the implementation of a ncw, comput- have more generating capacity than Power Saver Service advisers measure erized-billing system. The system is necessary in the mid-1980's, because cus-thc attic insulation in customers'omes designed to improve service to customers tomer growth has not been as rapid as and evaluate its effectiveness. by providing more information about originally anticipated.

They also check window exposures, power usage; it also increases thc effi- The sale, to the Los Angeles Depart-look for air-leaks around doors and ciency ofbillingprocedures. ment of Water and Power(LADWP), was

Customer Growth 700 600 F 500 e) ce 5 a~ 400 ag

'"~ 300 200 100 1937 1957 1977 2000 Year

) I

• V 77 77 Throughout its 75.year history, the Project has helped improve the quality of life its customers enjoy.

Today SRP feels it also has an obligation and responsibility to help consumers get the most from their energy dollars. One way of doing that is through Power Saver Service, which includes a free home inspection program and suggestions about making homes more energy efficient, thereby saving on electric bills.

finalized at the end of thc year. Under by the mines, lower-than-norinal maxi- bined capability of 5,691,000 kw.

tcnns of thc agreemcnt, LADlUP now mum daily temperatures during thc SRP's share is 1,014,250 hm. The units at is a 30-percent owner of the first summer, and thc growing conserva- the four stations produced 67.3 per-two 350,000-kilowatt units of the coal- tion efforts by customers. cent of SRP's energy in 1977. In addi-fircd Coronado Generating Stationbeing Average annual use by residential tion, coal-fired units with a combined built near St. Johns. customers increased from 12,597 kwh capacity of 1,460,000 le are under IUhen the first 1,270,000-kilo- in 1976 to 13,108 kwh in 1977. The construction at the Coronado and watt unit of the Palo Verde Nuclear average cost pcr lovh for those custo- Craig stations. SRP owns a percentage Generating Station begins commercial mers climbed from 3.51 cents in 1976 of these stations which are scheduled operation in 1982, LAD)UP will transfer to 4.25 cents in 1977. for completion in 1979 and 1980 its ownership in Coronado back to An electricity rate-increase went into respectively. IVhcn completed, 85 per-SRP. In exchange, LADIVPwill receive effect in February, 1977, to offset in- cent of SRP's energy willcome from 5.7 percent interest in the three-unit Palo creases in noncontrollable costs such coal, an abundant and economical Verde station. That will come from the as fuel, taxes and financing. (Thc energy source. Using coal instead of Project's 29.1 percent interest in thc last rate increase was in October, 1975. more expensive fuel helps keep con-station. SRP has the right to re- Another rate increase is not expected to sumers'lectricity costs as low as possible.

capture LADIVP's share in the Palo be necessary until late 1978.) During 1977,SRP made moves to Verde station to meet customerload However, thc increased charges ensure adequate future fuel resources requirements in the late 1990's. were partially offset during the summer by entering into several coal contracts SRP has received $ 51 million cash when a negative fuel cost adjustmcnt for Coronado Generating Station. Thc and will receive another cash payment of factor was in effect. As a result, the cost contracts werc with Pittsburg%,

$ 47 million in August, 1978 from LADlVP of electricity declined $ 3.68 per 1,000 Midway Coal Mining Company, for its share of costs already expended kwh during July, August and Septem- Consolidation Coal Company and for Coronado's construction. LADIVPwill ber. (The fuel cost adjustment factor Coastal States Energy Company. The con-also pay its proportionate share of the reflects the changes in fuel prices as tracts covered periods of five to 25 years.

remaining construction costs. they fluctuatc above or below the base In addition, SRP joined with thc Thc sale will reduce thc amount of charges contained in SRP four other participants in Palo Verde future SRP bond sales by about $ 230 electric rates.) During 1977, the Nuclear Generating Station to nullion between 1978 and 1982. That re- Project produced a higher percentage of acquire one-lialf interest in potential duction will decrease the portion of the electricity needed by customers with uranium proper'ties in wyoming. It is rate increases otherwisc required for lower-cost fuels, such as coal, and hoped the acquired rights will provide debt service coverage on thc financing less had to be produced with higher- supplementary fuel for the nuclear of that part of the plant sold to LADEVP. priced oil. This fuel-mix helped keep generating station.

electricity costs down for consumers. During the year, the Project also Number of customers goes up; actively sought and acquired several long-peak dips slightly Developing fuel supplies tenn coal leases in Ncw Mexico. SRP is By the end of 1977, SRP was serving for energy hidependence presently conducting exploration on 268,891 electricity customers, com- Throughout 1977, the Project con- the sites. The objective is to delineate a pared with 257,941 at the end of 1976. tinued its efforts to plan and develop proven coal reserve, which will further Despite the increase in the number adequate and reliable fuel sources for its aid SRP's quest for eneigy indepen-of people being served, the Project's existing and future generating stations. dence and willhelp keep electricity annual peak dipped from 1,732,000 Now and in the near future, thc costs down for consuiners.

kilowatts in 1976 to 1,731,000 kilo- bulk of SRP's generating facilitics watts in 1977. Three factors contributing willbc fueled by coal. The existing units SRP's construction looks to the future to the lower-thanwxpectcd peak were at thc Navajo, Hayden No. 2, Four Construction of additional gener-the copper mine strike in Arizona, Corners Nos. 4 and 5, and Mohave ating facilitics is part of the Project's which reduced the power demands stations are coal-fired. They have a com- commitment to future needs. During 10.

Project Fuel Sources Actual l 972, l 976 and l977 Estimated l978 and l 982 Percettt hfisc.

Year llydro Oil Gas Coal Nuc Purch.

4% 37% 32% =- 1e%

1972 17%

1976 15% 12% 7% 60'Io 6%

1977 009 093 CS CM - K 1978 10% 18%o 2% 69% 1%

1982 9'o 7%o 74% 16%o I Includes hydro purchases.

I goal

.a 0 nt W

r.i~<

~t- d Hydroelectric generators at Roosevelt Dam were among the first to produce power for Project customers. How-ever, the energy needs of Valley residents outgrew the hydroelectric generation available. So, SRP turned to other energy sources. Last year, coal fired generation supplied 67 percent of the power produced by the Project. Hydroelectric generation furnished Just 11 percent of the power used by customers.

1977, SRP spent $ 312.5 million on McCormick and Paget, Inc., to conduct vides for: changes in work practices various construction projects. a management audit of SRP. After the to improve efficiency of operations; an Major construction under way last first phase was completed, the firm additional holiday to become cffcctive in year included the Coronado Generating reported that "on balance, SRP is an 1979; more rapid accrual of vacation Station, near St. Johns, the Palo Verde effectively and efficiently-managed time; increased medical and dental in-Nuclear Generating Station, near utility." surance covcragc; and wage increases Buckcyc, and the Craig Generating Areas which received high ratings ranging from 6.5 percent to 9.0 percent.

Station, near Craig, Colorado. Also included: The contracts may bc opened prior under construction were transmission -management's strong ethic of to Jan. 1, 1979 for negotiation of 1979 lines, to bring power from Corona- holding costs in line; wage increases and shift diffcrcntial pay.

do and Palo Verde to Valley customers. -the senior management team's At thc end of 1977, SRP had a total Thc Project presently owns 70 percent compctcncy and activist posture; of 3,652 employees; 2,315 were of the Coronado Station's first two -financial management in gcncral; covered by the new contract. Thc generating units; Los Angeles Departinent -methods of raising capital; and remainder were salaried.

of Water and Power (LADWP) owns sophisticated planning.

the remaining 30 percent. Each of those Areas where improvements can be units has a capacity of 350,000 kw. made included:

They are scheduled for operation in 1979 key management processes such as and 1980. Thc estimated cost of those delegation of authority, and units is $ 634.0 million, excluding management information; interest charges during construction. -water group approaches to construc-A third 350,000-kw unit may be con- tion and facilities upgrading; and structed at Coronado. SRP's percentage power group management of engi-of ownership in that unit has not neering resources and the planning been determined. and execution of maintenance.

SRP owns 29 percent of the Craig To fully complete its work, the con-project, which includes two 380,000.kw sulting fimi willstudy three major areas coal-fired units that are expected to in grcatcr depth. These are gcncral bc operational in 1979. The total cost management organization; major of Craig is $ 598.0 million excluding power construction project and interest charges duringconstruction. engineering management; and water At present, thc Project also owns group management.

29.1 percent of thc Palo Verde station.

(5.7 percent will be transferred to project signs new LADWP in 1982, in exchange for its two-year labor contract 30-percent share of the Coronado sta- SRP's two-year labor contract with tion.) Palo Verdewill ultimately consist the International Brotherhood of of three 1,270,000-kw pressurized- Electrical Workers Local 266 expired water nuclear-reactor units. The on Dec. 31, 1977.

first unit will begin commercial open- After nearly three months of nego-tion in 1982. Thc station's total cost- tiations, talks broke down on Jan. 11, excluding interest charges during con- 1978 and the union began a 234ay struction-is estimated to be $ 2.8 billion. strike against SRP. Agreement on the new two-year pact was reached on Feb. 2, Consulting firm looks at SRP 1978 and striking employees returned Last year, theProject'sboard retained to work.

the consulting firm of Cresap, The $ 4.3 million agreement pro-

Financial commentary Special bond sale held energy normally generated in California maintenance and depreciation totaled to refund high-interest bonds and the Pacific Northwest. This reduc- $ 55.4 million, compared with $ 46.7 In August, 1977, the Project held the tion created a demand for energy from million in 1976. Uncontrollable expen-largest bond sale in its history. SRP other sources. In response, the Project ses of taxes and tax equivalents sold $ 155,915,000 in municipal reve- supplied large amounts of energy- amounted to $ 34.3 million, com-nue bonds at an effective interest rate primarily from coal-fired generating pared with $ 30.9 million the previous of 5.90 percent. Proceeds from the sale units-to utilities hard-hit by the water year. Other operating expenses, including will be used to refund three earlier shortage. As a result, wholesale sales labor, material, supplies and services issues of bonds with interest rates of to other utilitics, including surplus totaled $ 45.4 million, compared with 6.50 to 8.13 percent. Thc refunding sale sales, were up 135 percent, to $ 44.0 $ 38.8 million last year.

is expected to save approximately million in 1977, compared with $ 18.7

$ 23.2 million in debt service pay- million in 1976. Financing costs up ments during the next 37 and a half years. Increases were also recorded in Financing costs, less allowance for By reducing revenue requirements, the electric sales revenues from retail custo- funds used during construction, were refund will reduce future electric rate mers. Residential sales increased 30.7 $ 37.5 million in 1977, compared with increases that would otherwise be percent since 1976, from $ 102.9 million $ 31.1 million in 1976.

required. to $ 134.5 million. Commercial and The Project also sold $ 125 million in industrial sales rose 27.4 percent, from

$ 85.4 million to $ 108.8 million. Agricul-Net revenues set record revenue bonds in March, and $ 115 tural pumping sales increased by 38.6 The Project realized net revenues of million in November. Proceeds from thos'c sales were used to help finance percent, from $ 4.4 million to $ 6.1 $ 53.2 million in 1977, compared with

$ 11.3 million last year. Because SRP is a construction and improvements of elec- million.

The increase in electric revenues not-for-profit institution, net reve-tric facilities. Major projects include the was primarily thc result of a 13.9 per- nues are used to finance increases coal-fired Coronado and Craig genera-cent rate increase that took effect in in workingeapital requirements and to ting stations and the nuclear-powered Palo Verde Generating Station. February, 1977, coupled with the help pay for construction and improve-Revenues available for debt growth in electric energy sales. IVeather ment of facilities.

conditions and new-customer hook- SRP's plant-in-service value, less service coverage for 1977 were about ups also had an iinpact on the increase. credits for accumulated depreciation 1.77 times actual requirements. This level of coverage helped produce the very IVater revenues also increased in plus construction work in progress, 1977 because ofhigher water assessments totaled $ 1.25 billion in 1977, compared favorable effective interest rates nego-tiated for bond sales. The Project's (from $ 7.50 per acre in 1976 to $ 9 per with $ 1.04 billion in 1976.

Project management is committed bond ratings were "Aa" by Moody's In- acre in 1977) and increased deliveries.

vestor Service Inc., and "A+" by to maintaining a strong financial posi-Standard &,Poor's Corporation.

tion as a key factor in assuring favorable Opera ting expenses increase low-interest costs on borrowed capital Operating expenses for the Project funds and helping to minimize the Operating revenues climb totaled $ 220.4 million in 1977, impact of future rate increases.

Revenues from operations improved compared with $ 182.7 million in 1976.

in 1977 after several lackluster years Fuel and purchased-power expenses brought about by the general business amounted to $ 85.3 million compared with recession. In 1977, operating revenues with $ 66.4 million the previous year.

totaled $ 311.1 million, compared Most of the additional expense was a with $ 225.3 million in 1976. result of extra fuel needed to generate Hot, dry weather prevailed in energy to meet the increased retail sales the west during 1977. The resulting and the higher-than-normal sales to drought greatly reduced stream-flows other utilities.

and the amount of hydroelectric The plant-related expenses of 13.

Combined statement of net revenues Salt River Project Agricultural Improvement and Power District and its agent, Salt River Valley iVater Users'ssociation For the years ended December 31, 1977 and 1976 1976 Operating Revenues:

Electric.....................................

iVater and irrigation.

SMI~ l4 $ 220@61,215

~

11 4,307,032 Total operating revenues.. 5225 268 247 Operating Expenses:

Power purchased Osg%5+tN Fuel used in electric generation. 4@@68 I'18,103,516 48,285,472 Other operation expenses.

Maintenance.............................................

PAN 38,786,480

$ 4Kg0N 19,562,273 Depreciation and amortization (Note I) .. KQINo95 27,096,061 Taxes and tax equivalents (Note 5). ~

~ ~

~ 30 869,311 Total operating expenses. S 182 703 113 Net operating revenues. ' I 5 42565 134 Financing Costs:

Interest on bonds at coupon rates.

Alnortization ofbond discount I Rgtit'I Q0RP

$ 60,074,044 657,176 Amortization of bond issue expense............................. INg59 167,854 Amortization of loss on defeascd debt (Note 9) 33IgP Interest on other obligations.. QSPgN 294,059 Interest earned on investments and deposits ........................ (12,775,619 Net financing costs. $ 48,417,514 Less-Allowance for funds used for construction (Note 1). ~

~

6 4 (17,357,802)

Financing costs less allowance for funds used for construction $ 31 059,712 Other Deductions, net $ 218,163 Net Revenues for the Year. $ 11,287,259 lee accompanying notes to combbted financial statements are an integral part of this statement.

14.

Combined statement of sources of funds for additions to utility plant Salt River Project Agricultural improvement and Power District and its agent, Salt River Valley Water Users'ssociation For the years ended December 31, 1977 and 1976 1976 Gross Additions to Utility Plant, excluding allowance for funds used during construction. $ 234,011,818

~ ~ ~

Funds Generated From Operations:

Net revenues for the year. g@QIQI $ 11,287,259 Add Depreciation and other charges not requiring current funds. Sg8@59 29819,879 Deduct-Allowance for funds used during construction not providing current funds. ~

I ~ 'I (17,357,802)

Total funds gcncratcd from operations before retirement of debt (4mlgg3 $ 23,849,336 Less-Rcpaymcnt of long-term debt. I 10,527,234 Net funds generated from operations. ~ ~ ~

I $ 13,322,102 Funds Obtained From Financing:

Proceeds of bond issues, less defeascd bonds in 1977 (Note 9) . 5@WAN $ 398,749,762 Advances from U.S. Government for rehabilitation of irrigation plant M3$% 1,126,874 Other advances and contributions in aid of construction. @iN3g 3,062,146 Short-tean borrowings, net of repayments. III III 40,000,000 I I 362,938,782 Total funds obtained from financing. I > ~

Other-(Increasc) in scgrcgatcd funds set aside for debt service (CtNIs%IQ9@ (16,023,299)

Decrcasc (increase) in segregated funds set aside for construction .. 45gG!451 (96,825,635)

(Increase) in temporary investments held primarily for I I ' 50,652,353 construction ..

Nct funds obtained from financing.. $ 199 437 49$

Changes in Other Items Affecting Funds:

(Increase) in receivable on sale of plant 'ggi'@ '

(Increase) in unamortized loss on defcased debt ~

Increase in accounts payable. 0@0 6,888,304 (Incrcasc) decrease in accounts receivable gal%(g% 936,461 (Increase) dccrcase in fuel stocks and materials arul supplies. @P 7,416,227 (Increase) in deposits for payment of accrued interest on bonds.. $ 55959 (11,122,078)

Incrcasc in accrued interest payablc......... @$ 5gAQ IOP91,331 Decrcasc in cash.. gS 6,544,295 Change in other assets and liabilities, net. ~402 319 Nct change in other items.. $ 21,252,221 Funds Used for Additions to Utility Plant. ~ I

$ 234 011 818 Thc accompanying notes to combined financial statcmcnts are an integral part of this statcinent.

Combined balance sheet Salt River Project Agricultural Improvement and Power District and its agent, Salt River Valley Water Users'ssociation For the years ended December 31, 1977 and 1976 QKAs 1976 Utility Plant, at original cost (Notes 1, 2 and 3):

Plant in service-Electric.

Irrigation.

I E858K8 65X%/$ 8

$ 812,169,386 62,549,894 General. 'Il so I

~ 39 483 750 Total plant in service ~

~ I ~ ~

S 914,203,030 Less-Accumulated depreciation on plant in service 'I to 192 839,319 S 721,363,711 Construction'work in progress ~

~ ~

~ ~

~ 315 414 264 I i ~ ill $ 1,036,777875 Seg'regated Funds, consisting of cash, U.S. Government obligations and bankers'cceptances set aside in accordance with resolutions ofbond issues:

Debt service funds, excluding $ 38,856,000 in 1977 and

$ 33,481,000 in 1976 for payment of accrued interest (Note 9) ... I O(IIN~II $ 86,902,964 Construction funds. ~

~:

~ '184 I 97,582,811 485 775 Current Assets:

Cash..

Temporary investments, at cost, held primarily N~ii '399,692 for construction. Mgl:gGi3 106,090,055 Deposit in debt service fund for payment of accrued interest on bonds.. NQ'i&+ 33,481,367 Accounts receivable from insurance carriers (Note 11) .. OglgN 1,887,870 Receivable on sale of plant (Note 10) .. Ci'4Ki.gQ Trade and other accounts receivable, less reserves of

$ 1,319,000 in 1977 and $ 967,000 in 1976 for doubtful accounts Pgl 18,325@60 Fuel stocks, at average cost. 85XI5gilS 11,133,659 Materials and supplies, at average cost 8@$ 3g 15,296,886 Prepayments, interest receivable and other. 7,788 ct 08 I I I ~

~

$ 194,403,797 Other Assets:

Nonutility plant, less accumulated depreciation of $ 688,000 in 1977 and $ 500,000 in 1976.

Unamortized loss on defeased debt (Note 9) .

I 0g%aià Xg(QW S 2,389,661 Bond expense being amortized (Note I). NISOg9P 2,725,782 Miscellaneous deferred charges (Note I 1). 5@34,333

~

~

S 11 049 776 I ~

$ 1 426 717,323 The accompanying nores ro combined financi 16.

r 0 QiK3

~ 0 ~ 0 r ~ 0 1976 Long-Tenn Debt (Note 9)

General obligation bonds. ~is .+iso $ 278,915,016 Electric system revenue bonds. QcMPgt5% 893,317,068 Obligations fo U.S. Government. 95PIN3bI 12,570,867 Other obligations.. 1,762,219

$ 1,186,565,170 Accumulated Net Revenues, invested principally in utility plant:

Balance beginning of year Net revenues for the year..

I MP@NgS It I

$ 146,394,829 11,287,259 Balance end of year. I i'I i I $ 157,682,088 Total capitalization, consisting of long. term debt and accumulated net revenues. ~

4 I $ 1,344,247,258 Current Liabilities, excluding $ 15,688,000 in 1977 and

$ 15,260,000 in 1976 representing current portion of long-tcrm debt which is to be paid from segregated funds:

Notes payable to banks (Note 8) . o $ 1,000,000 Accounts payable Cga0 25,461,503 Accrued taxes and tax equivalents (Note 5). ~IN@Xi 12,822,109 Accrued interest. SM@%0 33,483,423 Customers'eposits @5K@50 3,340,486 Other current and accrued liabilities. 2,710,770 I 'I 's $ 78 818 291 Deferred Credits and Reserves:

Irrigation assessments levied for subsequent year. QN@K~) $ 2,690,660 Advances for construction. tOIIIOI>X 397,342 Other ~

o I I 563,772 II II $ 3,651,774 Commitments and Contingencies (Notes 3, 4, 5, 6 and 11)

I ~

$ 1,426,717,323 Statements are an integral part of this balance sheet.

Notes to combined financial statements 85QIItMON'Oaa'NjKHXMNMKcoaaIMBGCaaIKRh (c) Rcvctntcs 0 Meters for rcsidcntial, commercial and small industrial customers are read cyclically and sales recorded only when billed. This system of (a) Principles Underlying Contbincd Statements billing results in earned but unbillcd revcnucs which amounted to Thc combined financial statements include the accounts of the Salt

$ 9,450,000 at December 31, 1977, and $ 8,769,000 at Dccembcr 31, River Project Agricultural Improvement and Power District ("District")

1976. For large industrial customers, mctcrs arc read near month~nd and the accounts of its agent, the Salt River Valley Water and billings recorded on the accrual basis. Electric revcnuc billings are together referred to as thc Salt River Project, and a wholly Users'ssociation, adjusted periodically for changes in costs of fuel and purchased power.

owned subsidiary, Salt River Generating Company. All significant inter-Rcvcnucs from water and irrigation operations are recorded when company transactions have been eliminated.

carnal.

(b) UtilityPlant, Depreciation and hfaintcnancc KMED8BKi)QNOaat¹iM05'OMKh The accounting records of Salt River Project are maintained sub- The United States of America retains a paramount right or claim in stantially in accordance with the Uniform System of Accounts pre- the Salt River Project which arises from the original construction and scribed for electric utilities by the Fcdcral Power Coinmission. Utility operation of thc Project's facilities as a Fcdcral Reclamation Project.

plant is stated at the historical cost of construction. Construction costs Thc Project's right to thc possession and usc of, and to all revenues include labor, materials, services purchased under contract,'and alloca- produced by, thcsc facilitics is evidenced by contractual arrangcmcnts tions of indirect charges for engineering, supervision, transportation, with the United States.

and adininistrativc expenses.

An allowance for funds used to finance construction work in prog-ress is capitalized as a part of thc clcctric and general plant. This allow-tSI ~>>>>>>>>

Balances shown for construction work in progress represent ex-ance is deducted from net financing costs in the combined statement of penditurcs for ncw facilities required to serve anticipated customer net revenues and added to utility plant. Capitalization rates of 6>8% and needs, and consist of: Dcccmber 31 7V~% werc used in 1977 and 1976, respectively. 1977 1976 Dcprcciation expense is computed on the straight-line basis over Electric generating facilities......... $ 450,324,298 $ 276,195,260 Transmission and distribution...... 68>164>647 32,176,139 estimated useful lives of the various classes of plant. Rates in effec Irrigation plant............................ 3/32>230 2,807,137 during the years 1977 and 1976 resulted in provisions approximating Other construction...................... 3/47,652 4,235,728 3.59% for 1977 and 3.7 1% for 1976 on the average cost of depreciable Total.. $ 525>868/27 $ 315,414,264 electric plant, and 1.94% for 1977 and 1.90% for 1976 for dcpreciablc irrigation plant. When property rcprcscnting a rctircment unit is re- Constniction expenditures planned for 1978 approximate $ 427 placed, removed, or abandoned, thc cost of such property is crcditcd to million.

thc appropriate utility plant account, and such cost together with At Deccmbcr 31, 1977, substantial commitmcnts had bccn entered removal costs less salvage is charged to accumulated dcprcciation. into for delivery of materials and services on construction projects. In Thc Project cltarges to maintenance cxpcnsc the cost of labor, addition, various firm commitmcnts exist under coal and fuel oil supply contracts.

materials, and other expenses incurred in the repair, restoration of condition and replacement of minor items of property.

>> ~>>I>>>>>

Various pending lawsuits involving environmental matters could (c) Bond Evpcnse affect interests owned by Salt River Project in present generating facili-Bond discount, premium, and bond issue cxpcnse are being amor- tics and in proposed generating facilitics and transmission lines. In tized over the terms of the related bond issues. gcncral, these lawsuits seek to impose higher air quality standards for generating plants. If ultimately decided advcrscly to thc interest of Salt (d) Employees'etirement Plan River Project, thc outcome of the lawsuits could result in increased Thc Project has a retirement plan covering substantially all construction costs, increased future operating costs, and a possible loss employees. The plan is funded entirely froin einploycrs'ontributions in the operational reliability of certain gcncrating plants. All of these and the earnings of the invested assets. Thc cstiinated unfunded past cffccts would increase the costs to be passed on to customers through service liability,asdetermined by the plan's actuaryusing the "entry agc normal cost" valuation method, with frozen initial liability, was

$ 7,731,628 as of July I, 1977, and is being funded over a period ending in 2001. Thc employers'ontributions to this plan totaled $ 5,350,555 in 1977 and $ 4,552,082 in 1976.

Iincrcascd electric rates.

GKaa~IIRt'%N9RNMIiNIIJKat Salt River Project makes voluntary contributions to taxing bodies in lieu of payment of property taxes. Thc Department of Rcvcnue of At July I, 1977, the plan's assets cxcccdcd the actuarially com- the State of Arizona has filed lawsuits requesting increases in the values puted value of the vested bencBits at thc same date. used to compute the voluntary contributions for thc years 1970

,18.

through 1974. No lawsuits or claims have bccn filed for subsequent (@ gQi~ggjggQ>it@

years. Bonds outstanding arc general obligation bonds and electric system The general cffcct of the claims made under thc lawsuits would bc revenue bonds. In all years to date, net electric revenues have been to increase thc contributions for thc years in dispute by a total of more than sufflcient to meet all debt service requirements.

approximately $ 3,650,000. In 1973, in connection with a portion of the lawsuits, thc Superior Court of Arizona granted a summary judg- Gcncral obligation bonds are a lien upon the real property included ment in favor of Salt River Project. This summary judgment was later in the District and are additionally secured by a pledge of revenues rcverscd in part in appcllatc decisions within Arizona, and this rcvcrsal from thc operation of the electric system. If thc net clcctric revenues, was appcalcd to thc United States Supreme Court which denied juris- as defined in the bond resolutions, are not suflicient to meet the princi-diction. The claims must now bc litigated in Superior Court with the pal and intcrcst payments, the bonds and interest are payable from a decision of tltat court possibly subject to the appcllatc process. levy of taxes on thc real property.

Under Arizona law, thc amount of each voluntary contribution made by Salt River Project is subject to rcvicw and approval, or dis- Electric system revenue bonds arc secured by a pledge of, and a lien approval, by thc Secretary of thc Interior of the United States of on, thc revenues of the clcctric system after deducting "operating America. In thc rtpinion of legal counsel, any additional contributions expenses," as defined in the bond resolutions, subject to prior liens of rcquircd as a result of the above litigation would be subject to the general obligation bonds and amounts due the United States. In all approval or disapproval of thc Secretary prior to payment. years to date electric revenues, after deducting "operating expenses" as If any liability werc to result from this litigation, managcmcnt defined in thc bond resolutions, have been morc than sufficient to meet expects that thc amount of such liability would be rccovcrcd when paid all debt scrvicc requirements.

through increased rates collected from electric customers.

On August 18, 1977, $ 155,915,000 of Electric System Refunding Rcvcnuc Bonds, 1977 Series B, were sold at an cffcctivc interest rate of 68NKMQHNX88 5.90%. The proceeds of these bonds werc used to defcase the following Principally as a result of certain water flooding in 1970 and 1972, Electric System Revenue Bonds:

various lawsuits and claims have bccn fllcd against Salt River Project alleging that thc Project has a responsibility in regard to flood control Issue Amount and a liability in regard to flood damage. Thc ultimate liability, ifany, 1974 Scrics C $ 40,000,000 is not dctcrminablc, but managcmcnt expects that a significant portion 1975 Scrics A. 60,000,000 of any'liabilities wliich might result from flood damage claims will be 1975 Series C ..... 35,000,000 covcrcd by insurance.

$ 135,000,000 (Q) GHER5iIEMKiN55NBC5%989M Thc dcfcasancc resulted in a loss of $ 19,416,340. The Board of The expcnscs, including depreciation, for irrigation and water Directors approved thc deferral of this loss and its amortization over operations cxcccded thc asscssmcnts, dclivcry fees, and other rcvcnues thc period which thc 1977 Series B bonds are outstanding.

therefrom by approxhnately $ 9,462,000 in 1977 and $ 7,341,000 in 1976. Thcsc amounts do not include cxpcnditurcs for additions and Thc annual maturities of bonds and other long-term debt out-hnprovcmcnts to irrigation plant and for repayment of long.term debt. standing as of Deccmbcr 31, 1977 duc in each of the years 1978 thru 1982 arc $ 15,670,000; $ 16,421,000; $ 19,269,000; $ 20,198,000 and

$ 20 909 000 respectively Q) GKSCVCKRih Thc District has a lincwferedit agrcemcnt with 13 banks, which Interest and amortization of discount on the various issues out-provides for a maximum commitmcnt of $ 60,000,000 with interest on standing during the year resulted in an effective rate of 6.15% for 1977.

borrowings at a rate equal to 60% of thc banks'rime rate as cstab- This rate approximates 6.23% over thc remaining terms of the bonds.

lishcd from time to time by thc lead bank. No compensating balances nor commitmcnt fccs are required under the line ofcredit. Thc current At December 31, 1977, Electric System Revenue Bonds totaling agrecmcnt tcnninatcs on October 16, 1978. Thc linc.of-credit borrow- $ 235,000,000 principal amount werc authorized, but unissued. Electric ings arc borrowed in the name of and payablc from the General Fund System Refunding Revenue Bonds totaling $ 90,000,000 principal and rank junior to payments required for thc Prior Lien Bonds and thc amount were also authorized, but unissued.

Revcnuc Bonds. At December 31, 1977, thcrc werc no outstanding borrowings. On January 3, 1978, thc District borrowed thc full Thc debt scrvicc portion of segregated funds includes $ 18,666,000

$ 60,000,000 at an initial intcrcst rate of 4.65%, rcpayablc in full on or at Dccembcr 31, 1977, and $ 16,896,000 at December 31, 1976, restric-before October 16, 1978. ted for operating reserve requirements under bond resolutions.

19.

Long-term debt outstanding at December 31, 1977 and December 31, 1976, was as follows:

Issued Outstandin Future Interest Rate In Year 12/31/76 Maturities General Obligation Bonds:

Issue No. 4 ............................. 2 5/8 1950 S 700,000 Issue No. 5 ............................. 2 I/2 1951 pier t ggt 2,500,000 197840 Issue No. 6 ............................. 2 3/4 to 3 5/8 1953 pgiQtotttt) 8,000,000 197842 Issue No. 7 ............................. 3.2 to 3.4 1956 8gNgBt 7,045,000 197847 Issue No. 8 ............................. 3.6 to 3 5/8 1959 QgKtN~~Ot 3,830,000 197847 Issue No. 9 ............................. I to41/4 1960 S!$ NgS 22,805,000 1978.92 Issue No. 10 ........................... I to 3.6 196245 15RQgs 15,730,000 1978-94 Issue No. 11 ........................... 3.4 to 3 I/2 1965 O~t'g~D~ 10/00,000 197847 Issue No. 12........................... 3 to5 196849 956gg~D>> 37,000,000 1978-99 Issue No. 13 ........................... 4to5 1969 $gHN~Dt 7/00,000 1978-99 Issue No. 14 ........................... 3 I/2 to 6 1970-72 1978-2003 S 282/10,000 Unamortized bond discount.....

Total general obligation bonds outstanding........... S 278,915016 Electric System Revenue Bonds:

1973 Scrics A............................ 5 to 6 I/2 1973 %5KQtot~D~ S 74/10,000 1978-2010 1973 Series B ............................ 5 to 6 I/2 1973 75,000,000 1978-2011 1974 Series A............................ 5.7 to 7.2 1974 Nttllglglllll 90,000,000 1983-2012 1974 Series B ............................ 6.1 to 7.6 1974 @itgii+itit) 50,000,000 1983-2012 1974 Series C ............................ 6 1/2 to 7 3/4 1974 40,000,000 1975 Series A................,.......,... 7.1 to 8 I/8 1975 60,000,000 1975 Series B ............................ 7.0 to 7.6 1975 gitQtgQt 75,000,000 1983-2015 1'975 Series C ............................ 7.2 to 8 1/8 1975 35,000,000 1976 Series A............................ 5.0 to 7.2 1976 KtttItt%6Dt 100,000,000 1985-2016 1976 Series B ............................ 4.7 to 65/8 1976 OxttiX~gtlR 140,000,000 1984-2016 1976 Series C .......,.................... 6.0 to 6 3/4 1976 40,000i000 1982-2016 1976 Series D............................ 4.0 to 6.4 1976 gj@gitgtgitt) 125,000,000 1980-2016 1977 Series A............................ 3 3/4 to 6 1/8 1977 gggtgiitt t) 1980-2017 1977 Series B ............................ 4 3/4 to 5.9 1977 lÃOQgiiDt 1989-2015 Refunding 1977 Series C ............................ 3.8 to 5.8 1977 1980-2017 S 904,210,000 Unamortized bond discount..... (10,892@32)

Total electric system revenue bonds outstanding........... S 893 17 068 Total bonds outstanding...... $ 1,172,232,084 Obligations to U,S. Gov't for irrigation plant ............................ None 1935-77 oMNPgQP 12/70,867 1978-2002 Equipment contracts....................... 6 7/8 and 7 1/2 1974-75 0 Sgli 1,728,048 197842 Other obligations............................. None 1950 34 l71 1978-79 Total long. term debt ................. $ 1,186/65,170 20.

lNii)%MRCOs ' '

M8NZR8b The District and the Department of Water and Power of thc City of Los Angeles (LADWP) entered into the Coronado Project Participation Agreement on November 23, 1977, which provides for ownership, con-struction, operation and maintencnce of two coal. fired units each having a generating capacity of 350,000 kw, a railroad to deliver fuel and a 500.kv transmission system.

The District is Project Manager and owns 70% of the two genera-ting units and the railroad and 80%%uo of the transmission system. LADWP owns 30%%u0 of the first two units and the railroad and 20% of the transmission system.

SO ~

interest in the Coronado Project to the District and in return the District shall transfer to LADWP a 5.7% interest in Units I, 2 and 3 and associated facilities of the Palo Verde Nuclear Generating Station.

During 1976, Salt River Project terminated its participation in the Montezuma Pumped4torage Generation Project because of projections of reduced capacity requirements. The Board of Directors approved the deferral of approximately $ 1,800,000 of Montezuma Project costs and the amortization of this charge over a period of five years, with the intention that the costs bc considered for inclusion in amounts to be recovered from consumers over the same five-year period, commencing The LADWP agrccd to pay its share of all costs incurred by the with the next general rate change.

District from inception through December 31, 1977, which amounted A receivable from insurance carriers arises from an accident at the to $ 98,087,756. The District received payment of $ 50,607,713 on Kyrcne Station. Damage from the accident has been fully repaired and December 30, 1977. The unpaid balance of $ 47,480,043 plus 7/~% billed to the carriers. Management believes that the amount billed will interest is due on or before August I, 1978. Collection of thc unpaid be collected.

balance is subject to a review of the related costs by LADWP. In man- Salt River Project is actively engaged in rcscarch and dcvclopmcnt agement's opinion, the resulting adjustment, if any, to the unpaid programs rclatcd to new energy sources and improved technologies for balance, would not bc significant. power generation. During 1977, operating expenses included approxi-The District and LADWP have also cntcrcd into a Memorandum of mately $ 1,100,000 of amortization related to research and develop-Agreement Providing for Purchase, whereby LADWP shall transfer its ment projects.

O O -OO To the Board of Directors, Salt River Project Agricultural Improvement and Power District, 4 Board of Governors,

'Salt River Valley IVater Users'Associations We have examined the combined balance sheet of SALT RIVER PROJECT AGRICULTURALIMPROVEMENT AND POWER DISTRICT ( a political subdivision of the State of Arizona) and its agent, SALT RIVER VALLEYWATER USERS'SSOCIATION, together referred to as the SALT RIVER PROJECT, as of December 31, 1977, and December 31, 1976, and the related combined statements of net revenues and sources of funds for additions to utility plant for the years then ended. Our examination was 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 December 31, 1977, and December 31, 1976, and the results of its operations and sources of funds for additions to utility plant for the years then ended, in conformity with generally accepted accounting principles consistently applied during the periods.

Phoenix, Arizona, February 24, 1978. Arthur Andersen &, Co.

ZI.

Statistical review PROJECT GENERAL NSP 1976 1972 1967 Operating revenues.. OOQ~:PEN $ 225,268/47 $ 104,698,620 $ 50,686,491 Electric I(>>>>i 'rr>>

>> 220,961,215 102,627,839 48,791,130 Water and irrigation 6@gg>>35 4,307,032 2,070,781 1,895,361 Operating expenses. SQghg 182,703,113 84,251,026 45,398,680 Nct financing costs Less capitalized interest. IPgxlg 31,059,712 7,527,068 2,458,112 Other deductions (revenues), nct . gR 218,163 159,782 287,449 Nct rcvenucs. gK5%0>> 11,287,259 12,760,744 2/42,250 Construction expenditures. NOBNOg~~D>> 223,448,000 89,788,071 19,889,979 Electric and irrigation plant, gross..... 04%99)R5 1,229,617,294 5198 19,307 252,375889 Contributions of power revenues to support water operations.. QNg~~D>> 7,341,000 10,600,000 7,700,000 Taxes &, tax equivalents 5R 30,869,311 11,207,572 4,559,225 Employees at year<nd. QN9 3,325 2,654 2,050 iVATER MSP 1976 1972 1967 Total storage and pumping capacity (acre-feet) ... SNICK 2,841,818 2 F56,538 2,871843 Storage capacity (six reservoirs) ..................... 8gKI0>>D~ 2,072,050 2,072,050 2,072,050 Installed pumping capacity . %3@6 769,768 784,488 799,193 IVatcr in storage January 1 (acre-feet)

Project storage only 771,440 723,247 1,345,146 Runoff (acre. feet). 817,419 1879,103 595,946 IVatcr in storage December 31 (acre-feet)

Project storage only 7111353 1,051,824 1,176,353 Sources of water. for deliveries (acre-feet) ............ @go>>>>'giggf>>'ARP 1,190,720 1,190,477 1,205855 Gravity supply 848,734 782,629 804,536 Groundwater supply (pumping by SRP) 335,988 403,106 396,863 NO>>wt>>'!Ã Groundwater supply (pumping by others) . 5,998 4,718 3,856 Uses of water (acre-feet) . OgggP 1,190,720 1,190,477 1,205,255 Agricultural.. CINE 451277 455,567 541,167 Urban. IlggN 295,123 236,361 179,227 City domestic. Ki898! 187,044 142,559 96/50 Subdivision irrigation QPgN 56,753 50,248 45 /39 Other nonagricultural irrigation (schools, parks, churches, ctc.)............... 9S 51,326 43,555 37,138 Decreed deliveries .. CAMO 58,464 55,548 55,159 Contract deliveries. Q5g89 82,467 79,630 53,695 SQ0 Seepage and evapotranspiration .....................

Canals, total (miles) .

Lined .

II 6%

303889 131 59 363,371 131 53 376,007 138 47 Latcrals, total (miles). 863 878 877 872 Lined or piped %5 715 622 472 Drainage and waste ditches (miles)....................... 8D>> 251 272 285 Lined or piped N 52 47 38 Assessed area.. %35K~) 238,266 238,264 238,252 Number of assessed accounts MgKS 166,048 152,120 134,325 Number of times water delivcrcd to users ............ c60>> 500,607 517,784 488342

~ trascd on U.S.C.S. provisional records and subject io adjustrncnt.

22.

po)vER 1976 1972 1967 Sources: (kwh)

Nct stcam generation ..  %Ã%5JMtÃ'i 5,637,595,000>> 4,219,158,000>> I $ 95,066,000 Nct.diesel generation.. ~ 0- ~ 0-Nct combustion turbine gcncration.......... Ning% 93,811,000 125,8 19,000 459,155,000 ~ 0-Nct combined cycle generation................ t0gNkX5~Dt Nct run of river hydro generation ............ SKN0,~>>t 243,951,000>>>> 97,870,280*>> 256,718,000 Pumped-storage generation /@ijIll@I 89,536,000 95,733,000 Total net generation.. Qg@~g~~Ã 6,524,048,000>> 4,538,580,280>> 1,651,784,000 Purchased 0oNCtNttQQi3 2,561,076,900 1,559,501,675 1,403,660,530 Intcrchangc received 6%gSgDt 162,016,000 560,248,063 472,217,002 IVhecling rcccivcd... 'P1IXtig~1 13,389,100 41,976,362 1>

30,255@28 Total energy sources. 0Q59NgR 9,260,530,000 6,700,306,380>> 3,557@16,860 Disposition: (kwh)

Rcsidcntial .. QlÃgEMN 2,931,4442 60 2,260,767,468 1,107,042,744 Commercial and industrial. 8$ 8MN@3~3 3,594,531,963 2,631,1931186 I,285@31,692 Irrigation pumping .. g@g@iiQti3 282,916 JI39 257892,624 239,225,723 Street and highway lighting.. gUQS 36,456,046 31,959,968 23,822/20 Public authorities .. R95g 288,417,414 209/70,851 178,264,606 Interdepartmental. 8@~1': R 186,729,026 216,442,682 202,702,690 Sales for resale 04$ 5Gtt) 818,405 /06 428,622,958 169,799,750 Total sales ......................................... QXK@@gK 8,138,900,854 6,035 JI49,737 3,206,190,125 Intcrchangc delivered. 05g89g~~Dt 384,440,000 132,683,800 70,206,680 wheeling delivered 59xg93 12,643,696 38,954,064 27,713,880 Energy losses cE@III58 598,785,450 471,167,779 253,806,175 Energy for pumped-storage operations..... Kg5g~~D>> 125,760,000 21,651,000 Total disposition of energy ................ Rgbg~Dt 9,260,530,000 6,700806,380 3/57/16,860 Peak overall power system (kw). 8984iiDt 2,089,000 1,523,000 739,000 Date and time (MST). mme)Qym July 7,6 p.m. Aug. 1,5 p.m. July 10,5 p.m.

Peak, Project customers (kw). 00g~Ot 1,732,000 I $ 60,000 679,000 Date and time (MST). Qgh$ gSyea July 7, 6 p.m. July 31, 6 p.m. Aug. 29, 6 p.m.

Generating capability (kw)*>>>>

Steam. 0kK559>> 1/48,250>> 844,400>> 532@00 Diesel. Qi ~ 0- ~ 0. 7/00 Combustion turbine. MgK0 378,000 112,000 Combined cycle. Sig'giDt 288,000 Hydroelectric, conventional QgS 94,000 54,400 77,100 Hydroelectric, pumped-storage ...................... 0fK~~D 140,000 143,500 4.

Total operating capability ........................ 8@65KP 2,448,250>> 1,154,300>> 617,200 Contract purchase at time of peak ................. r2NIt9$ 325,563 520,592 432,312 Total resources. Itt>>j~ 2,773,813>> 1,674,892>> 1,049,512 Electric customers, year end Residential .. K@gPP 238,989 191,357 128,966 Commercial and industrial. 5 17,591 14,076 11,264 Other Total.

gS 1,361 1,012 881 8%NO 257,941 206,445 141,111 Average annual kwh use residential .................. IX@$ 12,597 12,442 8,770 Average annual kwh price residential (cents) .... tMI 3.51 2.14 1.96 includes SRp participation in jointly owned projects.

includes run of river generation by pumpedctorage units.

>>'>> Figures reported indicate unit capabilities during the summer peak.

Officers, board 8 council Elected Officers D. Michael Rappoport (5) Council Members Director, Governntental Affairs Three council members are elected for Karl F. Abel Richard H. Silverman (6) two-year terms from among the President Director, Law and Land shareholders in each of the 10 district John R. Lassen Paul D. Rice areas of the Salt River Valley Water Vice President Secretary Users'ssociation and from among thc Principal Officers and Named to position: (1j April 20, 1978; (21 members in each of the 10 division Jan. 1, 1978; (3) Jan. 9, 1978; (41 Jass. 1, Other Executives 1978; (5j July 18, 1977; (6J Jan. 3, 1978. areas of the Salt River Project Agricul-tural Improvement and Power District.

Jack Pfister Consultants General Manager The state law passed in 1976 provides Legal Advisers that beginning in 1978 District Robert F. Amos Jennings, Strouss & Salmon council members will bc elected to Deputy General Manager Auditors four-year terms with half the council John D. Jacobs (I) ArtlutrAndersen & Co. seats up for election every two years.

Director, Infotvnation Systems Consulting Engineers The councils enact and amend bylaws Roger B. Lisdeman Ford, Bacon &Davis Incorporated relating to the management and conduct Director, Operations Services Bond Counsel E. 1V. Yorke of thc business affairs of the Project.

Mudge Rose Guthrie &Alexander Director, Personnel Financial Consultant John R. McNamara Stnith Barney, Harris Upham & Co.

Associate General Manager, Power Incorporated Trent O. Meacham Board Members Assistant General Manager, Power The 10 members of the Board of Construction and Maintenance Governors of the Salt River Valley John O. Rich Water Users'ssociation are elected Assistant General Nanager, biennially from among the share-Power Operations holders of thc Association.

Reid 1V. Teeples The Board of Directors of the Salt Associate General Manager, IUater River Project Agricultural Improve-Don L. Weesner ment and Power District consists of 12 Assistant General Manager, IUater members and will be expanded to 14 in Leroy Michael Jr. (2) 1980. One District board member is Assistant General Nanager, elected from each of the 10 SRP Planning and Resources voting areas. In addition, the Dis-R. 1V. Mason(3) trict's board includes two members to Director, Project Planning bc elected at large. These board members SRP council members, pictured next page, top to bottom:

Carroll M. Perkins (4) wercappointed to the District's District 1-Rudolph Jolmson, Emil ht. Rovey, Assistant General Manager, board in 1976 as prescribed by state Ho>uard W. Lydic; District 2-Conrad Gingg, htarcel J. Boulais, C.C. Pessdergast Jr.; District Financial Services law. Their positions will be up for 3-ht.B. Brooks Jr., Eluin E Fleming, Thayer Kenneth J. Knauer election to four-year terms in 1978. The Collier; District 4-iuy IVilson Jr., Leui H.

Reed, IViley R Baker; District 5-Edmund Treasurer ncw state law also provided that two Nauarro, Roy W. Cheatham, Carl E. IVeiler; Vaughan A. Pierce additional at large representatives will District 6-James L Diller; not pictured:

James R. Narshalt, Dean IV. Lcsuis; District Assistant General Manager, be added in 1980, bringing the total 7-IVilliam H. Goettl, A. IVanen Austin, Marketing and Commercial Services number of District board members to 14. Gcorgc B. IVillmotls; District 8-Tlsonsas ht.

O>ucsss Jr., Joe Bob Ncclyl not pictured:

Stanley E. Hancock The boards establish the policies for Dwaysse E. Dobson; District 9-Robert W.

Director, Communications the management and conduct of thc W. Curtis Dana, Olcn Sharp; District 'irchett, 10-Otto B. Neely, L. htax Pace, Ortassd R.

& Public Affairs business affairs of the Project. Hatcls 24.

L' l

le I

I

"'(

I 4 10 I 7 8 5

SRP Board members (abov%

district number follows Board tnetnber's name:

I=Alex hL Conovaloff, No. 2 2=John hf. IVilliams Jr., No. 5 3-lV. Larkin Fitch, No. 9 4-BillRousseau, No. 3 5=Leo C Smith, No. 4 6- John S. Hoopes, No. 8 7=Tom Finley, No. 10 8 John L Burton Jr., at large 9-Thomas P. IIurley, No.

lVilliamP. Schrader, No. 7 6'0=

II- lVillimn lV. Arnett, at large l2-Germain II. Ball, No. I Published by SRP Conununications 4 Public Affairs Department; editor Narcie Lynn Smith; photography by Chct Snellback, Ed Tolivcr and Bob lVallace.

BIR.K RATE US. POSTAGE PAID PHOENIX, ARIZONA Perm@ No. 395