ML20323A233
| ML20323A233 | |
| Person / Time | |
|---|---|
| Site: | Palo Verde  |
| Issue date: | 11/17/2020 |
| From: | Arizona Public Service Co, Salt River Project |
| To: | Office of Nuclear Material Safety and Safeguards, Office of Nuclear Reactor Regulation |
| Shared Package | |
| ML20323A230 | List: |
| References | |
| 102-08184-MDD/MSC | |
| Download: ML20323A233 (16) | |
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CONTENTS 2 From the President and the Vice President 4 From the General Manager & CEO 6 Reviewing Financial Results 9 SRP Boards and Councils 11 SRP Officers and Executives 12 Five-Year Operational and Statistical Review P% -
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'S 2020 3ALT river project
About SRP SRP has delivered on ITS COMMITMENT TO PROVIDE RELIABLE AND AFFORDABLE WATER AND POWER to the people living in central Arizona this past year and for more than a century. By providing these essential resources, we have helped the Phoenix metropolitan area develop and thrive.
We act in the best interest of the people we serve and strive to help build a better future for Arizona. In the years ahead, we will continue to lead the way by applying our forword-thinking approach and new technology to address water and energy supply challenges.
SRP 20?'J ANNUA, REPOST T
The SRP Board considers customer input an essential ingredient for thoughtful Board actions, and as the communities we serve have continued to evolve, so must our efforts to engage them.
From the President and the Vice President WE ARE RESILIENT. core mission and to be a source of stability for the Resilience is not a product of easy times, but of communities we serve.
times that test our strength. At the close of fiscal year This deeply rooted corporate culture has allowed 2020 and as we continue to face unprecedented our organization to remain strong generation after uncertainty caused by the COVID-19 pandemic, SRP is generation. Just prior to the COVID-19 outbreak, SRP once again demonstrating its resilience. was named one of Arizona's Most Admired Companies Although the current public health crisis is a particularly by Az Business magazine and BestCompaniesAZ.com.
daunting challenge, SRP has delivered on its core The award honored SRP for its leadership excellence, mission of providing sustainable, reliable and affordable innovation, workplace culture, corporate and social water and power to the Valley. SRP has fulfilled this responsibility, and customer favorability.
mission since 1903 and has continued to do so even in Our culture also represents why we are confident the midst of challenges that in their time were no that SRP will emerge from this situation as a stronger less daunting. organization, in part by carrying forward the culture of caring that has developed over the past century.
WE ARE ONE SRP. In addition, each member of on increasingly diverse and inclusive SRP team embraces a "growth mindset."
Through all the challenges SRP has faced, from Collectively, we do our work in new, innovative ways shortages and rationing during World War II to while adapting to conditions that change each day.
significant flood events in 1978 and 1980, we see a common thread. No matter the hardship, SRP's publicly The global pandemic has presented a significant elected officials, management and employees have disruption, and the SRP team, including the Board and always come together as "One SRP" to deliver on our Council, has responded with speed and dedication.
2 2020 ANMUAi-REPOR'
We are finding ways fo perform our varied roles while To accomplish this goal effectively, continual protecting the health and safety of colleagues, family improvement and education on our rapidly changing members, power customers, water shareholders and the industry and technology is critical. In that spirit, the communities we serve. Board and Council have collaborated with SRP management fo launch a series of work-study education WE ARE HERE TO HELP. sessions that allow our elected members to dive deeply into selected topics and better understand complex Helping neighbors is part of SRP's heritage and core and changing issues.
culture. During 2019, SRP supported the community through monetary and in-kind contributions totaling more The SRP Board also considers customer input an than $4 million. essential ingredient for thoughtful Board actions, and as the communities we serve have continued to evolve, Earlier this fiscal year, SRP was recognized for so must our efforts to engage them. As a result of this the vital role it plays in Arizona as one of the region's commitment and to further our understanding of power most philanthropic companies. The Phoenix Business customer views, we have formed a new advisory Journal awarded SRP the top spot in the Community panel. The SRP Customer Utility Panel, made up of 14 Impact large company category of the 2019 Corporate residential electric customers from across our service Philanthropy Awards.
area, will replace and build on the Residential Advisory We are fond of describing SRP as "community-based," Committee, which was established in 2007 but what that really means has recently come into stark There are challenges ahead and the road to recovery focus. More than 80% of local nonprofits are feeling the may be difficult. We know SRP can accomplish its effects of the COVID-19 health crisis. SRP is stepping up goals and fulfill its responsibility to deliver sustainable, to the plate at this difficult time and providing assistance affordable and reliable water and power to the Valley to the communities and customers we serve that will residents and businesses SRP proudly serves. Despite this help improve lives.
intense period of uncertainty, the availability of essential In March 2020, our Board of Directors approved services provided by SRP will remain certain.
more than $1 million in contributions to assist SRP's On behalf of SRP's elected officials and the hundreds residential and small business customers, $500,000 of thousands we represent, we applaud the past year's in contributions to support several local nonprofit achievements and look forward to continuing our organizations, and $100,000 to Arizona Together, teamwork with management, employees and all of our which supports frontline workers and efforts to mitigate stakeholders.
the medical and economic impacts of the COVID-19 pandemic in Arizona.
David Rousseau John R. Hoopes WE ARE ADAPTING. President Vice President SRP is a self-governed public utility. We and the elected Board and Council regard our governance role as our most important work on behalf of the SRP water shareholders and power customers we represent. As elected representatives, Board and Council members serve as the voice for our neighbors by making thoughtful and informed decisions on issues critical to the organization today and in the future.
SRP 2020'ANNUAL rep.
'4 The two-year plan is aimed at maintaining SRP's overall financial strength and flexibility, which will ensure our services meet the standards that water shareholders and power customers value and respect.
From the General Manager & CEO WE ARE STRONG. Crews at Theodore Roosevelt Dam successfully As fiscal year 2021 (FY21) begins, SRP will rely on its conducted an annual test of spillway gates to ensure position of financial and operational strength to continue proper operation in the event of a flood.
providing sustainable, reliable and affordable water and SRP successfully raised $550 million in proceeds power to the Valley. By focusing on this core mission, through a revenue bond sale. The proceeds will fund SRP will again play a key role in leading the future prosperity of Arizona. electric system improvements, including upgrades to distribution and other facilities.
Before I address FY21 plans in more detail, I want to thank our employees and publicly elected Board Standard & Poor's (S&P) upgraded SRP's credit rating and Council members for their substantial efforts from AA to AA-t-. With this upgrade from S&P, SRP and recognize the following FY20 achievements that received the highest ratings among Large Public Power advanced our mission. Council entities with both an Aal rating from Moody's Investors Service and an AA-i- rating from S&P.
- SRP announced it will invest in 1,000 megawatts (MW) of new utility-scale solar energy by 2025 and After an extensive generation and transmission initiated two new solar energy projects with battery scheduling software overhaul, SRP joined the Western storage. The two new resources are scheduled to be Energy Imbalance Market. Participation in the regional online by June 2023 and will enable SRP to meet its market will help us keep power costs down and renewable energy targets, achieve its commitment to integrate more renewables in the future.
reduce carbon emissions and make SRP one of the nation's largest investors in energy storage.
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SRP issued a request for proposals (RFP) for up to 400 SRP leaders have analyzed several scenarios given the MW of new solar energy. The RFP seeks proposals current environment. At this time, we feel it is prudent to for up to 200 MW of solar to be sited on the plan for a multiyear reduction to our bottom line. With Navajo Nation, while the remaining 200 MW is not that in mind, we've adjusted our typical six-year financial location-specific but must deliver electricity to SRP s plan horizon to focus on the next two years. Under that two-year plan, we are actively examining ways to transmission system.
reduce our costs in FY21 and FY22 in response to a SRP selected an operational strategy to limit emissions weaker economic outlook.
from two coal-fired units at the Coronado Generating The two-year plan is aimed at maintaining SRP's overall Station near St. Johns, Arizona. The plan will help SRP financial strength and flexibility, which will ensure our reliably and economically meet customer energy needs services meet the standards that water shareholders and and enable the achievement of SRP's goals to reduce power customers value and respect. We have set FY21 carbon dioxide emissions by more than 60% by 2035 Objectives that support our six prioritized areas of focus:
and 90% by 2050. Customers, Innovation and Sustainability, Workforce, Leadership, Community, and Finances.
SRP crews performed canal construction and maintenance activities "in the wet." This approach enabled area municipal treatment plants to receive WE ARE OPTIMISTIC.
water while the Central Arizona Project performed In addition to the COVID-19 outbreak, external forces, maintenance on its delivery system.
including climate change, evolving customer expectations Forbes magazine recognized SRP as one of America's and technological advances, are all happening at once.
Best Employers for Diversity, ranking in the Top 500 SRP has overcome difficult situations in the past. And I remain confident that we will persevere and succeed in companies with 1,000 or more employees. This FY21 and the years ahead.
honor follows SRP's recent Forbes ranking as a Best Employer overall. We have taken steps to ensure that we continue to achieve our core mission while finding new ways to For the sixth time in the last seven years, SRP ranked innovate and adapt. As we have done throughout this highest in business customer satisfaction among past fiscal year, we will continue to evaluate how we large electricity providers in the West Large Region, respond to situations and do everything we can to stay according to a study issued byJ.D. Power. It's the agile in these uncertain times.
ninth time in the study's last 11 years that SRP was Once again, I want to thank SRP employees and our ranked highest in the region by its business customers.
leadership team for their commitment and engagement SRP was also ranked highest in the western United during this challenging period. Their efforts are States among large electric utilities in the 2019 Electric recognized and greatly appreciated and have enabled Utility Residential Customer Satisfaction Study for the SRP to maintain its position of strength. By working 20th time in the 21 years that j.D. Power has been together as One SRP, we will see this through and surveying residential electric customers. emerge even stronger than before.
WE ARE FOCUSED. Mike Hummel The pandemic has had a major impact on all of us. For General Manager & CEO more than a century, SRP has been committed to helping Arizona thrive. Despite the challenges we face, we intend to extend that legacy. We will accomplish that by delivering on our core mission and by continuing to act in the best interest of the customers, shareholders and communities we serve.
SRP 202U ANNUAL REPO'-'
S
The District has a diversified customer base, with no single retail customer providing more than 3% of its retail electric revenues.
Reviewing Financial Results RESULTS OF OPERATIONS fuel used in electric generation and power purchased Operating revenues were $3.1 billion for fiscal year expenses include adjustments for the fair value of certain fuel and purchased power contracts. Excluding 2020 (FY201 and $3.4 billion for fiscal year 2019 (FY19),
the fair value adjustments, these expenses would have a decrease of $249.2 million, or 74%. TFie decrease decreased $14.6 million, or 1.4%, from the previous in operating revenues was primarily due to decreased retail electric and wholesale revenues. FY20 retail year. In addition to the increase of fuel and purchased electric revenues decreased $92.1 million to $2.8 billion power expenses, depreciation and amortization expense and wholesale revenues decreased $173.4 million increased $9.7 million and taxes and tax equivalents to $206.6 million compared to FY19 primarily due to increased $6.7 million when compared to FY19. These reduced demand due to mild weather in FY20 relative increases were partially offset by a decrease in to FY19. Additionally, FY20 wholesale revenues included operations and maintenance expense of $66.1 million o fair value loss of $28.9 million compared to a $0.2 when compared to FY19 due to the timing of scheduled million loss in FY19. Excluding the fair value losses, FY20 plant maintenance projects.
wholesale revenues would have been $235.5 million Investment income, net, was $18.8 million for FY20 compared to $380.2 million in FY19. The total number of compared to $76.8 million for FY19. Investment income, customers was 1,074,952 as of April 30, 2020, a 1.7% net, includes fair value losses of $5.8 million for FY20 increase from the previous year. and fair value gains of $46.2 million for FY19.
Operating expenses were $3.0 billion for FY20 and Financing costs were $144.3 million and $171.2 FY19. Fuel used in electric generation and power million in FY20 and FY19, respectively. The decrease purchased expenses increased $102.5 million. SRP's in financing costs is primarily due to lower interest 6 2020 ANNUA. REPORT
expense related to a power purchase agreement that Committee. The policy covers market, credit and was accounted for as a finance lease, which was operational risks and includes portfolio strategies, terminated in FY20. authorizations, value-at-risk limits, stop-loss limits, and notional and duration limits. The Risk Oversight Net expenses for FY20 were $178 million compared Committee is composed of senior executives. The District to net revenues for FY19 of $305.8 million. Excluding maintains an Energy Risk Management Department, the effects of the changes in the fair value of fuel and separate from the energy marketing area, which purchased power contracts, wholesale positions and regularly reports to the Risk Oversight Committee. SRP investment income, net revenues would have been believes that its existing risk management structure
$474 million and $173.2 million for FY20 and is appropriate and that risks are properly measured, FY19, respectively.
reported and managed. ;
ENERGY RISK MANAGEMENT PROGRAM ELECTRICITY PRICING The District's mission to serve its retail customers is the The District has a diversified customer base, with no cornerstone of its risk management approach. SRP builds single retail customer providing more than 3% of its retail or acquires resources to serve retail customers, not the electric revenues. The District has implemented projects wholesale market. However, as a summer-peaking and programs geared toward enhancing customer utility, there are times during the year when the District's satisfaction by offering customers a range of pricing and resources and/or reserves are in excess of its retail load, service options. Moreover, SRP is one of the low-price thus giving rise to wholesale activity. The District has an leaders in the Southwest.
Energy Risk Management Program to limit exposure to The District is a summer-peaking utility, and it has made risks inherent in retail and wholesale energy business efforts to balance the summer-winter load relationships operations by identifying, measuring, reporting and through seasonal price differentials. In addition, SRP managing exposure to market, credit and operational offers prices on a time-of-use basis for residential, risks. To meet the goals of the Energy Risk Management Program, SRP uses various physical and financial commercial and industrial customers.
instruments, including forward contracts, futures, swaps The District's retail electric prices consist of three and options. Certain of these transactions are accounted components: base prices, a Fuel and Purchased Power for under Accounting Standards Codification (ASC] 815, Adjustment Mechanism (FPPAM) and, through April
'Derivatives and Hedging." For a detailed explanation 2019, an Environmental Programs Cost Adjustment of the effects of ASC 815 on SRP's financial results, Factor (EPCAF). Base prices recover costs for generation, see Note 7 in the notes to the Combined Financial transmission, distribution, customer services, metering, Statements (available at srpnet.com/annualreport). meter reading, billing and collections, and system benefits charges that are not otherwise recovered The Energy Risk Management Program is managed through the FPPAM. The FPPAM was implemented in according to a policy approved by the District's Board May 2002 to adjust for increases and decreases in of Directors (Board) and overseen by a Risk Oversight 5SP 2'J20 annual REPOP^ 7
4 fuel costs. The EPCAF was implemented in November CAPITAL IMPROVEMENT PROGRAM 2009 to cover costs incurred by the District to comply The Capital Improvement Program is driven by the need with requirements imposed by mandate that are to sustain the generation, transmission and distribution related to renewable energy, energy efficiency and systems of the District to meet customer electricity needs climate change.
and to maintain a satisfactory level of service reliability.
On March 25, 2019, the Board concluded a public FY20 capital spending levels were slightly above original process by approving changes and adjustments to its expectations. Generation projects accounted for 19%
price plans including an overall average annual price of the year's expenditures. These projects included the decrease of 2.2%, effective with the May 2019 billing acquisition of Coolidge Generating Station as well as cycle. The overall average decrease was composed of plant modification costs for Palo Verde, Gila River and an average 3.9% decrease to FPPAM, partially offset by Four Corners generating stations.
an average base price increase of 1.7%. Additionally, the Board discontinued EPCAF as a separate price Expansion of the electrical distribution system to meet plan component. The costs of energy efficiency are future growth and to replace aging underground cable instead recovered through base rates in the System accounted for 38% of FY20 capital expenditures. More Benefits Charge (SBC), and expenses for all renewable than one quarter of the distribution system spending purchased power agreements are included in the FPPAM was for New Business projects. The addition of new component. SRP-owned renewable resources are now transmission facilities made up 15% of FY20 capital included in the base pricing components as capital, expenditures. These projects included the Price Road operations and maintenance, and taxes, consistent with Industrial Expansion as well as transmission pole standard accounting practices. asset management.
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SRP Boards and Councils SRP BOARDS for four-year terms. The President and Vice President The District is governed by a 15-member Board are elected at large by eligible shareholders of the of Directors. The District Board, among other things, Association. The Board members, the President and establishes overall District policy, approves the annual the Vice President are elected by votes weighted in budget and major contracts, authorizes major purchases proportion to the amount of eligible land owned by each and sales of assets, sets electric prices for the District shareholder. Members of both boards are elected by os per Arizona statutes, and authorizes the issuance property owners within the respective boundaries and of revenue bonds. The District Board members are serve staggered four-year terms.
elected from among the District electors (landowners) for four-year terms and consist of the President, who SRP COUNCILS is an ex officio member, plus one member from each of the 10 voting divisions of the District, plus four Both the District and the Association have 30-member additional members who are elected at large, half being Councils three members from each of the 10 voting elected biennially for four-year terms. The President districts (Association) or voting divisions (District), half and Vice President are elected at large by the electors being elected biennially for four-year terms. All Council of the District. With the exception of the four at-large members are elected by votes weighted in proportion to Board members, all are elected by votes weighted in the amount of eligible land owned by each shareholder/
proportion to the amount of eligible land owned by elector. Most often, candidates seek election to both each elector. The four at-large Board positions are Councils. The two Councils, among other things, enact elected based on one person, one vote by eligible and amend bylaws of the respective organizations and District electors. set compensation of elected officials, and the District Council approves the issuance of revenue bonds.
The Association is governed by an 11-member Board of Governors. Among other things, the Board is involved Visit srpnef.com/about/map.aspx for a detailed mop of in establishing the policies, annual budget, major the 10 SRP voting districts and divisions for SRP Boards contracts, water rates and fees for the Association. The and Councils.
Association Board members are elected from among the Association's shareholders (landowners) for four-year terms and consist of the President, who is an ex officio member, plus 10 additional members (one from each of the 10 voting districts), half being elected biennially
SRP Boards and Councils The Association Board: The District Board: Directors at-large:
District 1: District 6: Division 1: Division 6: Seat 11:
Larry D. Rovey Jack M. White Jr. Kevin J. Johnson Jack M. White Jr. Anda G. McAfee District 2; District 7: Division 2: Division 7: Seat 12:
Paul E. Rovey Keith B. Woods Paul E. Rovey Keith B, Woods Corey J. Hawkey District 3: District 8: Division 3: Division 8: Seat 13:
Mario J. Herrera Deborah S. Hendrickson Mario J. Herrera Deborah S. Hendrickson Nicholas R. Brown District 4: District 9: Division 4: Division 9: Seat 14:
Leslie C. Williams Robert C. Arnett Leslie C. Williams Robert C. Arnett Randy J. Miller District 5: District 10: Division 5: Division 10:
Stephen H. Williams Mark V. Pace Stephen H. Willigms Mark V. Pace Tfie Association Council: The District Council:
District 1; District 6: Division 1: Division 6:
Tyler M. Francis, Jacqueline L. Miller, Tyler M. Francis, Jacqueline L. Miller, Ronald S. Kolb, Nicholas J. Vanderwey, Ronald S. Kolb, Nicholas J. Vanderwey, Clifford M. Leatherwood Robert W. Warren Clifford M. Leatherwood Robert W. Warren District 2: District 7: Division 2: Division 7:
Jerry E. Geiger, Mark A. Lewis, Jerry E. Geiger, Mark A. Lewis, Kimberly A, Owens, Barry E. Paceley, Kimberly A. Owens, Barry E. Paceley, William W. Sheely Harmen Tjaardajr. William W. Sheely Harmen Tjaarda Jr.
District 3: District 8: Division 3: Division 8:
Aaron M. Herrera, Christopher J. Dobson, Aaron M, Herrera, Christopher J. Dobson, Richard W. Swier, Mark L. Farmer, Richard W. Swier, Mark L. Farmer, Paul A. Van Hofwegen Mark C. Pedersen Paul A. Van Hofwegen Mark C. Pedersen District 4: District 9: Division 4: Division 9:
Garvey M. Biggers, A. Allen Freeman, Garvey M. Biggers, A. Allen Freeman, M. Brandon Brooks, Mark A. Freeman, M. Brandon Brooks, Adam S. Hatley Michael G, Rakow Adam S. Hatley Michael G. Rakow District 5: District 10: Division 5: Division 10:
John R. Augustine, Dave B, Lamoreoux, John R. Augustine, Dave B. Lamoreaux, J. Weston Lines, William P. Schrader Jr., J. Weston Lines, William P. Schroder Jr.,
John R. Shelton William P, Schrader III John R. Shelton William P. Schrader III ANNUAL S£0<<'
SRP Officers and Executives Corporate Officers David Rousseau, President John R. Hoopes, Vice President John M. Felty, Corporate Secretary Ekian J. Koch, Treasurer Executive Management Mike Hummel, Dave Roberts, Jim Pratt, General Manager & Associate General Manager, Associate General Manager Chief Executive Officer Water Resources & Chief Customer Executive Alaina Chabrier, Aidan McSheffrey, Kelly Barr, Associate General Associate General Manager Associate General Manager Manager & Chief & Chief Financial Executive & Chief Corporate Communications Executive Services and John Coggins, Sustainability Executive Rob Taylor, Associate General Associate General Manager & Chief Manager & Chief Power System Executive Public Affairs Executive Michael O'Connor, Associate General Manager
& Chief Legal Executive SR' 2'J20 annual ftEPORt Jt
Five-Year Operational and Statistical Review FINANCIAL DATA ($000) 2020 2019 2018 2017 2016 Total operating revenues $ 3,121,431 $ 3,370,610 $ 3,196,486 $ 3,084,688 $ 3,047,272 Retail Electric Revenues 2,810,421 2,902,560 2,847,104 2,780,916 2,749,131 Water Revenues 20,823 18,661 18,151 16,238 15,853 Other Revenues 290,187 449,389 .'331,231 287,534 282,288 V
Total operating expenses 3,012,233 2,959,389 3,064,672 2,741,432 2,681,443 Total other income (loss), net 17,299 65,777 52,589 81,856 (35,953)
Net financing costs 144,263 171,170 165,100 177,275 185,273 Net (expenses)
(17,766) 305,828 19,303 247,837 144,603 revenues for the year Taxes and tax equivalents 173,211 166,508 176,153 166,898 164,475
^^lP^T6,891,569 f Utility plant, gross ij 17,079,497 16,438,352 15,698,318 15,139,862 Long-term debt 4,621,694 4,587,689 4,742,857 4,465,538 4,579,919 Electric revenue contributions 59,158 58,115 47,534 58,209 60,511 to support water operations for comparative purposes, certo/n prior-year amour^ts have been reclassified to conform with the curfen^yeor presentoft'on.
.D20 annual
SELECTED DATA 2020 2019 2018 2017 2016 Total debt service coverage ratio 3.8 4.2 4.1 3.6 3.4 Debt ratio 46.2 45.9 48.2 46.7 48.6 Total electric soles (million kWh) 35,204 37,161 35,256 34,257 33,912 Peok-SRP retoilcustomers (kW) 7,250,000 7,305,000 7,219,000 6,873,000 6,806,000 Water deliveries (ocre-teet) (1) - 785,126 766,288 773,527 779,466 r-Runoff (acre-feetl (1) 1,415,489 269,469 1,136,862 572,533 Employees at year-end 4,966 5,040 5,089 5,186 5,230 Customers at year-end 1,074,952 1,057,122 1,041,342 1,026,118 1,009,108 l)j Water data is by calendar year, all other data is by fiscal year ending April 30 FINANCIAL INQUIRIES BRIAN J KOCH Treasurer & Senior Director, Financial Services (602) 236-2993 BONDHOLDER INFORMATION SRP Treasury Department (602) 236-2222 iRP i02(j ANNUAL 13
CORPORATE HEADQUARTERS STREET ADDRESS SRP / 1500 N. MILL AVE. / TEMPE, AZ 85281-2389 MAILING ADDRESS SRP P.O. BOX 52025 / PHOENIX, AZ 85072-2025 CONNEa n facebook.com/srpconnect n twitter.com/srpconnect , T7*
- t Q youtube.com/srpconnect
@ instagram.com/srpconnect srpnet.com Delivering water and power CCAA2I0071-002