ML18192B802

Salt River Project Annual Report, 1974

ML18192B802
Person / Time
Site:	Palo Verde
Issue date:	07/11/2018
From:	Salt River Project
To:	US Atomic Energy Commission (AEC)
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Download: ML18192B802 (28)

Text

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f' Highlights 4, background.

Letter from management.

Review of the year..Financial section..Statistical review..Board and Council members.Project service area, watershed-map...

page 1..............1 1.20and 21 23 and 24....inside back cover OPERATIONS 1974 1973 Assessed water accounts.Water runoff (acre-feet).

Water storage, year-end (acre-feet)

....Water diverted into canals and pumped (acre-feet).

Number of power customers Average annual use per residential customer (kwh).Average annual kwh cost per residential customer (cents).Energy generated, purchased, interchanged and wheeled (kwh)...Peak load for Project customers (kw).161,596 441,582 1,054,710 1,238,484 239,431-12,808 2.62 8,872,601,000 1,645,000 157,578 2,514,341 1,498,629 1,471,580 , 225,921 13,182 2.23 7,583,538,900 1,448,000 REVENUES Electric.Water and irrigation.

Total operating revenues Taxes and tax equivalents.

Total operating expenses.Net revenues.Plant investment, year-end Long-term debt$166,971,981 2,613,184$169,585,165

$18,948,704 148,957,645 8,858,430 830,591,704 637,227,196

$128,334,924 1,578,819$129,913,743

$12,691,099 105,486,982 17,459,416 662,055,948 464,745,966 BACKGROUND The Salt River Project, the first multi-purpose project authorized under the Federal Reclamation Act of 1902, is comprised of the Salt River Project Agricultural Improvement and Power District and the Salt River Valley Water Users'ssociation.

The District is an agricultural improvement district organized under the laws of the State of Arizona.It operates the Salt River Project under contracts with the United States of America, and provides electric service to residential, commercial, industrial and agricultural power users in a 2,900 square-mile service territory in parts of Maricopa, Gila and Pinal counties.The Association, a private Arizona corporation, encourages and participates in the management of the 13,000 square-mile watershed of the Salt and Verde rivers, in cooperation with the U.S.Forest Service.The Association administers water rights of the Project's 250,000 acre area, and operates and maintains the irrigation transmission and distribution system which provides Project water for agricultural, municipal and industrial uses.Following the long-standing reclamation principle, the Project uses electric revenues to support its water and irrigation operations, thereby keeping water delivery charges at reasonable levels.At the same time, the Project maintains competitive rates for the electric service it provides.

The year 1974 was not a particularly healthy one economically for the nation or the utility industry.But at the Salt River Project it was a successful year due in large part to an intensive cost-cutting program.The program unfortunately included the first large-scale layoff in the Project's history, a reduction in desirable but nonessential services and cuts in capital, operating and maintenance expenditures.

For 1974, operating revenues totaled$169,585,165 and net revenues reached$8.8 million.Also during the year, the Project retained its high rating on bonds and sold$180 million in electrical revenue bonds to help finance electric system construction improvements.

The sale brought the long-term debt to$637.2 million.Total plant value at year-end reached$831 million.The number of electric customers continued to grow during the year but at a slower pace than in 1973, increasing from 225,921 to 239,431 during 1974;SRP planners expect the number to climb to 249,212 during 1975 and 338,838 by 1980.Total demand for water remained relatively constant but the cities'emand for water increased from 152,626 acre-feet in 1973 to 160,342 acre-feet in 1974.This is a summary of 1974.It was a hard and complex year, but still successful.

EVe remain confident that the Project's stability and financial integrity will continue in the future.Rod J.hlchkullin, General hlanager;Karl F.Abel, President; John R.Lassen, Vice President near St.Johns.This coal-fired station, which is expected to cost$991 million, is scheduled to have three 350,000 kw units.The first unit is scheduled to begin commercial production in 1979 and the second unit a year later.The schedule for the third unit has not been finalized.

The Secretary of the Interior authorized studies and independent analysis of the environmental impact statement for Kaiparowits Generating Station in southern Utah during 1974.The Project is a 10 percent participant in this three million kilowatt, coal-fired station.The first of the station's four units is scheduled to begin operation in 1981.The environmental report and preliminary safety analysis report for Arizona's first nuclear generating station were filed in 1974.The Project is participating in the construction of Palo Verde Generating Station where three 1,270,000 kw pressurized water nuclear reactor units are to be built.Palo Verde, located near Wintersburg, Arizona, will produce power from the first unit in May 1982;the second and third units are scheduled to be on line in May 1984 and 1986.PROJECT FUEL SOURCES Hydro~Gas Oil 1974 19%12%19%1975 11 4 29 1976 10 31 1977 9 27 1978 8 19 1979 8--=16 1980 7 13*Includes hydro purchases.

Misc.Coal Purchase 39%1 1%50 6 59 63 1 72 1 76 80 COAL, A MAJOR SOURCE OF ENERGY By the 1980's, 80 percent of the energy delivered to Project customers will come from coal-fired generating units, compared to 39 percent during 1974.This switch to coal is being made because of its availability and cost.Natural gas became so scarce in 1974 that it supplied only 13 percent of the Project's fuel requirements; in 1975 it will supply only four percent of those requirements.

By 1976, it will be unavailable as boiler fuel.The cost of the replacement fuel, oil, nearly doubled during 1974.At the end of 1973, oil costs were between$7 and$8 per barrel, including delivery charges.By the end of 1974, the average cost per barrel was$13.65.And, although the SRP had adequate quantities of oil to meet 1974 generating requirements, potential shortages exist for future years, particularly if new oil-fired units are constructed.

Hence the emphasis on development of coal-fired generating stations, which utilize one of the West's most abundant and econom-ical energy sources.For the same reasons, the SRP is also turning to nuclear energy for the production of electricity.

~Together, nuclear power and coal will produce the~majority of power for SRP customers during the 1980's and 1990's.RESEARCH AND DEVELOPMENT-SEARCHING FOR NEW SOLUTIONS During the year, the Project continued to con-tribute to utility research and development in two principal areas: the search for new sources of energy and efforts to make present generating systems more environmentally acceptable.

During 1974, SRP invested$2,371,129 towards these programs;in addition,$1.3 million was spent for environmental impact studies.The Project made a third contribution of$108,023 towards fulfilling a pledge of$1.08 million for development of the first liquid metal fast breeder reactor demonstration plant in the United States.The Project contributed

$77,750 to support the research and development projects of the American Public Power Association (APPA)and the Electric Power Research Institute (EPRI).Studies are being made in the areas of solar, geothermal and nuclear energy as well as in advanced transmission and distribution systems.SRP also supported the efforts of the Western Energy Supply Transmission (WEST)Associates.

This investment, which was for$10,028, went to the development of environmental technology.

The studies of WEST are coordinated with those of APPA and EPRI.As a participant in the Navajo and the proposed Kaiparowits generating stations, the Project paid$41,807 to Northern Arizona University and Brigham Young University for continuing environmental studies in the area of the two generating stations.Environmental studies were also conducted at the Coronado Generating Station at a cost of$1.3 million.As a participant in the Navajo and Mohave power projects, the SRP paid$2.01 million in 1974 toward the development and testing of sulfur dioxide re-moval equipment for generating stations which burn low sulfur coal.Some$30 million has been spent on this project to date by the participants.

The research includes the construction and operation of two full-scale test modules at the Mohave Station.One of the modules is to be moved in early 1975 to the Four Corners Generating Station in northwest New Mexico for further testing.Other research and development programs were significant but required less funding.These included: support of geothermal-exploration by SRP and other Arizona utilities; an SRP supported study by Arizona Accomplishment was the keynote of 1974 for the Salt River Project.Some of the more significant achievements, which are documented in this report, were: the production of commercial power from the first unit of the Navajo Generating Station;start-up of the Santan Generating Station;siting approval for the Coronado Generating Station;completion of supervisory control facilities for the water trans-mission system;and net revenues of$8.8 million earned despite economic adversity.

At the$647 million Navajo Generating Station near Page, Arizona, the first 750,000 kilowatt (kw)generating unit began commercial operation on schedule in May.The second unit produced first power on December 2, 47 days ahead of schedule.Commercial operation of the second unit began in early April, 1975, rather than at the end of May as originally scheduled.

During the test period of the coal-fired unit, electricity produced saved SRP 425,000 barrels of oil which would be burned at another generating station to produce power for project customers.

At year-end, the third unit was 45 days ahead of schedule and is expected to be ready for commercial operation in April, 1976.When the three units at the station are completed, Navajo will have a capacity of 2.25 million kw.Salt River Project, which is construction manager and operating agent, owns 21.7 percent of the station's capacity.The Project received another 11.3 percent of the first unit's capacity in 1974 through the purchase of portions of the U.S.Bureau of Reclama-tion's entitlement, which will not be needed until the Central Arizona Project is completed.

POWER PRODUCED AT SANTAN GENERATING STATION Three 75,000 kw combined cycle units came on line during 1974 at the Santan Generating Station near Gilbert, Arizona.A fourth unit is scheduled for completion in 1975.These combined cycle generators are comprised of a combustion turbine and a steam turbine on a common shaft.The heat from the oil-fired combustion turbine, which is usually lost into the atmosphere, is used to produce the steam for the second turbine.Each unit generates 52,000 kw from the combustion turbine and 23,000 kw from the steam turbine.These units have an efficiency rating of approximately 60 percent higher than conventional combustion turbines now in use.Cost of the four units is projected to be$57.5 million.Two new combustion turbine generators were installed at Agua Fria Generating Station in 1974 at a cost of$13,873,000.

These units can supply a total of 124,000 kw of peaking power.Four other com-bustion turbines with a total capacity of 238,800 kw are located at the Kyrene Generating Station.An additional 62,000 kw unit is under construction at"l II tb K.Z.C Three 75,000 kw combined cycle units began operation during 1974 at Santan Generating Sration.A fourth unit went into operation early in 1975 at thc low-profile station.Agua Fria and is expected to produce power in 1975.The Project, in participation with Colorado-Ute Electric Association, Inc., is building a second coal-fired unit at the Hayden Generating Station, at Hayden, Colorado.The 250,000 kw unit is scheduled for completion in 1976.The Project will initially receive 80 percent, or 200,000 kw, of the$116.5 million unit's output with the amount diminishing to 125,000 kw in 1982.Ground breaking took place in 1974 for the Craig Generating Station at Craig, in northwest Colorado.The Project will own 29 percent of the station, and receive 110,000 kw from each of the two 380,000 kw generating units.The units are scheduled to begin operation in 1978 and 1979.During 1974, the environmental impact statement was filed and siting was approved for SRP's wholly owned 1,050,000 kw Coronado Generating Station CUSTOMER GROWTH BELOW PROJECTIONS The total number of electric customers increased 13,510 during 1974, however the increase was 26 percent below projections due to the sagging Valley economy.Customers at year end totaled 239,431, short of the 242,938 that had been predicted in 1973, but 6 percent more than total customers in 1973.The additional customers, coupled with 7 days with temperatures over 115'nd 18 days over 110'uring the early summer, caused peak demand to reach a new high of 1,645,000 kw on June 27, at 6 p.m., compared with the peak of 1973 of 1,448,000 kw.Also this year, electric sales to customers totaled 7.6 billion kwh compared to 6.9 billion kwh in 1973.However, due to mild winter conditions and conser-vation efforts on the part of customers, the average residential.

usage decreased to 12,808 kwh from 13,182 kwh in 1973.During the year, the reliability of electric service to Project customers was 99.98 percent.EFFECTIVE ENERGY USE PROMOTED Marketing programs continued to advise con-sumers, architects, engineers, equipment dealers and builders of ways to use electricity more effectively.

Messages advocated avoiding energy waste, shifting load to reduce peak and utilizing efficient appliances such as the heat pump for space heating.Off-peak load building efforts continued, primarily through promotion of security lighting and heat pumps.FUEL COSTS Avcragc, pcr milton BTU 1970 1971 Oil$.60$.72 Gas.38.41 Coal.15.17 1972 1973 1974$.94$1.04$2.17~.42.53.64~.19.21.22 were reductions in construction and maintenance planned for the canal and lateral systems;postpone-ment of construction of various electrical trans-mission lines;placing a freeze on all new hiring;~eliminating 117 positions which included 55 em-~ployes laid off;and paring expenses such as postage, travel, transportation and office equipment.

In addition, all departments were directed to reduce operating and maintenance expenses by 10 percent;most overtime was eliminated, except in cases of service emergencies; and the Project began reevaluating policies and practices including electric generation and expansion needs, rate structure for both water and power, and the level of service to customers.

Some desirable but nonessential services to cus-tomers were eliminated, reduced or modified.These included: elimination of the budget billing plan;suspension of the publication of PROJECTION, a quarterly magazine for electric customers; initiation of a new schedule of charges for the services of the Agriculture Division;and an increase in charges for the Project's appliance repair service.ECONOMY FORCES RATE INCREASE, BUDGET CUTS Inflationary pressures caused SRP to increase water charges by 12 percent and raise electric rates seven percent in 1974.But even these higher rates and record electric sales during the year could not keep up with the rising costs faced by the Project.Project, taxes charged to expenses for 1974 were$18.9 million with an additional

$2.5 million de-,ferred to future periods.This is a total of$21.4 million that SRP contributed to various governmental taxing entities.Also during the year wages went up 12 percent.From mid-1973 to mid-1974, the cost of most materials doubled.Some wooden power poles in-creased in price from$72 to$142 during the period.Aluminum wire costs jumped from eight to 14 cents per foot;gasoline prices went up more than 38 percent.Concrete pipe increased as much as 80%, in some cases increasing as much as 15%in a two-week period.To help counteract rising costs the Project acceler-.ated its cost cutting program in August with the result that more than$22 million was trimmed from the 1974 budget and an additional

$29.3 million was cut from the 1975 budget.Included in the cutbacks Fuel costs were another strain on economic plan-ning.Oil prices more than doubled and availability of low-cost natural gas essentially disappeared.

Due to the fluctuating prices for fuel, the Project's fuel cost adjustment factor changed twice during 1974.In May, the factor was lowered from 3.91 to 3.62 mills per kilowatt-hour of electricity used.This change reflected the higher percentage of the Project's power being produced by coal-fired gen-erators, primarily because the first unit at the Navajo Generating Station began commercial operation.

Other factors included greater availability of natural gas and hydroelectric power during the summer.All of these energy sources produce power less ex-pensively than by burning oil.In October, the factor increased to 6.20 mills per kilowatt-hour.

This increase was primarily, a result of a drop of natural gas available for power generation.

The SRP received 5,483 million cubic feet of natural gas from November 1973 to April 1974 but only 1,840 million cubic feet was expected to be available from November 1974 through April 1975.As a result the amount of oil needed to operate SRP generators is expected to nearly double.Then in November these and other cost increases L>>IX Pi~,I A bove, engineering new electrical distribution and transmission facilities must be done years ahead to en-sure completion by the time t hey are needed.SR P planners predict that Project electric customers will num-ber 338,838 by 1980.Left, llew clccitfle meters afe spo't tested, before installation, in the meter shop located in the rcccntly completed$4.9 million Crosscut Construc-tion and Maintenance com-plex.Bclotv, chemists con-tinually monitor the water for purity at Santan Gener-ating Station and other facil-ities with steam turbine generators.

t State University designed to monitor the effects of the pumped-storage system on the ecology of SRP lakes;and a fossil fuel ambient air sampling and modeling program for Phoenix-Tucson, supported by SRP and other Arizona utilities.

ENVIRONMENT IMPORTANT AT ALL SRP FACILITIES A decorative enclosure wall at Christy Substation was completed and the exterior landscaping was designed for installation during 1975.During 1974, 176 pipeline structures, 5 wellsites were completed, and 5,389 security and streetlights installed.

Substa-tions and other facilities are planned to harmonize with the environment in which they are placed.Other aspects of SRP's award-winning beautification pro-gram include underground distribution lines.and ten others were enlarged to serve new customers.

Cost of transmission and distribution lines during 1974 totaled$34,259,231 compared with$43,221,710 the previous year.Construction during 1974 also included an expan-sion at the Crosscut Construction and Maintenance complex.The$4.9 million facilities, which are located south of the administration building in Tempe, will be ready for occupancy in 1975;they will be headquarters for nearly 300 employes.To help pay for electrical system construction and improvements, the Project sold$180 million in bonds during 1974.SRP bonds continued to receive high ratings established in May 1973: "A-1" by Moody Investors Services, Inc.and"A" by Standard and Poor's Corporation.

CONSTRUCTION OF POWER LINES GROWS Construction of new transmission lines totaled 205 miles compared to 129 miles during 1973.Also during 1974, 76 miles of distribution lines were built above ground compared to 56 miles of overhead during 1973.Underground, 1,143 cable miles were laid, compared to the 1,000 miles of underground during 1973.Three distribution substations were constructed ELECTRIC CUSTOMERS Residential Commercial

&, industrial Other Total Average annual kwh use, residential Average annual kwh price, residential (cents)1974 221,808 16,393 1,230 239,431%of 1973 Change 209,334 6 15,443 6 1,144 8 225,921 6 12,808 13,182 (3)2.62 2.23 17 The president, vice president, board and council of SRP arc publically elected by landowners biannually.

Returns from precincts arc tallied by employes in the Project Secretary's Offi<e.prompted the SRP's board of directors to authorize a rate increase for 1975.The increase averaged 19 percent, the largest increase in Project history, and was needed to raise an additional estimated$21 million in 1975 revenues.Also in 1974 the SRP suffered a wildcat strike over a change in work schedule for some of the electric t line crews.During the illegal strike, 785 workers left their jobs, some for as much as a week.The strike, the first at SRP in 20 years, was settled with the assistance of a federal mediator.In October, an agreement was signed with Local Union 266 of the International Brotherhood of Electrical IVorkers extending their existing labor contract from March 31, 1975, to December 31, 1975.The agreement also eliminated the existing cost of living escalator, granted an immediate six percent cost of living increase, provided for a six percent pay raise effective January 1, 1975, and set guidelines for a cost of living increase of up to three percent to be paid beginning in June, 1975./zi/All Equipment and parts for many SRP facilities are fabricated in the shops in thc ncw Crosscut Construction and hiaintenance complex.hfore than 300 employcs arc hcadquartertxl there.Three electrical distribution substations werc constructed and ten others werc enlarged during the year.TRAINING FOCUS FOR AFFIRMATIVE ACTION During 1974, the Affirmative Action Division of the Project was incorporated into the Training and Development Division to concentrate more of their efforts in retention, mobility and training of minor-ities, women and veterans.The aim of the Affirmative Action Program is to assure fair and impartial consideration in recruitment and placement; education and training;transfers and upgrading; and compensation and benefits without regard to race, religion, creed, color, national origin, sex or age.A$4.2 million addition to the Project's administration building was completed in 1974.The new expansion provides office facilities for expected growth through 1980.

SUPERVISORY CONTROL COMPLETED Water personnel completed a five year installation program for the supervisory control facilities on the water transmission system.The$3.3 million system makes it possible for an operator, sitting at a computer console, to electronically monitor canal water levels and flows by raising and lowering 205 gates at 79 sites, and to control 52 pumps.With supervisory control, water handling is improved, particularly during storms.The facilities improve water conservation and free water personnel for other responsibilities.

delivery fee plus the regular assessment of 95 cents for one-fifth acre.This total is up from$7.85 in 1973.The price of pump water was set at$8 per acre-foot.

The annual water delivery charges were increased from$14 to$15 for active field accounts and from$7 to$8 for active subdivision accounts served on a group basis.The 1974 budget for the operation of the water storage and delivery system was$21.2 million com-pared to$20.9 million in 1973.CONSTRUCTION AND MAINTENANCE EFFORTS INCLUDE CANAL LINING Other water construction and maintenance during 1974 included guriite lining on nearly two miles of canals, and installation of two water radial gate structures and lateral headgates.

Cost of the work totaled$666,300.ASSESSMENT INCREASES 12 PERCENT The Project board of governors approved a 1974 water assessment of$4.75 per acre, an increase from 1973 when the assessment was$4.25.This assessment covers the first two acre-feet of water.The total cost to irrigate a residential lot of one-fifth acre became$8.95, representing an$8 WATER USE In acre-feet Agriculture Municipal-domestic Other, nonagricultural Subdivision irrigation Total 1974 441,087 160,342 54,990 54,302 1973 642,134 152,626 49,366 51,761 710,723 895,886%of Change (31)5 11 5 (21)WATER DELIVERIES DECLINE Water deliveries during 1974 declined sharply from the preceding year but were nearly equal to the t average of the past 30 years.tVater levels and flows at control gates and pumps throughout the Project's canal system can be monitored and operated by one employe at the supervisory control console.4L~II o" trrrs oQ)o+-Q)~~~~~g~~+got v~e go~~~~0 o v s e r sa sa g~g)I'4I~

Maximum water storage during 1974 was 1,553,749 af on Feb.1, 1974, which is 75 percent of capacity.By comparison, in 1973 the maximum in storage, which set a new record, totaled 2,065,876 af on May 21;which is 99.7 percent of capacity.Total contents at the end of 1973 were 1,498,620 af.At year-end 1974, the six SRP reservoirs contained a total of 1,054,710 af or 51 percent of capacity.~"-""~~y1~~II Ir." tt]I j~I~y yI i,~t The Project encourages and participates in the management of the 13,000 square-mile watershed of the Salt and Verde rivers, in cooperation with the U.S.1'orest Service, helping to develop new sources of water for the Valley and the state as a whole.During the year, deliveries totaled 767,264 acre-feet (af).In 1973 deliveries were 968,613 af, due principally to that year's heavy runoff which per-mitted large extra deliveries at no charge to users.Although total deliveries declined, non-agricultural usage increased from 253,753 af in 1973 to 269,636 af during 1974.This increase was partially attributa-ble to greater municipal usage.During the year, water delivered to eight cities in accordance with municipal water contracts totaled 160,343 af.In comparison, deliveries to the cities totaled only 152,626 af during 1973.Water charges to cities are the same as to other users;although costs vary depending upon the pro-portion of pump and surface water consumed, the cities paid an average of$3.17 per af for Project water.Other nonagricultural uses, including residen-tial irrigation, parks and playgrounds, required 109,293 af during 1974, up from 1973 consumption of 101,127 af.Agricultural water orders totaled 441,088 af, a decrease of 201,047 af compared to the 642,135 af in 1973.Of the total water required during 1974, 57 t percent was from SRP lakes compared to 92 percent during 1973.The remainder both years came from the Project's deep well pumps.The percentage drawn from each source depends upon runoff and reservoir contents.WATERSHED MONITORED FROM THE SKY Project personnel maintained a continual watch on watershed conditions with the help of the Earth Resources Technology System (ERTS)satellite, sponsored by NASA and the U.S.Geological Survey.The satellite receives information on the amount of snowfall and river flow conditions daily.This enables Project personnel to better plan water operations and to anticipate possible emergency conditions.

Project forces, like this SRP zanjero, delivered 710,723 acre-feet of water during 1974, 37.9 percent of which svas for urban usage.4~~P g~I I!I-~))I COURT RULES SRP NOT LIABLE FOR FLOODING In December, Judge Edwin Thurston, Maricopa County Superior Court, directed a verdict in favor of SRP in a damage suit filed by 34 property owners in the Cudia Wash area.The property owners contended that damage resulting from the overflowing of canals during the June 22, 1972, flood was due to negli-gence on the part of SRP.Earlier in the year, a Maricopa County Superior Court jury verdict favored Scottsdale homeowners whose homes had been flooded as a result of a 1970 storm;an appeal has been filed in that case.exceeding the old record of$750 per acre set last year.Part of the reason for this increased value was soaring prices on a national level.Of the total in 1974,$53 million was attributable to livestock and$95.3 million to crops.CROPS, LIVESTOCK HELP VALLEY'S ECONOMY Land within the Project area continued its transi-tion from agriculture to urban usage.During 1974 agricultural acreage declined 5,178 acres from 129,551 at yearwnd of 1973 to 123,373 acres at year-end of 1974.Despite this decline, livestock and crops raised during 1974 in the SRP area injected$148.37 million into the Valley's slumping economy.This was a decrease of$170,000 from 1973's total value of$148.55 million.The gross value of crops produced within the Project's service area was$816 per acre, Phoenix Tempe Glendale Mesa Scottsdale Chandler Peoria Gilbert Total 1974 122,974.1 19,814.0 9,994.9 3,313.2 2,470.9 706.9 763.7 304.4 1973 118,574.5 17,470.5 8,888.9 2,875.8 2,648.4 989.1 665.4 5 12.9 160,342.1 152,625.5 DOMESTIC WATER USE In acre-feet'7c of Change 4 13 15 (7)(29)15 (41)5 re h,-I Representatives from thc Project's Agriculture Section aided 117 cooperating farmers during 1974, providing soil~petiole, and irrigation analysis for 61,011 acres.The cooperative program is designed to help irrigators make the most cfficicnt use of water.

OPERATING REVENUES UP 30.6 PERCENT Operating revenues for 1974 totaled$169.6 mil-lion, an increase of 30.6 percent over the$129.9 million for 1973.Sale of electric energy produced$167 million of this total, an increase of 30 percent from 1973.This reflects, in part, additional electric customers, up six percent, and a 10 percent increase in kilowatt-hour sales.A total of$35.6 million of the operating reve-nues were recovered through fuel escalation charges.Water revenues contributed

$2.6 million, up from$1.6 million in 1973.Also, electric rates and water assessments were increased during 1974.An electric rate increase, averaging seven percent, was effective with bills mailed in January 1974, and produced$6.7 million of additional revenues during the year.In November 1974, the board again approved an electric rate increase, averaging 19 percent, to produce an addi-tional$21 million in 1975.Water assessments were increased an average of 12 percent during 1974 and 21 percent for 1975.OPERATING EXPENSES CLIMB t TO$149 MILLION Operating expenses were strongly influenced by the energy crisis and the continuing inflation.

Oper-ating expenses increased by$43.5 million to a new high of$149.0 million.The principal increases were in the costs of fuel and purchased power, which together amounted to$71.8 million, up$28.3 million from 1973.Fuel used in electric generation cost$44.1 million, up$15.4 million.The quantity of purchased power increased 54 percent over 1973, to 3.3 billion kilowatt-hours; this expense rose$13 million to$27.7 million, partially due to higher prices.Natural gas for generation of electricity was cur-tailed from contract by 5,281,747 MCF during 1974.Costs of oil, the substitute fuel, rose to an average of$13.65 per barrel compared with$6.75 per barrel in 1973.This impact was only partially offset by the fuel cost adjustment factor, which was 3.91 mills per kilowatt-hour during January through April, 3.62 mills for May-October, and 6.20 mills for November on into winter.Additional fuel costs resulting from new generating units going into operation are not reflected in the fuel cost adjustment factor and must be recovered by standard rates.t Taxes and tax equivalents increased by$6.3 million to$18.9.This increase was due, in part, to an increase in the assessed valuation of the Project's real property because of new construction.

At the same time, the assessment ratio for utilities was increased by the State Legislature from 40 to 50 percent of full cash value, resulting in an increase in taxes of$3 million.Also, the state sales or trans-action privilege tax rate was increased from three to four percent.Other operation and maintenance expenses rose$6.2 million to$41.2 million during 1974.This is a reflection of wage and salary increases, and higher costs for materials and supplies.Reduction in author-ized strength and the first general layoff in Project history helped to hold down those expenses.Interest paid on long-term bonds rose from$19.7 million in 1973 to$29.2 million in 1974, an increase of 48 percent.NET REVENUES AT$8.9 MILLION Net revenues during 1974 were$8.9 million, compared with$17.5 million in 1973, a decrease of 49 percent.This decline reflects the effect of general economic conditions.

Also, in 1973, earnings were unusually good because exceptionally heavy runoff into Project reservoirs provided approximately four extra months of low cost hydro-electric generation than is normally available.

PLANT VALUE UP$168.5 MILLION During 1974, the Project's gross plant, including construction work in progress, grew from$662.1 million in 1973 to$830.6 million.Of plant in service, at cost, electric plant increased by$145.2 million, irrigation plant by$6.8 million, and general plant by$9.7 million.Total capital expenditures during 1974 were$177.1 million.SOURCES OF REVENUES In hfillions 1974 1973%of Change Electric Residential

...........

Commercial and industrial

..........

Other....................

Water........................

Total....................

$72.2$58.9 22.6 62.9 31.9 2.6$169.6 48.9 20.5 1.6$129.9 28.6 55.6 62.5 30.6 DEBT CLIMBS TO$637.2 MILLION Long term debt climbed from 1973's$464.7 million to$637.2 million in 1974.This rise is a result of three bond sales, totaling$180 million, during 1974.The Project sold$90 million in bonds during'anuary at an effective interest rate of 5.75 percent,$50 million in May at 6.36 percent, and$40 million in September at 7.75 percent.11 COMBINED STATEMENT OF~et jI'evermez Salt River Project Agricultural Improvement and Power District and its agent, Salt River Valley IVater Users'ssociation For the years ended December 31, 1974 and 1973 OPERATING REVENUES: Electric.IVater and irrigation..

Total operating revenues.OPERATING EXPENSES: Power purchased Fuel used in electric generation.

Other operation expenses.Maintenance.......

Depreciation and amortization (Note 1).Taxes and tax equivalents (Note 5).Total operating expenses.Net operating revenues.FINANCING COSTS: Interest on bonds at coupon rates.Amortization of bond discount Amortization of bond issue expense.Interest on other obligations Interest earned on investments and deposits.....

Net financing costs.Less-Allowance for funds used for construction (Note 1)Financing costs less allowance for funds used for construction.

OTHER DEDUCTIONS (REVENUES), NET.......

NET REVENUES FOR THE YEAR$27,705,014 44,074,595 29,390,114 11,845,338 16,993,880 18,948,704

$14,746,135 28,694,459 25,546,385 9,456,018 14,352,886 12,691,099

$148,957 645$105 486 982$20 627 520$24 426 761$29,151,707 486,365 144,768 1,259,712 (8,310,470)

$19,673,195 435,622 133,085 297,911 (6,313,813)

$22,732,082

$14,226,000 (11,335,298)

(6,967,752)

$11,396,784

$372,306$8,858,430$7 258 248$(290,903)$17,459,416 1974 1973$166,971,981

$128,334,924 2,613,184 1,578,819$169,585,165

$129,913,743 The accompanying notes to combined financial statements are an integral part of this statement 12 COMBINED STATEMENT OF sources of fuza6e FOR ADDITIONS TO UTILITY PLANT Salt River Project Agricultural Improvement and Power District and its agent, Salt River Valley Water Users'ssociation For thc years ended December 31, 1974 and 1973 GROSS ADDITIONS TO UTILITY PLANT....FUNDS GENERATED FROM OPERATIONS:

Net revenues for the year...Depreciation and other charges not requiring current funds.Total funds generated from operations before retirement of debt Less-Repayment of long-term debt Net funds generated from operations.

FUNDS OBTAINED FROM FINANCING:

Proceeds of bond issues.Advances from U.S.Government for rehabilitation of irrigation plant.Other advances and contributions in aid of construction.

Long-term contract, net of repayments.

Short-term borrowing, net of repayments.

Less-Increase in segregated funds set aside for debt service...........................

Reduction (increase) in segregated funds set aside for construction.

Increase in temporary investments held primarily for construction.

Net funds obtained from financing......

CHANGES IN OTHER ITEMS AFFECTING FUNDS: Increase in fuel stocks.Increase in materials and supplies.Increase in debt service fund for payment of accrued interest on bonds..............

Decrease (increase) in other assets and liabilities, net.Net change in other items...FUNDS USED FOR ADDITIONS TO UTILITY PLANT.....

1974 1973$177,096,264

$171,144,625

$8,858,430$17,459,416 20,114,309 16,925,011

$28,972,739

$34,384,427 8,964,999 7,913,157$20,007,740

$26,471,270

$178,138,610

$148,507,206 648,392 4,909,099 2,410,168 19,750,000 786,569 4,647,041 19,750,000

$205,856,269

$173,690,816 (15,486,507)

(12,011,592)

(145,276)162,942 (7,592,816)

(12,521,199)

$182,631,670

$149,320,967

$(9,597,403)

(6,227,714)

$(6,295,028)

(1,987,048)

(4,785,578)

(3,221,150)

(4,932,451) 6,855,614$(25,543,146)

$(4,647,612)

$177,096,264

$171,144,625 I Thc accompanying notes to combined financial statements are an integral part of this statement 13 COMBINED 1974 Salt River Project Agricultural Improvement and Power District and its agent.Salt December 31, 1974 and 1973 aSSetS 1973 UTILITY PLANT, at original cost (Notes 1, 2 and 3)Plant in service Electric....

Irrigation.

General.Total plant in service Less-Accumulated depreciation on plant in service$517,459,324 60,763,852 35,412,147

$372,215,35 I 53,958,879 25 704,188$613,635,323

$451,878,418 151,398,751 136 509,334 I Construction work in progress.$462,236,572 216,956,381

$315,369,084 210,177,530 14 SEGREGATED FUNDS, consisting of cash and U.S.Government obligations set aside in accordance with resolutions of underlying bond issues: Debt service funds, excluding$15,900,974 in 1974 and$11,115,396 in 1973 for payment of accrued interest (Note 7).Construction funds.CURRENT ASSETS: Cash, including$6,000,000 restricted by line of credit (Note 8).Temporary investments, at cost, held primarily for construction.

Deposit in debt service fund for payment of accrued interest on bonds.Accounts receivable, less reserves of$802,000 in 1974 and$642,000 in 1973 for doubtful accounts..

Fuel stocks, at average cost Materials and supplies, at average cost.Prepayments, interest receivable and other.....

OTHER ASSETS: Advances for dedicated capacity in electric plant owned by others, less accumulated straight-line amortization over 39 years Nonutility plant, less accumulated depreciation of$414,000 in 1974 and$400,000 in 1973 Bond expense being amortized Miscellaneous deferred charges...........

$679,192,953

$525,546,614 S 60,132,372 S 44,645,865 283,774 138 498 S 60,416,146 S 44,784,363

$6,828,388 S 4,592,901 45,411,557 I 5,900,974 37,818,741 11,115,396 16,179,043 17,249,725 13,294,125 2,609,038 13,881,592 7,652,322 7,066,411 1,857,109$117,472,850 S 83,984,472 S 12,627,615

$10,763,179 1,239,513 1,689,652 4879 536~'18,571,880

$672,887,329 1,268,538 1,961,264 6,985,219 S 22,842,636

$879,924,585 The accompanying notes to combined financi Riv Valley IVater Users'ssociation Capitalization and liabilities 1974 1973 LONG-TERM DEBT (Note 7): General obligation bonds.Electric system revenue bonds........

Obligations to U.S.Government.

Other obligations.

$296,977,898 326,787,909 11,231,655 2,229,734$304,872,729 148,548,103 11,256,911 68,223$637,227,196

$464,745,966 ACCUMULATED NET REVENUES, invested principally in utility plant: Balance beginning of year.Net revenues for the year Balance end of year Total capitalization, consisting of long-term debt, and accumulated net revenues.$127,122,737 8,858,430$109,663,321 17,459,416

$773,208,363

$591,868,703

$135,981,167

$127,122,737 CURRENT LIABILITIES, excluding$9,389,000 in 1974 and$8,950,000 in 1973 representing t current portion of long-term debt which is to be paid from segregated funds: Notes payable to banks (Note 8)Accounts payable............................................

Accrued taxes and tax equivalents (Note 5)....Accrued interest Customers'eposits.

Other current and accrued liabilities............

$61,000,000 14,259,890 7,742,820 16,446,059 1,837,381 2,449,080$41,250,000 18,016,469 4,047,535 11,250,233 1,656,334 1 956 105$103,735,230

$78,176,676 COMMITMENTS AND CONTINGENCIES (Notes 3,4,5 and 6)DEFERRED CREDITS AND RESERVES: Irrigation assessments levied for subsequent year..Advances for construction.

Other.$1,639,943 731,371 609 678$1,353,241 866,112 622 597$2,980,992$2,841,950$879,924,585

$672,887,329 ements are an integral part of this balance sheet.15 Zlollc8 TO COMBINED FINANCIAL STATEMENTS Salt River Project Agricultural Improvement and Power District and its agent, Salt River Valley Water Users'ssociation 0 (I)SUMilIARY OF SIGNIFICANT ACCOUNTING POLICIES: (a)Principles Underlying Combined Statements The combined financial statements include the accounts of the Salt River Project Agricultural Im-provement and Power District and the accounts of its agent, the Salt River Valley Water Users'ssociation, together referred to as the Salt River Project, and a wholly owned subsidiary Salt River Generating Company.All significant intercompany transactions have been eliminated.(b)Utility Plant, Depreciation and Maintenance The accounting records of Salt River Project are inaintained substantially in accordance with the Uniform System of Accounts prescribed for electric utilities by the Federal Power Commission.

Utility plant is stated at the historical cost of construction.

Construction costs include labor, materials, services purchased under contract, and allocations of indirect charges for engineering, supervision, transportation, and administrative expenses.An allowance for funds used to finance con-struction work in progress is capitalized as a part of the electric and general plant.The cost of funds so used is deducted from net financing costs in the com-bined statement of net revenues.A capitalization rate of 6%has been consistently used for several years.Depreciation expense is computed on the straight-line basis over estimated useful lives of, the various classes of plant.Rates in effect during the years 1974 and 1973 resulted in provisions approximating 3.42%for 1974 and 3.49%for 1973 on the average cost of depreciable electric plant, and 2.31%for 1974 and 2.45%for 1973 for depreciable irrigation plant.When property representing a retirement unit is replaced, removed, or abandoned, the cost of such property is credited to the appropriate utility plant account, and such cost together with removal costs less salvage is charged to accumulated depreciation.

The Project charges to maintenance expense the cost of labor, materials, and other expenses incurred in the repair, restoration of condition and replace-ments of minor items of property.The Federal Power Commission has ordered com-panies subject to its jurisdiction to adopt a method of accounting whereby the balances of contributions in aid of construction are offset against utility plant.While Salt River Project is not subject to this order, its management adopted such accounting on January 1, 1974.To effect comparability between 1974 and 1973, contributions in aid of construction have been reclassified against utility plant at December 31, 1973.(c)Deferred Charges Bond discount, premium, and bond issue expense are being amortized over the terms of the related bond issues.(d)Employes'etirement Plan The Project has a retireinent plan covering sub-stantially all employes.The plan is funded entirely from employers'ontributions and the earnings of the invested assets.The estiinated unfunded past service liability based on the"entry age normal" actuarial cost method was approximately

$9,938,000 at July 1, 1974, and will be funded over a period ending in 2001.The employers'ash contributions to this plan totaled$3,483,000 in 1974, and$2,706,000 in 1973.As of July 1, 1973, a change was made in the actuarial cost method of valuing the retirement plan's investments from the cost basis to a modified market method.The effect of this change was to increase employers'ontributions in 1974 to a rate of 10.83%of total basic salary rates of participants.

Under the previously used actuarial method, the employers'ontributions in 1974 would have been at a rate of 10.04%.The excess of the actuarially computed value of vested benefits at July 1, 1974 over the total at December 31, 1974 of the market value of the plan's assets plus contributions receivable from employers was$6,740,000.

The Pension Reform Act of 1974 requires the Association to amend its retirement plan to conform with certain provisions of the Act, which will become mandatory in 1976.Management believes that the effect of such amendment on annual retirement plan costs will not be significant.(e)Revenues Meters for residential, commercial and small indus-trial customers are read cyclically and sales recorded when billed.For large industrial customers, meters are read near month-end and billings recorded on the accrual basis.Revenues from water and irrigation operations are recorded when earned.(2)POSSESSION AND USE OF UTILITY PLANT: The United States of America retains a paramount right or claim in the Salt River Project which arises from the original construction and operation of the Project's facilities as a Federal Reclamation Project.~The Project's right to the possession and use of, and%P to all revenues produced by, these facilities is evidenced by contractual arrangements with the United States.16 (3)CONSTRUCTION PROGRAM: Balances shown for construction work in progress represent expenditures for the new facilities required to serve anticipated customer needs and consist of Electric generating facilities.................

Transmission and distribution

..........

Irrigation plant.........Other construction

...Total................

December 31 1974 1973$174,124,250

$161,312,356 35,463,106 2,528,863 4,840,162 40,356,532 3,873,943 4,634,699$216,956,381

$210 177,530 (4)ENVIRONMENTAL LITIGATION:

Various pending lawsuits involving environmental matters could affect interests owned by Salt River Project in present generating facilities and in pro-Construction expenditures planned for 1975 approximate

$175 million, which includes$134 million expended in 1975 on the following major projects (shown below): Significant operating problems are being experi-enced on the Navajo Project coal haul railroad.Although the matter is under intensive analysis, studies to date indicate that remedial action involv-ing capital expenditures in the range of$20 to$30 million may be required.These costs would be for reconstruction and modification and would not in-crease the coal delivery capacity of the railroad.To the extent not recovered from third parties, the costs will be shared by the participants in the same proportion as their participation in the Navajo Project.Salt River Project's share of such costs would be 21.7%and are not included in the expected expenditures shown below.posed generating facilities and transmission lines.In general, these lawsuits seek to impose higher air quality standards for generating plants, delay or halt the construction of transmission lines, or invalidate coal leases.If ultimately decided adversely to the interest of Salt River Project these lawsuits could result in increased construction costs, increased future operating costs, and a possible loss in the operational reliability of certain generating plants.All of these effects would increase the costs to be passed on to customers through increased electric rates.(5)PROPERTY VALUATION LITIGATION:

Salt River Project makes voluntary contributions to taxing bodies in lieu of payment of property taxes.The Department of Property Valuation of the State of Arizona has filed suits (since consolidated into one suit)against the Project to increase the value used in the computation of the voluntary contributions for the years 1970, 1971 and 1972.This suit would have had the effect of increasing contributions by$2.25 million for these three years.In 1973, the Superior Court of Arizona granted judgment on this suit in favor of the Salt River Project.This decision has been appealed by the Department of Property Valuation.

The Department has also filed suits against the Salt River Project to increase the valuations for 1973 and 1974 which would increase the contributions by approximately

$1.4 million.Since all legal findings to date have been favorable to the Project, no reserve for additional contributions has been provided at December 31, 1974.(6)OTHER LITIGATION:

Principally as a result of certain water flooding in 1972, various lawsuits and claims have been filed against Salt River Project alleging that the Project has a responsibility in regard to flood control and a EXPECTED CONSTRUCTION EXPENDITURES (Note 3)Power facility Navajo Generating Station.Hayden Generating Station.Craig Generating Station.Coronado Generating Station.Palo Verde Nuclear Station.Santan Combined Cycle Units.Coronado Transmission System.Palo Verde Transmission System Expected In-Service Date 1974-76 1976 1978-79 1979-83 1982-86 1974-75 1979 1982 ($000)Expected Expenditures Overall In 1975$171,456$23,959 91,529 24,737 157,845 21,109 990,865 40,376 947,450 8,457 60,547 6,989 108,234 8,280 31,295 242$2,559,221$134,149 17 liability in regard to flood damage.The ultimate liability, if any, is not determinable, but management expects that a significant portion of any liabilities which might result from flood damage claims will be covered by insurance.

The Salt River Pima-Maricopa Indians have brought two lawsuits against Salt River Project claiming damages for trespass on various property originally held by the U.S.Government and used by the Project under a 1917 agreement with the U.S.Government.

Management believes that the Project will be able to sustain its position with regard to its entitlement to the use of the major properties involved in these suits.(7)LONG-TERM DEBT: Bonds outstanding are general obligation bonds and electric system revenue bonds.General obligation bonds are additionally secured by a pledge of revenues from the operation of the electric system.These bonds are a lien upon the real property included in the District, and the bonds and the interest thereon are payable from the levy of taxes on such real property unless the net electric revenues, as defined in the bond resolutions, are sufficient to meet~the principal and interest payments.%F j Electric system revenue bonds are secured by a pledge of, and a lien on, the net revenues of the electric system, subject to prior liens of general obligation bonds and amounts due the United States.In all years to date net electric revenues have been more than sufficient to meet all debt service requirements.

Long-term debt outstanding at December 31, 1974, and December 31, 1973, was as follows (shown below): The annual maturities of bonds and other long-term debt outstanding as of December 31, 1974, due in each of the years 1975 through 1979 are$9,389,000;

$10,156,000;

$14,861,000;

$15,227,000 and$15,957,000, respectively.

LONG-TERM DEBT OUTSTANDING (Note 7)Interest Rate General Obligation Bonds-Issued in Year Outstanding December 31, 1974 1973 Future Maturities Refunding Bonds Issue No.4 Issue No.5 Issue No.6 Issue No.7 Issue No.8 Issue No.9 Issue No.10 Issue No.11 Issue No.12 Issue No.13 Issue No.14 3 2-5/8 to 2-3/4 2-3/8 to 2-1/2 2-3/4 to 3-5/8 3.1 0 to 3.40 3-3/5 to 3-5/8 1 to 4-1/4 1 to 3.60 3-1/4 to 3-1/2 3 to 5 4to 5 3-1/2 to 6 194447 1950 1951 1953 1956 1959 1960 1962-65 1965 1968-69 1969 1970-72$223,000 1,900,000 3,500,000 8,900,000 7,445,000 4,090,000 24,750,000 17,415,000 11,850,000 40,300,000 8,600,000 172,200,000

$398,000 2,300,000 4,000,000 9,300,000 7,595,000 4,170,000 25,875,000 18,245,000 12,070,000 41,950,000 8,950,000 174,600,000 1975 1975-77 1975-80 1975-82 1975-87 1975-87 1975-92 1975-94 1975-87 1975-99 1975-99 1975-2003 Unamortized bond discount Total general obligation bonds outstanding Electric system revenue bonds-1973 Series A 5 to 6-1/2 1973 Series B 5 to 6-1/2 1974 Series A 5.7 to 7.2 1974 Series B 6.1 to 7.6 1974 Series C 6-1/2 to 7-3/4 1973 1973 1974 1974 1974$301,173,000 (4,195,102)

$309,453,000 (4,580,271)

S 75,000,000 75,000,000 90,000,000 50,000,000 40,000,000

$75,000,000 75,000,000

$296,977,898

$304,872,729 1976-2010 1977-2011 1983-2012 1983-2012 1983-2012 1935-74 1974 1950 18 Unamortized bond discount Total electric system revenue bonds outstanding Total bonds outstanding Obligation to U.S.Gov't for irrigation plant None Equipment contract 6.875 Other obligations None Total long-term debt$150,000,000 (1,451,897)

$330,000,000 (3,212,091)

$326,787,909

$148 548 103$623,765,807

$453,420,832 11,231,655 2,172,862 56,872 11,256,911 68 223$637,227,196

$464 745 966 1975-99 1975-82 1975-79 On January 8, 1975, the District sold bonds in the principal amount of$60,000,000 at an effective interest rate of 8.11%.These bonds were the first installment of$170 million of electric system revenue bonds authorized October 29, 1974, to finance the 1975 construction program.Interest and amortization of discount on the various issues outstanding during the year resulted in an effective annual rate of 5.26%for 1974.This rate approximates 5.90%over the remaining terms of the bonds, after giving effect to the bonds sold on January 8, 1975.The debt service funds portion of segregated funds includes$15,717,000 at December 31, 1974, and$10,787,000 at December 31, 1973, restricted for operating reserve requirements under bond resolutions.

zuGMezz'eyez6 (8)LINE OF CREDIT: The District, with the Association joining as guarantor, maintains a line of bank credit in the amount of$60,000,000.

The full amount available was borrowed at December 31, 1974, and at that date carried an interest rate of 7.00%.Under terms of the line of credit, a$6,000,000 non interest bearing compensating balance is required.Other bank borrowings total$1,000,000 at an interest rate of 6.50%.The average interest rate on bank~t borrowings for the year was 6.26%~(9)IRRIGATION AND WATER OPERATIONS:

The expenses, including depreciation, for irrigation and water operations exceeded the assessments, de-livery fees, and other revenues therefrom by approxi-mately$9,971,000 in 1974 and$7,187,000 in 1973.These amounts do not include expenditures for additions and improvements to irrigation plant and for repayment of long-term debt.To the Board of Directors, Salt River Project Agricultural Improvement and Power District, and Board of Governors, Salt River Valley Water Users'ssociation:

We have examined the combined balance sheet of SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT (a political subdivision of the State of Arizona)and its agent, SALT RIVER VALLEY WATER USERS'SSOCIATION, together referred to as the SALT RIVER PROJECT, as of December 31, 1974, and December 31, 1973, and the related com-bined 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 ac-cordingly 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, 1974, and December 31, 1973, and the results of its operations and sources of funds for additions to utility plant for the years then ended, in conformity with gen-erally accepted accounting principles consistently applied during the periods.Arthur Andersen Sc Co.Phoenix, Arizona February 24, 1975 19 Project General Operating revenues..

Electric.IVater&irrigation

.....................

Operating expenses........................

Net financing costs Less capitalized interest.............

Other deductions (revenues), net.Net revenues.Construction expenditures

............

Electric&irrigation plant..............

Contribution of power revenues to support water operations

......Taxes&, tax equivalents.................

Employes at year-end....................

1974 S 169,585,165 166,971,981 2,613,184 148,957,645 11/96,784 372,306 8,858,430 177,096,264 830,591,704 9,971,000 18,948,704 3,187 1973 S 129,913,743 128,334,924 1,578,819 105,486,982 7,258,248 (290,903)17,459,416 171,144,625 662,055,948 7,187,000 12,691,099 3,021 1969 S 65,231,040 63,783,829 1,447,211 55,509,026 2,158,993 660,806 6,902,215 43,156,232 317,811,604 8,600,000 7,658,728 2,262 1964 S 42,470,372 40,241,583 2,228,789 34,578 r244 2,605,797 96,562 5,189,769 10,327,955 209 801 785 5,300,000 2,421,376 1,859 tVater Total storage and pumping capacity (acre-fee t).Storage capacity (six reservoirs)

.........Installed pumping capacity.................

IVater in storage January 1 (acre-feet)...

Project storage only............................

Runoff (acre-feet)

.Released from storage (acre.feet)...........

IVater in storage December 31 (acre-feet)..

Project storage only............................

IVater diverted into canals and pumping (acre-feet)

............................

From gravity sources..........................

From pumping by Association pumps From pumping by others....................

Contract deliveries (acre-feet).................

From gravity sources..........................

From pumping..Canals, total (miles)................................

Miles lined.Laterals, total (miles).............................

Miles lined or piped............................

Drainage&, waste ditches (miles)............

Miles lined or piped............................

Assessed area.Number of assessed accounts..................

Number of individual water deliveries.

1974 2,884,556 2,072,050 812,506 1,498,629 1,201,943 441,582*866,476*1,054,710 789,158 1,238,484 872,007 361,002 5,475 132,458 111,991 20,467 131 56 875 683 263 53 238,263.90 161)596 516,485 1973 2,840,943 2,072,050 768,893 1,4347947 1,051,824 2,514,341 1,313,692 1,498,629 1,201,943 1,471,580 1,392,150 76,537 2,893 198,669 178,437 20,232 131 54 876 653 267 49 238,263.90 157,578 512,964 1969 2,865,302 2,072,050 793,252 1,468,205 1,160,088 1,069,758 1,127,402 1,365,502 1,046,630 1,401,635 1,103,486 291,726 6,423 132,608 109,955 22,653 131 48 881 534 283 46 238,261.50 140,072 488,854 1964 2,814,703 2,076,713 737,990 796,150 550,663 532,019 681,961 608,941 359,447 1,121,645 670,174 446,763 4,708 96,990 73,927 23,063 138 46 866 387 284 31 238,251.90 132,486 577,628*Based on U.S.G.S.provisional records and subject to adjustment.

20 Power 1974 1973 1969 1964 Sources: (ksvh)t Net steam generation..........................

Net diesel generation

..........................

Net combustion turbine generation Net combined cycle generation

..........

Net run-of-river hydro generation**

Net pumped storage generation..........

Total net generation.

Purchased Interchange received...............................

Wheeling received Total energy Disposition: (kwh)Residential Commercial

&industrial.....................

Irrigation pumping.............................

Street&highway lighting...................

Public authorities

...............................

Interdepartmental

..............................

Sales for resale..............................

Total sales..Interchange delivered.............................

Wheeling delivered.

Energy losses..........................................

Energy for pumped storage operations Total.Peak overall power system (kw).............

Date and time (MST)..........................

Peak, Project customers (kw).................

Date and time (MST)..........................

Generating capabilityat year~nd and con-tracted purchase at time of peak(kw)Steam.Diesel.Combustion turbine........................

Combined cycle..............................

Hydroelectric-conventional

............

Hydroelectric-pumped storage........

Total operating capability

..................

Contracted purchase...........................

Total resources...............................

Transmission

&, subtransmission lines-total circuit miles.....................

Distribution lines-primary&, secondary Cable miles underground

................

Circuit miles overhead....................

SRP transmission substations

.................

SRP distribution substations

..................

Customer-owned distribution subs.........

Electric customers, year-end Residential.

Commercial

&.industrial.....................

Other.Total.........................................

t Average annual kwh use-residential.

Average annual kwh price-residential (cents)...............................

2,325,016,000*

2,074,311,000 3,200 4,473,608,000*

4,360,347,000¹ 252,506,000 129,429,000 332,325,000 610,571,000¹¹ 264,197,000 333,822,000¹¹ 176,128,000 5,365,493,000*

211,176,000 2,285,490,200 251,211,778 748,931,114 1,443,956 3,287,077,048 21,133,000 5,324,376,000*

1,940,568,367 277,927,048 40,667,485 7,583,538,900 2,589,213,000¹ 1,608,677,185 366,746,833 38,806,382 4,603,443,400 3,257,052,229 207,521,040 42,534,731 8,872,601,000 2,640,917,384 2,894,899,907 218,566,804 38,974,096 201,267,802 62,477,382 855,118,667 6,912,222,042 112,973,600 37,536,087 489,467,171 1,508,158,739 1,950,372,606 238,492,639 27,714)212 180,874,830 145,000,900 126,492,829 4,177,106,755 110,932,948 36,090,376 279,313,321 2,751,862,961 3,191)339,884 308,554,192 38,756,879 239,776,522 194,652,239 903,560,899 7,628,503,576 255,852,000 39,599,835 694,923,589 783,098,756 1,090,615,121 242,568,241 19,463,531 193,735,482 217,583,687 457,930,882 3,004,995,700 31,065,457 1,314,000 249,701,891 31,340,000 7,583,538,900 1,759,000 July 2, 6 p.m.1,448,000 June 28, 6 p.m.253,722,000 8,872,601,000 2,408,000 June 27, 6 p.m.1,645,000 June 27, 6 p.m.4,603,443,400 1,043,000 Sept.8, 6 p.m.944,000 July 31, 6 p.m.3,287,077,048 781,000 Sept.9, 9 p.m.547,000 July 28, 6 p.m.611,200>>1,019,150*

362,800 225,000 94,300 147,200 1,848,450*

629,725 2,478,175 850,400¹238,800 94,400 147,200 1,330,800¹ 582,145 1,912,945 532,200 7,900 62,400 673,600¹530,012 1,203,612 64,000 604,100 134,000 738,100 1,107*808 652 902¹3,282 4,780 16*109 2 4,425 4,856 19*112 2 589 4,446 12 80 6 83 4,132 10 62 6 146,463 11,781 958 159,202 221,808 16@93 1,230 239,431 209,334 15,443 1,144 225,921 113,880 10,421 833 125,134 7,111 12,808 13,182 10,685 2.62*Includes SRP participation in jointlywwned projects.2.23 1.934 2.035'*Includes run-of-river generation by pumped storage units.

Other 1$tVater&irrigation Agricultural pumping, street&, highway lighting, and public authorities THE REVENUE DOLLAR Reinvested in Project assets 7)Maintenance Sales for resale 13)Net interest on indebtedness 10)Depreciation and amortization Commercial

&industrial electric sales 37)Taxes, (sales, payroll, contributions ad valorem)16)Purchased power 17)Other operation expenses Residential clcctric sales 43]27)Fuel used for generation SOURCES USES THE IMPACT OF FUEL AND PURCHASED POWER COSTS ON THE ELECTRIC REVENUE DOLLAR fuel cost 27%fuel cost 34%fuel cost 43%1970 1973 1974 22 c"r~pPu~t.rXjy rg rj~<<Vp tc~it Bill Rousseau, No.3, Tom lrinlcy, No.10, Larkin Pitch, No.9 E BOARD MEMBERS (picturfxl left)The Board of Governors of the Salt River Valley Water Users'ssociation and the Board of Directors of the Salt River Project Agricultural Improvement and Power District consist of 10 members each, elected from among the shareholders and members for two.year terms.The boards establish the policies for the management of the Project and for the conduct of its business affairs.COUNCILMEN (Pictured on the following pago)Three Councilmen are elected for two.year terms from among the shareholders in each of the tcn district areas of the Salt River Valley Water Users'ssociation and from among the members in each of the tcn division areas of the Salt River Project Agricultural Improvement and Power District.The councils enact and amend bylaws relating to the management of thc Project and to the conduct of its business affairs.ELECTED OFFICERS Karl F.Abel=President John R.Lassen=-Vice President Gcrrnain ll.Ball, No.I, Thomas P.llurlcy, No.6, Alex M.Conovalolf, No.2, Lco C.Smith, No.4 OTHER OFFICERS&, EXECUTIVES Rod J.McMullin=General Manager Robert F.Amos=Associate Gcncral Manager, Finance and Operations Services A.J.Pfister==Associate General Manager, Power Reid W.Teeples-=Associate General Manager, Water Carl T.Eyring==-Assistant Gcncral Manager, Power Construction and Maintenance T.M.Morong, Assistant General Manager, Power Engineering, and Chief Engineer, Power Vaughan A.Pierce Assistant General Manager, Marketing and Commercial Scrviccs John O.Rich-Assistant General Manager, Power Operations Stanley E.Hancock-Director, Communications and Public Affairs Leroy Michael, Jr.==-Director, Legal Services*Frank G.Scussel=Director, Project Planning&Policy Administration E.W.Yorke-Director, Personnel Francis E.Smith-Secretary KennethJ.Knauer-Treasurer Don Wecsner-Chief Engineer and Staff Coordinator, Water<<Retires June 30, 1975 John S.lloopcs, No.8, John h1.tvilliams, Jr., No.S, IVitliam P.Schradcr, No.7 Numbers indicate District and Division from which Board members were clcctcd.Legal Advisors-Jennings, Strouss&Salmon Auditors-Arthur Andersen&Co.Bond Counsel-Mudge Rose Guthrie&Alexander Financial Consultant

-Smith, Barney&, Co., Incorporated 23 Jfp I n111p'1 c~1 111 11-'I I'~rl 18'(I~~I~~~I'E~I 10'*I I'1 EIE\11~I~I I~1'S 1~I'%1~~I hO~~t 1\E(trs1 24 g 5+(8~a r J J Numbers indicate District and Division from which Councilmen werc elected.A Thomas M.Owens, Jr., No.8;IViley R.Baker, No.4 B Orland R.Ilatch, Otto B.Nccly, L.Max Pace, No.10 C Carl E.tVcifer, R.C.Jones, Edmund Navarro, No.5 D A.)Varren Austin, George B.tViflmoth, No.7 E Cal A.Sutton, hfarcef J.Boulais, C.C.Pendergast, Jr., No 2 F Ray C.Roles, James L.Diller, No.6 G Ivy IVilson, Jr., Levi ll.Rccd, No.4 H J.B.Neely, Dwaync E.Dobson, No.8 I James R.Marshall, No.6;william ll.Goettl, No 7 J M.B.Brooks, Jr., Thayer Collier, Elvin E.Fleming, No.3 K tV.Curtis Dana, Robert fV.Birchett, Olen Sharp, No.9 L Rudolph Johnson, lloward tV.Lydic, Emil hf.Rovey, No.I SALT RIVER PROJECT WATERSHED, IRRIGATED AREA IIlld ELECTRICAL SERVICE AREA I ,/t 4~ATNIOAX~IlACITAta , IAIIC TT~N'g o cv N 44 44 d (f,s MILE irj fg~AVION f~'PROJECT ANIrfnf WATERSHED SAATCC',I OAU 4'NXTIIVIC I ra'OAUCN I lAt Jf'y OAQ)Wf NCAlc ltf ku gftWAAT UT OAN IIAINCIAVITCC 4 Ofc crlArtlla trait~Tvwe AIACNC ICT Oewt IlblllNCC ICT.~AANI C4NI A 4OA frnfl cleat IAN Cxof Ot IAXI Electrical Sevra Area Served Kxdfnively by Sait Rryer Project Salt River Project Pnwidel Full Power RCQulfCflWITI Of Affrcre Publrc Sofvfa fcf RITIXX, Pibfett Motel OrteCt Solel lo Customart for Atl Mrnrno Loadt Sail River Protect Provrdef Full Power Retuirementl of Aritona Public Serwco for Relole SNctrrcof Sevke Atoll riot Served by Selt Reer Prefect soll fliver project trrrolted Aroo SCale Of Mrfet SALT RIVER PROJECT P.O.BOX 1980/PHOENIX, AZ.85001/RETURN REQUESTED 8ULK RATE U.S.POSTAGE PAID PHOENIX, ARIZONA Permit No.395