ML17303A548
| ML17303A548 | |
| Person / Time | |
|---|---|
| Site: | Palo Verde  |
| Issue date: | 12/31/1987 |
| From: | Boulais M, Lassen J, Pfister A SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT & POWER |
| To: | |
| Shared Package | |
| ML17303A547 | List: |
| References | |
| NUDOCS 8709170199 | |
| Download: ML17303A548 (32) | |
Text
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DEADLINE RETURN DATE RECORDS FACILITY BRANCH S7O9X70iW 86~~~~~8 PDR ADOCK OMOOMB I I
Background
Purpose of Salt River Project: Provide a reliable and adequate supply of water and electricity at the lowest reasonable cost~~<hvt~~SALT RIVER PROJECT PUIILISIIER SRP Communications i'ublic Affairs Department EDIIR Heather Cllsby DESICJI Larry i~tacLcan PHO?OGRIt PHV Chet Snellback, Ed'tbllmr, Jere Grms and Joe Qulhuls COhtPUTER CRrlPHICS Jeff Stanley On the couer-Another beautiful Arizona sunset silhouettes part of SRP's Eyrene Receiving Station in'ibmpe.S alt River Project is named for the major river which supplies water to the Phoenix metropolitan area.SRP plays a significant part in the growth of the Salt River Valley, providing water and power to residents through bw organizations
-the Salt River Valley Water Users'ssociation (the Association) and the Salt River Project Agricultural Improvement and Poiver District (the District).
The Association is a private Arizona corporation.
It ad-ministers water rights of SRP's 240,000-acre area and operates and maintains the irrigation transmission and distribution system which carries water to municipal, industrial, agricultural and residential users.In coopera-tion with the U.S.Forest Service, it participates in the management of the 13,000-square-mile water-sheds of the Salt and Verde rivers.The District is a public power utility and a political subdivision of Arizona.It operates under contracts with the United States and provides electricity to residential, commercial, in-dustrial and agricultural power users in a 2,900-square-mile ser-vice area in parts of Maricopa, Gila and Pinal counties.In line with the long-standing reclamation principle, SRP uses a portion of its electric revenues to help support its water opera-tions.This practice helps keep waterdelivery charges to cities, farmers and homeowners at reasonable levels.At the same time, SRP maintains electric rates that are competitive with those of other utilities in the area.
Contents Message from Management
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2 ower o~o~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~o 4 P ater.......................................8 W C~~ommumty...................................12 F manctal....................
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16 Combined Financial Statements...................18 Notes to Combined Financial Statements............22 Statistical Review...'...........................
26 Board Members and Council Members..............28 Highlights REVENUES/EXPENSES (See Page 20)Total operating revenues ($000)Total operating expenses ($000)Net operating revenues ($000)Financing costs (less AFUDC)($000)Other expenses, net ($000).Reinvested
($000).POWER OPERATIONS (See Page 27)Energy customers at year end.Total kilowatt-hour sales (000).Average annual kWh usage per res.customer Avg.annual kWh revenue/res.
customer (cents)WATER OPERATIONS (See Page 26)Assessed water accounts.............
Water runoff (acre-feet)
Water in storage, Dec.31 (acre-feet)
.Water deliveries (acre-feet)
.SELECTED OTHER DATA (See Page 26)Gross plant investment
($000).Long-term debt ($00(hSee Page 19).Taxes 6 tax equivalents
($000).Electric-revenue contributions to support water operations
($000)Employees at year end.'ased on V.S.G.S.provisional records and subject to adjustment.
" Does not include temporary employees.
Fiscal 1987 888,506 706,377 182,129 105,293 2,075 74,761 487,321 15,566,478 12,440 7.54 Calendar 1986 181,894 1,070,214',691,741 870,658 Fiscal 1987 4,814,087 2,986,737 103,097 15,9?5 5,735" Fiscal 1986 848,618 642,963 205,655 42,337 5,002 158,316 457,489 14,503,982 12,175 7.56 Calendar 1985 181,645 1,774,667 1,671,535 1,016,612 Fiscal 1986 4,481,667 2,880,407 83,864 12,384 5,468" To Our Shareholders and Bondholders:
T his past year we witnessed our 50th anniversary as the Salt River Project Agricultural Im-provement and Power District.We'e seen a lot of changes in the past 50 years.Through it all we'e continued to supply a reliable source of energy and water at the lowest reasonable cost.Research shows our custom-ers are happy with our service.One of last year's goals was to achieve an overall quality of service rating of 90 percent from our customers.
We received a 97 percent rating.Customers saw a small decrease in their electric bills as we passed on a decrease in fuel costs.For residential customers, the average cost per kilowatt-hour (kWh)was 7.54 cents compared to 7.56 cents per kWh in the previous year.During the year, we added 29,832 new electric customers for a total of 487,321 customers in all classes.The new customers con-tributed to a new system peak of 2,785 megawatts (MW)on August 20.However, plenty of power is available.
The first two units of the Palo Verde Nuclear Generating Sta-tion have begun commercial opera-tion, providing SRP with 444 MW of generating capacity.Future power supplies are being deeloped at St.Johns, where the third 350 MW unit of the coal-fired Cor-onado Generating Station is under contruction.
On a per-customer basis, our operations and maintenance costs dropped to$1,422.That is$114 less than our Project goal of$1,536.As the number of customers in-creased, many located near the outer edges of the SRP service area.To better accommodate customers on the east and est sides of the Valley, we opened the Tolleson Service Center and broke ground for the Mesa Service Center.Regional service centers enhance operations by reducing travel time and expense of reaching the customer.In an effort to eliminate use of leased office space and to con-solidate administrative functions, we broke ground for a new corpo-rate headquarters.
Eventually, the headquarters will consist of five buildings on 40 acres est of the present headquarters.
The first component, the Information Systems Building, is scheduled for completion in late 1988.In addi-tion to the corporate headquarters, 484 surrounding acres of SRP-.owned land will be available for lease and development by others and will be called Papago Park Center.Income from this develop-ment will be used to supplement electric revenues, offset operating expenses and hold down electric bills.Water supplies were sufficient and remarkably well managed.Although inflows from the Salt and Verde rivers were only 87 percent of average, heavy summer rains kept reservoirs fuller than normal.Storage at the end of 1986 totaled 1,691,741 acre-feet (a0 or 84 per-cent of capacity.This was 139 per-cent of normal.For the third time in four years, plenty of water in storage reduced groundwater pumping to less than 7 percent of deliveries.
Project groundwater pumping totaled on-ly 65,538 af, aiding our efforts to conserve this essential resource.'Ibtal water deliveries hit a 10-year low of only 870,658 af, compared to 1,016,612 in 1985.Agricultural use was less than nor-mal due to land sales and govem-ment set-aside programs which reduced the quantity of crops grown.Municipal use was less due to summer rains which curtailed the usual amount of lawn watering.Land and vvater use continued to shift.A total of 7,165 acres was converted from agricultural use to urban use.By year's end, 68.6 per-cent of the 238,170 acres in SRP was urbanized, while 31.4 percent remained in agriculture.
SRP's Water Group faced a ma-jor reorganization.
Reid W.lteples retired as head of the Water Group after 39 years with SRP.He was succeeded by D.S.Wilson, Jr.A reorganization of three depart-ments was completed to increase eficiency and to provide better ser-vice to customers.
A new department was formed, the Water Quality and Geohydrology Department.
SRP staff will monitor water quality and institute practices to ensure that SRP water meets all applicable standards.
We initiated meetings with all cities we serve to seek solutions to mutual water problems.As population increases, the cities will be faced with an in-creasing demand for water.By working with the cities, we can share information and avoid cost-ly duplication of efforts.Under the Safety of Dams Act, preliminary engineering and ex-cavation work began on Theodore Roosevelt Dam and Stewart Moun-tain Dam.During 1986, we entered into agreements with the U.S.Bureau of Reclamation to add several maintenance items to necessary dam safety modifications scheduled at Stewart Mountain Dam.The proposed changes will enhance operating and main-tenance facilities at the dam.Financially, it vvas another good year for SRP.Careful management of SRP resources, healthy financ-ing opportunities and a strong local economy contributed to the success.Our debt service coverage increased from 1.85 to 2.0, aided by a 4.7 percent increase in gross revenues.Hot weather and the almost 30,000 new customers helped to build an increase in gross revenues to$888.5 million, up from the previous year's revenues of$848.6 million.Net revenues totaled$74.8 million during fiscal year 198M7.As a public power utility, our net revenues are reinvested to replace equipment and to help finance construction of new facilities.
Maintaining a healthy financial status resulted in our bonds con-tinuing to receive high investment.
grade ratings of AA and Aa by the nation's leading rating services.We have sold investment-grade bonds for more than 20 years.For the first time in ffive years, we sold bonds on a competitive bid basis.In October 1986, SRP sold$100 million in tax-free electric system revenue bonds.The bonds were sold in$5,000 denominations at an effective interest rate of 7.34 percent.Mini-bonds retained their popularity.
Mini-bonds are bonds sold for$500 or less, which makes them appealing to the investor with a small amount of capital for in-vestment.After the end of the fiscal year, approximately
$22.3 million in mini-bonds were sold.Some were interest-bearing mini-bonds for$500 each and, for the first time, we sold capital appreciation bonds for$200 each.These bonds vvill pay$488.05 if held to maturity in 2002.Our employees were the strength of this year's corporate theme,"The People Behind the Spirit." Their commitment to ex-cellence was shown in their work and in their many volunteer ac-tivities in their communities.
Their efforts are, in large measure, the reason this past year was successful for Salt River Pro-ject.Through our employees'alents, expertise and dedication, we expect to be able to meet the challenges of the coming year.Challenges will include meeting financial capital requirements caused by new construction.
These capital requirements are expected to cause our debt ratio to rise.However, through all of the year's activities i~e'll be working closely with Valley communities and all levels of government, con-tinuing to be a strong presence in the Valley we serve.We'l be here, providing a reliable supply of water and electricity for our customers, for another 50 years to come.John R.Lassen&i~g.~Marcel J.Boulais A.J.Pfister (From left)Salt River Project General Manager A.J.Pfister, President John R.Lassen and VIce President Marcel J.Boulais.Officers Elected Officers John R.Lassen President Marcel J.Boulais Vice President Principal Officers and Other Executives A J.Pfister General h1anager John R.NcNamara Associate Ceneral h1anager, Corporate Engineering and Ibiver Group Robert J.Conlon Assistant General Nanager, Corporate Engineering Trent O.Neacham Assistant General h1anager, lbwer Construction
&Naintenance John O.Rich Assistant General hlanager, Power Operations D.S.Wilson, Jr.Associate General Nanager, IVater Croup Richard Juet ten Assistant General Nanager, IVater Resources&Services Robert W.Mason Director, Water Croup Nanagement Staff Don G.Parlett Associate General hlanager, Corporate Services Croup Paul G.Ahler Assistant Ceneral h1anager, Human Resources James L.Swartz Assistant General h1anager, Operations Services Carroll N.Perkins Associate Ceneral Nanager, Customer, Financial&Information Services Group John D.Jacobs Assistant General Manager, Information S>stems Oren D.Thompson Assistant General hlanager, Customer Services Mark B.Bonsall Corporate 71easurer, Financial Services Leroy Michael Jr.Associate Ceneralh1anager, Planning&Resources Arnold L.Schwalb Director, Corporate Planning Darrell E.Smith Director, Resource Planning Stanley E.Hancock Assistant General h1anager, Communications
&Public Affairs D.Michael Rappoport Assistant Ceneral h1anager, Government Affairs Richard H.Silverman Assistant General h1anager, Law&Land C.A.Howlett Assistant Ceneral Nanager, Special Rejects Paul D.Rice Corporate Secretary Consultants LegalAdvisers Jennings, Strouss 4 Salmon Auditors Arthur Andersen 6 Co.Bond Counsel Nudge Rose Guthrie Alexander 4 Ferdon Financial Consultant Lazard Freres 6 Co.3 SRP linemen continually upgrade and repair SRP's power lines, such as this high voltage line between H'yrene and Silver King receiving stations.
Electric customers benefit from decreased fuel costs, increased power i t was a golden year for SRP's Power District.In the 50th year since the for-mation of the Salt River Project Agricultural Improvement and Power District, the District:~Added nearly 30,000 new electric customers, including several major industrial customers~Passed on a slight decrease in fuel costs to customers, reduc-ing their cost of electricity
~Began receiving low-cost power from the second unit of Palo Verde Nuclear Generating Station~Completed the Palo Verde transmission system to the Phoenix Metropolitan area, on-time and under budget~Brought on-line a new com-puter, the Energy Management System, to control SRP's electric system~And continued construc-tion of the third coal-fired unit of the Coronado Generating Station.Further luster was added to the golden jubilee when SRP's District improved service to our customers by building a new regional service center;esta-blished a demand side implemen-tation program;and formulated a balanced strategy approach to resource planning.SRP's service area remains a high-growth area The number of SRP customers continued to grow.Electric customers, totaled 487,321 at year's end, compared to 457,489 the year before.SRP has added about 30,000 customers in each of the past four years including a record 34,715 customers in fiscal year 1985-86.Because of continuing growth, the number of customers by the end of the next fiscal year is expected to easily surpass the 500,000 mark.Of the increase in last year'customers, 27,153 were residen-tial and 2,245 were commercial and industrial.
Other electric users, including municipal street light contracts and irrigation pumps, increased by 434.Several new industrial customers, including B.F.Goodrich, Hamilton-Avnet, Parker Hannifin and Hexcel, ac-counted for about 8,000 kilowatts (kW)in new load, nearly 800,000 square feet of manufacturing space and more than 1,000 new jobs in the area.Each new customer increased demand on the electric system.Electric customer use reached a peak of 2,785 megawatts (MW)on August 20, 1986.This peak demand surpassed the previous high of 2,658 MW reached on August 29, 1985.'Ibtal kilowatt-hour (kWh)sales to customers during the year increased by 1.06 billion kWh to 15.56 billion kWh from 14.50 billion kWh the previous fiscal year.Electric bills drop slightly During the)mr, SRP was able to pass on to customers a slight decrease in fuel costs, thereby lowering the cost of electricity.
For residential customers, the average cost per kWh was 7.54 cents, compared to 7.56 cents per kWh the previous year.The reduction was due to a decrease in the fuel cost adjustment fac-tor applied to bills.SRP's electric Transmission system completed under budget SRP's work on the Palo Verde Nuclear Generating Station's transmission system was com-pleted ahead of schedule and$3 million under budget.The 13-year project was completed in October 1986, at a cost of$95 million.The high-voltage transmission system includes 165 miles of 500 kilovolt (kV)power lines which Generating Sta-tion.Both began commercial opera-tion in calendar year 1986, the first unit on January 30, 1986 and the second unit on September 20, 1986.SRP is one of Year Ending April 30 Hpb'o Gas 1984 15.8 3.9 1985 12.8 8.9 1986 11.0 103 1987 10.0 8.6 1992 63'1$prnjeded)'inc&As bybo purchases bill numbers m prnraroprsl busc Oil Cnal Nuclear Purch.0.5 78.6 0 1.2 0.4 76.2 0 1.7 0 683 1.0 9.4 0 58.4 12.4 10.6 0 67.6 21.0 0 seven owners of the nuclear powered station 50 miles west of Phoenix.SRP owns 17.49 per-cent of Palo Verde's three 1,270 MW units.With the commercial operation of the first two units, SRP gained 444 MW of generating capacity.The third unit of Palo Verde.Nuclear Generating Station is ex-pected to be in commercial operation by the end of 1987.This unit will provide another 222 MW of capacity to SRP.The U.S.Nuclear Regulatory Commis-sion issued an operating license for the unit in March 1987.That license allows plant operator Arizona Public Service Company to load nuclear fuel and begin the prescribed testing process.link Palo Verde Nuclear Gener-ating Station with Phoenix and other moor cities and the elec-trical grid connecting the Western states.Meanwhile, construction began on the Papago Buttes-Pinnacle Peak 230-kV transmis-sion line.The line will strengthen SRP's transmission system and increase electric reliability to the growing number of customers in the Scottsdale and Tempe area.The line is expected to be com-pleted in early 1989.During the fiscal year, SRP added a total of 15 miles of 69 kV subtransmission line and 39 miles of overhead distribution lines.SRP also installed 1,403 miles of primary underground rates contain a basic amount for fuel, but fuel costs can change on a daily basis.Fluctuations be-tween the amount paid for fuel and the amount collected from customers are refunded or recovered on bills through periodic fuel cost adjustments.
SRP starts receiving low cost power from Unit 2 of Palo Verde Some of the power re-quirements of customers were met with electrici-ty from the first hvo units of Palo Verde Nuclear PROJECT ENERGY SOURCES distribution lines and 513 miles of secondary underground distri-bution lines.Also, five new residential distribution substation sites were opened and 15 new substations were installed.
Energy Management System is installed SRP's ability to control its power nebvork increased dramat-ically with the arrival and instal-lation of the Energy Management System (EMS), a new computer system installed in February 1987.EMS is a power network control system with which dis-patchers monitor and direct the flow of power from generating fa-cilities to customers.
Thus far, about 70 SRP substations are operated by the new system.All 170 substations in the SRP elec-tric system are projected to be on EMS by late 1987.The new system is far more advanced and efficient in every respect from the old control sys-tem, which SRP had outgrown.In addition to features of the old system, the EMS has powerful statecf-the-art computer analysis capabilities designed to help pow-er dispatchers react faster to sys-tem disturbances and make better decisions regarding alloca-tion of generation resources.
Besides the ability to quickly identify, analyze and determine the cause of power outages, EMS'ther advantages include an in-creased ability to analyze the best time to buy and sell electricity, and to quickly analyze demand on the system.As a result, the new system increases SRP's relia-bility and cost effectiveness.
SRP sent nine engineers and their families to Minneapolis for three years to supervise the build-ing of the computer and its soft-ware.Including installation, the new system cost$28 million.Construction continues on Coronado 3 In January 1986, construction resumed on the third 350 MW unit of the Coronado Generating Station at St.Johns, Arizona.By the end of May 1987, construc-tion was 8 percent complete.The 6 unit is expected to begjn com-mercial operation by 1991.SRP expects to spend about$670 million in direct costs for the unit, about$50 million less than the 1985 estimate.SRP is one of a few U.S.utility compa-nies building a generating unit of this size and is benefitting from competitive prices for equipment and materials.
Supervision of Generating Station.SRP completed the first phase of its statewide study of potential locations for a new coal-fired generating station.However, since current projections show that another large, coal-fired generating station won't be needed until aiter the year 2000, and it takes about 10 years to plan and build a large coal-fired areas are evaluating the potential benefits, including deferral of new generating units, improved effi-ciency, enhanced reliability and better system coordination.
Regional service centers provide faster service to customers Regional service centers, new-ly opened or now under con-~A C~0~E Phoenix~F~G 8/vga APACHE J FNREIICE JCT.fflfVf8 oP MIAMI~~GNBE~SUPERIOR~H O Electric Service Area Served Exclusively by Salt River Project.D Salt River Project Provides Full PoNer Requirements of Arizona Public Service for Resale.Project Makes Direct Sales to Customers for All Mining Loads.Salt River Project Provides Full Po>>vr Requirements of Arizona Public Service for Resale.i Electric Service Areas Not Semd by Salt River Project contruction by SRP engineers also is keeping costs down.Meanwhile, SRP is testing a potential source of new coal for Coronado Generating Station.SRP has acquired leases for coal-bearing properties in western New Mexico.lhsting of 100,000 tons of coal will help SRP decide if that coal could be a future source of fuel for Coronado station, the study probably won'be resumed until the early 1990s.SRP will continue to study sever-al options for meeting its cus-tomers'lectric demand.One option under study is a high voltage transmission line to connect the Desert Southwest and the Pacific Northwest.
SRP and 26 other utilities in the bvo struction, are bringing SRP closer to its customers.
Service centers in the western and eastern part of the Salt River Val-ley enhance operations by reduc-ing travel time and expenses.When customers need service, construction or repair, crews are able to respond quickly because they are closer to the work site.SALT RIVER PROJECT ELECTRIC SERVICE AREA The new Tolleson Service Center, opened in January 1987, is headquarters for 300 employees who serve the growing west Valley.By 1995, SRP pro-jects that it will be serving 200,000 electric customers in that area.SRP is building a similar regional service center in east Mesa to serve the growing east Valley.About 350 SRP employees will work at the center when it opens in 1988, with ap-proximately 150,000 electric customers expected to benefit.Customer service centers in Glendale and in the southeast Valley are also planned.SRP opened its first service center in Tempe in September 1983.SRP emphasizes demand-side planning SRP continually is looking for ways to reduce its costs and pass along its savings in the form of lower electric bills to its cus-tomers.'Ib provide customers with more opportunities to reduce their electric bills and to bring about beneficial changes to the pattern of system demand, SRP established the Demand-Side Implementation Department last year.Demand-side programs can moderate the rate of growth in peak demand and bring about a more constant demand for elec-tricity throughout the year.This lower rate of growth means SRP does not have to build as many new generating plants, thus keep-ing down rising costs associated with new construction.
More constant demand means SRP can make more efficient use of its existing generating system.Last year the new department, in cooperation with other depart-ments, continued a program evaluating customers'esponses to the time-of-day program.Within the time-of-day program, begun in March 1980, par-ticipating customers pay lower rates during off-peak hours.Con-versely, they pay higher rates dur-ing on-peak hours, when electricity demand is great.Results from the study will help SRP plan rate alternatives that t I,'/))allow customers to take greater control over the cost of their elec-tricity.SRP's Board of Directors voted in March 1987 to allow an additional 10,000 SRP customers to participate in the time-of-day program, increasing the number of potential customers in the pro-gram from 3,000 to 13,000.Other demand-side programs include a cash incentive program for businesses, schools, or chur-ches which install thermal energy storage systems, rather than con-ventional air conditioners.
A thermal energy storage system uses electricity at night to form ice or liquid which is used to cool the building during the day, in-stead of a conventional refrigera-tion system.Customers who replaced gas furnaces with high efficiency heat pumps last year received$200 ELECTRI from SRP for the (ALL switch.The$200 incentive was boosted from a$100 incentive of-fered when the program began in 4oo,ooo March 1985.2pp ppp Another incentive offered was to customers who replaced old, inef-ficient air condi-tioners or heat pumps with new high<fficiency air conditioners or heat pumps.SRP offered cash in-centives of between$50 and$100 a ton for the new equipment.
SRP's Energy Efficient Home (EEH)program achieved new heights in market penetration last year.Currently, six out of 10 new homes in SRP's service area are built by contractors in the EEH program.The program requires builders to meet 12 building specifications for a total-electric home.EEH homes are more energy efficient and thus cost less to operate for the owner.Resource planning aimed at reducing cost During the fiscal year, SRP used a new approach, called C CUSTOMERS CLASSES)1977 1987 1982 balanced strategy planning, to plan methods of meeting pro-jected electric demand.This ap-proach reflects SRP's least-cost planning philosophy.
Its goal is to find the best combination of demand-side load reductions and future power additions resulting in the lowest possible cost, while maintaining SRP's high level of customer service.The balanced strategy plan calls for commercial operation of the third unit of Coronado Generating Station by 1991, a 200 MW purchase and a sales contract recapture, plus a reduc-tion in projected peak load up to 400 MW by the year 2006 through demand-side programs This plan allows SRP to delay construction of additional un-committed coal units until after the turn of the century.1992 1997 2001 New electric customers, such as Westcourt In the Buttes hotel manager (right), receive personal assistance about the/r power needs from an SRP commercial customer representative.
SRP demonstrates a vital interest in hydraulic engineering projects at Arizona State University's SRP Hydraulic Engineering Laboratory.
Water Group reorganization reflects changing needs of the Salt River Valley S RP's Water Group under-went major changes last year to satisfy changes in laws, community attitudes and the needs of water customers.
Last year, SRP's Water Group:~saw retirement of its top ex-ecutive~formed a new department and reorganized three others~participated in several city and SRP long-range water plan-ning forums~completed canal mainte-nance work to decrease water losses~and worked with Valley cities to build an intertie between SRP canals and the Central Arizona Project canal.Urban land use increases in water service area The character of the area served by SRP continued to change during the past year.A total of 7,165 acres was converted from agricultural use to urban use.By year's end, 68.6 percent of the 238,170 acres of SRP member lands was urbanized while 31.4 percent was used for agriculture.
SRP estimates that essential-ly all acreage within SRP bound-aries will be out of agricultural production by the>mr 2015.Water deliveries also have reflected the changes in land use.During the past year deliveries for urban uses totaled 395,158 acre-feet (ao while deliveries for agricultural purposes totaled 290,572 af.During the previous year, urban use totaled 396,228 af and agricultural use was 381,341 af.Reid M%epics Reid Teeples retires In January, Reid W.Teeples retired after 15 years as the head of the Project's Water Group.Tt.epics, who joined SRP in 1948, was replaced by D.S.Wilson, Jr.During his tenure, Teeples coordinated the largest well-drilling program in SRP's history and established the Project's Groundwater Department.
He also was responsible for standar-dizing many of SRP's practices while heading the Civil Engineer-ing Department.
In addition to his work at SRP, he served in various leader-ship capacities with the Colorado River Water Users'ssociation, the National Water Reclamation Association and various other groups.Wilson joined SRP in 1967.He was manager of Water Resource Operations for eight years before being named to suc-ceed'keples.New department formed Arizona's Environmental Quality Act, passed last year, placed stringent water quality re-quirements on the water use practices of industry, agriculture and municipalities.
In response to the act and other laws and regulations relating to water quality, SRP formed its Water Quality and Geohydrology Department.
Members of the department will monitor the quality of SRP's water resources and institute practices to ensure water man-aged by SRP meets all applicable standards.
SRP's Water Group also reorganized three departments to provide better service related to water rights administration and water construction and maintenance.
Water rights administration is expected to be particularly im-portant during coming years as the Gila River Water Rights Ad-judication progresses through the courts.The adjudication will determine the relative water rights of all lands within the Gila River basin, including SRP member lands, and the land on the watersheds of the Salt and Verde rivers.One of SRP's primary duties is to ensure protection of water rights for lands within the SRP water service territory.
Those rights were established under the Kent Decree in 1910 and other court actions.By protecting the water rights, lands in the SRP water service area are assured a portion of the water in SRP reservoirs.
As a result, the water supply of lands within SRP boundaries is more secure than the water supply for many other portions of the Valley.The Project also was involved in discussions over a potential joint groundwater storage and recovery project, meeting with 1986 PLANNING CASE 2005'RBAN IRRIGATION 111,000 ABYR SYSTE>1 LOSSES 122.900 ABYR ll'Yo 12%1244 URBAV IRRIGATION 97700 ABYR SYSTE'V LOSSES 121~AF/YR OTHER VALLEY CONTRACIS 184~AF/YR AGRICULTURE 290.800 AF/YR 29%2494 OTHER VALLEY CONTRACIS 90900 AF/YR AGRICULTURE 252,900 AF/YR NlMCIPAL 4 INDUSTRIAL 284200 AF/YR 29%46%0HMCIPAL 4 Bil)USTRIAL 470.000 AF/YR TOTAL DE41AND 993,600 AFIYR'IIAL DEbfAND 1.033.000AFIYR AF (ACR&F0071
%$880 CALLOVS COMPONENTS OF SRP WATER DEMAND the City of Mesa and the Arizona Municipal Water Users Associa-tion (AMWUA).SRP is consider-ing groundwater storage to recharge Salt and Verde river waters during above-normal runoff years.The underground stored water would then be recovered for use during below-normal runoff years.SRP increases efforts to assist cities with water planning As the number of people living in the Valley continues to grow, the cities here are faced with an increasing demand for water.During the past year, SRP continued its meetings with the City of Phoenix and expanded those meetings to include other cities in its water service area to seek solu-tions to mutual problems.By working ivith the cities, individually and as a group, all involved can share information and avoid costly duplication of ef-forts in planning ways to meet water demand.Among the ef-forts worked on by of adequate supplies now and in the future throughout the Valley.Also, the cities and other pro-viders will find it easier to comply with the conservation requirements of Arizona's Groundwater Management Act.During the year SRP organ-ized a regional water planning forum with the cities it serves, to identify and address long-range water planning issues.Four water planning groups were established, each led by an SRP facilitator, to inform each other about the cities'nd SRP's needs and limitations and to avoid duplication of efforts.years, an abundance of surface water allowed SRP to keep groundwater pumping to less than 7 percent of deliveries.
lbtal Project groundwater use was 65,538 af.Combined surface and groundwater produced for Pro-ject use totaled 993,591 af, which was 90 percent of the median for the last 10 years.Depending on surface water supplies, ground-water historically has satisfied between 5 percent and 40 per-cent of SRP customers'nnual water demand, or 55,000 af to 440,000 af each year.Reduced pumping helps eliminate over-SRP was institu-tion of a Valley-wide water conser-vation effort.SRP, along with other members of AMWUA encour-aged the cooperation of local broadcasters, under the leader-ship of KPHO'klevision, on an extensive campaign called Water Wise." Each month a water con-servation tip is communicated through public service an-nouncements carried by local television and radio stations.A printed version of the tip is distributed through ABCO Markets Inc., Bashas and Lucky grocery stores.drafting supplies.The Arizona Groundwater Management Act calls for pumping to be limited to the quantity recharged by January 1, 2025.Water storage above normal SRP began the year with 1,671,535 af of water in storage.Inflows from the 13,000-square-mile watershed to the SRP reser-voirs totaled 1,070,214 af during the year, which was 87.0 percent of average.Inflows during 1985 totaled 1,7?4,667 af.Unusually heavy summer rainfall on the Salt and Verde watersheds contri-buted to runoff that kept reser-voirs fuller than normal.Storage at year-end totaled 1,691,741 af or 84 percent of capacity.This'otal was 139 percent of normal.For the third time in four Tbtai water deliveries hit a 10-year low.Deliveries totaled 870,658 af compared to 1,016,612 af in 1985 and 881,009 in 1984.Agricultural use was less than usual due to government set-aside programs which re-duced the quantity of crops grown.Summertime municipal use declined because of greater than normal summer rainfall which reduced laivn irrigation.
By working together toward the common goal of conserving water, customers can be assured 10 SRP Is a recognized world authority on water systems.These Egyptians were among nearly 600 visitors from 58 countries who toured SRP facilities In 1986, During SRP visits, Egyptian participants received handswn training In the operations, maintenance and management of the Project's irrigation system.Tbtal water deliveries to the cities during the year totaled 284,192 af, an increase of slight-ly less than one percent from 1985's total of 281,464 af.SRP coordinates construction with cities As more and more streets and freeways are built, the rights of way often conflict with those of SRP wateiways.
In 1986 SRP met with Valley cities, the Arizona Department of itansportation, and the Maricopa County Highway Department to discuss ongoing design and construction projects.More than 30 meetings were held resulting in improved coordination behveen SRP and the agencies on irrigation-related projects where facilifles of bvo or more entities are involved.Interagency coordination saved time and money by reduc-ing the impact of residential and freeway construction on SRP's ability to supply water to homes, businesses, municipalities and farms.SRP continued its commit-ment to water conservation by lining 7.4 miles of canals and in-stalling 98 lateral structures last year.Lining canals decreases water system losses for a savings of thousands of acre-feet of water each year.SRP also completed a beautification project along part of the Arizona Canal which in-cluded improving the appearance of the canal by extensive brush and tree removal, and tree trim-ming.Similar projects are planned for other canals.Congress funds dam improvements Under the Safety of Dams Act, Congress appropriated
$3 1 million for safety improvements at Theodore Roosevelt Dam and$3.9 million for work at Stewart Mountain Dam.Shortly after the end of the fiscal year, Arizona's congres-sional delegation negotiated an agreement with environmental groups concerning Plan 6.Under the agreement, Cliff Dam will not be built.In return, environmen-tal groups agreed not to oppose the remaining elements of Plan 6.The plan will provide Central Arizona Project water storage and regional flood control and dam-safety modifications.
Other elements are an enlarged Theo-dore Roosevelt Dam and modifi-cations to Stewart Mountain Dam on the Salt River.Construction outside the SRP reservoir system included New Waddell Dam on the Agua Fria River.During 1986 SRP entered into agreements with the U.S.Bureau of Reclamation to add several maintenance items to necessary dam safety modifica-tions scheduled at Stewart Moun-tain Dam.The proposed changes will enhance operating and maintenance facilities at the dam.For 1987 SRP contributed about$1.5 million in safety modifications.
SRP is prepared to contribute an additional
$5 million to the U.S.Treasury in fiscal 1988.The Project's involve-ment is through a local cost-share agreement for completion of Plan 6.The federal government has accepted$371 million in local funds in exchange for a federal commitment to complete all elements of Plan 6 by 1997.SRP pledged$52 million of the local funds as its share of dam-safety modifications.
The federal government is responsible for the balance.Work to be performed on Theodore Roosevelt Dam in-cludes raising the overall height of the dam by 77 feet.The modifications to the dam will enable it to provide flood control, dam safety and additional water conservation storage on the Salt River.Modifications to Theodore Roosevelt and Stewart Mountain dams are included in the Plan 6 agreement.
The Arizona Department of Transportation will begin con-structing a bridge on the upstream side of Roosevelt dam in 1987 to be finished by 1990.The bridge will remove the Ql Imk Q~~~o&O 13,000 Sq.&tile Project Watershed The Central Arizona Project is a water-delivery system being constructed by the Bureau of Reclamation to deliver water from Lake Havasu on Arizona's western border to Maricopa, Pinal, and Pima counties in cen-tral and southern Arizona.Cur-rently, construction is complete to just north of'Ittcson.Although SRP hasn't con-tracted for CAP water, SRP may need the intertie to receive CAP water for use when Roosevelt Lake is drawn down for construc-tion of the federally mandated safety modifications.
CAP received record levels of funding from the 99th Congress, despite the pressure of the Gramm-Rudman deficit reduc-tion law.For fiscal year 1987, CAP received$202.8 million.ASU dedicates student laboratory Continuing its longtime tradi-tion of supporting higher educa-tion, SRP provided grants to Arizona State University's SRP Hydraulic Engineering Labor-atory.The joint endeavor between SRP and ASU's College DOMESTIC WATER DELIVERIES Chandler Gilbert Glendale Mesa Peoria Phoenix Scottsdale Tempe Total il it numtpers are 1986 1985 7,936 6,700 4,357 3,125 25,222 23,982 44,391 41,476 4,028 4,351 156,412 160,876 3,478 3,843 38,367 37,172 284,192 281,464 in acre feet, crcept percents of change change+10.39%+39.44%5.17%+7.03%+7.47%2.77%9.50%+3.38%+1.00%of Engineering and Applied Science exemplifies the business-education partnership SRP strives to maintain.The new equipment in the laboratory will be used by students to study the mechanics and engineering pro-blems associated with water and other fluids.Work with representatives from countries around the world was continued through SRP's Office of International Affairs.The office hosted nearly 600 visitors from 58 countries, held 20 on-the-job training programs and conducted seminars for 160 representatives of 15 nations.Through efforts coordinated by the office, SRP helped install four radial gate structures in Egypt.The installation was part of the ongoing Professional Employee Exchange Program (PEEP)with Egypt's Ministry of Irrigation.
Also, a seminar on telemetry was presented to the Ministry of Irrigation by SRP personnel.
Also under PEEP, tm Cairo University students completed a 15-week summer study program.One student worked in SRP's Civil Engineering Department and the other in Water Resources and Services'ydrology Division.baffic from the to SALT RIVER PRO JECT IRRIGATED AREA of the dam.Intertie will link SRP canals and CAP@+LE Locally, SRP worked with six ecoOl Valley cities to ob-tain agreement on a plan to build a$3.1 million struc-ture that would link SRP's canal system with the Central Arizona Project (CAP)aqueduct.The in-tertie, which will carry up to 800 cubic-feet-per-second of water, will transport water from the CAP aqueduct near Granite Reef Diver-sion Dam to SRP's main canals for Salt Riwr Project delivery to CAP Irrigated Area users.
a f~I~~'1 46 erat..~I",1 I I t ,t.+'4y;-:.I'~, j~;p IE.P The Salt River Pete water safety program teaches water safety to school children.The award-winning program has reached more than half a million children in 2D years.
Salt River Project's service extends beyond water and power S RP employees-'The People Behind the Spiritontinued to put their customers and their communities first.And it showed.In fiscal year 1986-87:~97 percent of customers rated SRP service as"good" or"excellent"~Volunteer work by SRP employees reached new heights~Business offices were moved, improving customer service~And SRP's Better Way and Quality Circle programs meant savings for SRP and its customers.
SRP receives high marks"The People Behind the Spirit" kept up SRP's tradition of giving first-rate customer service.Nearly all of SRP's electric and~ater customers polled last year were very satisfied with the quali-ty of service they received from the Project, according to monthly surveys.SRP's goal was for 90 percent of its customers to rate overall quality of service good or excellent.
The Project exceeded that goal with the 97 percent rating.Employees'ommunity involvement remains high SRP employees showed pride in their communities by donating their time, money and energy to community-related projects.Pro-ject employees pledged a total of$326,772 to 52 non-profit agen-cies.And Project employees donated approximately 480 pints of blood last year to a statewide blood service.Thanks to the volunteer ef-forts of SRP employees, Valley teenagers last year learned more about the free-enterprise system through SRP-sponsored Junior Achievement companies.
Employees helped raise$106,000 during February 1987's Junior Achievement Telephone Campaign.A total of 97 volunteers, representing 33 com-panies, called area businesses requesting donations for Junior Achievement.
SRP volunteers raised$12,242, the second highest amount of any business during the telephone campaign.The money went toward pro-grams and operational support for the organization.
In a joint effort, SRP and Arizona Public Service Company (APS)raised more than$8,700 for needy citizens in the fourth annual S.H.A.R.E.
Affair 10-kilometer run January 10.A record 835 people participated in the fund-raising event, which also included a two-mile fun run and a five-mile walk.Proceeds were donated to the Salvation Army, which ad-ministers the Service to Help Arizonans with Relief on Energy (S.H.A.R.E.).
Formed by SRP and APS in 1982, Project S.H.A.R.E.
provides funds through the Salvation Army for energy-related bills and home repairs of needy families.SRP customers donated$114,313 to the S.H.A.R.E.
pro-gram last year.Customers donate through their monthly electric bills.Meamvhile at St.Johns, the seventh annual Coronado Generating Station benefit run attracted 440 participants and resulted in a donation of$1,640 to the St.Johns Senior Citizens Association.
The annual Page Attacks'fhsh program received first place in the statewide'hke Pride in America" competition spon-sored by the Commission on Arizona's Environment and se-cond place in the national com-petition sponsored by the U.S.Department of Interior.Each>m;the community effort has in-volved more than 75 percent of Page's 6,500 residents.
Page Attacks%ash started in 1981 as a city-wide cleanup pro-gram sponsored by SRP's Nava-jo Generating Station (NGS)and the Glen Canyon National Recreational Area.The Page Kiwanis Club and Elks Lodge have helped to coordinate the event in recent years with help from NGS employees.
Last year'participants collected 212 tons of trash.SRP's organizational and monetary involvement in Page At-tacks Thrash, along with other anti-litter efforts, was honored by an award from Arizona Clean and Beautiful, the state arm of the na-tional Keep America Beautiful campaign.SRP was distin-guished as the most outstanding business in the state with regard to its anti-litter efforts.The Delta Gamma National Foundation for the Blind honored SRP with an award recognizing the Project's support of the Foundation for Blind Children.The award recognized SRP as a long-time supporter of the organization through employee volunteering, financial donations and in-kind services.Employees also hold key posi-tions on the foundation board.SRP recognizes the value of excellence in education.
Last year, SRP honored 61 seniors during its fifth annual Spotlight on Excellence program.Honored students were graduating seniors from Maricopa County, Page and St.Johns-areas in which 8RP has electric facilities.
Honorees.were selected by their school principals for academic achieve-ment and all-around excellence.
For younger students, SRP and APS co-sponsored the an-nual Ener@Fair.The fair at-tracted 200 entries for"Energy Changes and Challenges." Kindergarten through 12th grade students participated.
Russell Moreland of Willis Junior High School, Chandler, made the win-ning entry.Ten outstanding employees and one retiree were honored for their service to civic and com-munity organizations in Arizona with SRP's Karl F.Abel Volunteer awards.Named for SRP's im-mediate past president, these awards are presented each year to employees who devote their time and energy to their com-munities.Saundra Reedy, administrative assistant at Coronado Generating Station, was named St.John'Outstanding Chamber of Com-merce member in 1986.She was honored for her efforts in several Chamber of Commerce activities promoting the St.Johns area.SRP honored for two safety programs SRP received two moor safe-ty awards last year.They were 13 Ittdta$I'd IO StttOO>$tt, ttttt~t i I tlt tttl IO n II I grams include SRP's Speakers'ureau, where employees volunteer to make presentations to organizations or groups.'lbpics range from the early beginning of the Project through the most up-to4ate activities of the utility.During fiscal year 1986-87, SRP made about 2,300 presen-tations to audiences totaling 87,343 persons.SRP also conducted programs about microwave cooking, com-puter equipment safety, and energy conservation, SRP's Power Saver Store opened last year at Westridge Mall.Nothing is for sale.Instead, employs offered fire, expert ad-vice about the efficient use of water and power.third place in the American Public Power Association's (APPA)Electric Safety Award contest and the Arizona Safety Association's Howaid Pyle Award.APPA is a national organiza-tion representing more than 1,750 publicly owned electric utilities.
APPA conducts the an-nual safety contest to draw atten-tion to the importance of safe working habits in the electric utility industry, and to recognize excellence in that area.The Arizona Safety Associa-tion is a chapter of the National Safety Council.The Howanl Pyle Award recognizes safety promo-OOO~O IM$$$ICr tion in the community.
SRP is the first utility to receive this honor.SRP's public safety programs extend to construction workers, school children, professional law enforcement officers, firefighters and others.Additional public service pro-Customer service representative Elaine Spencer is one of several SRP employees who volunteer their time to needy organizations throughout the state.//An SRP employee shows the tools of his trade to his son during an open house at the new'Iblleson Regional Service Center.The regional service center Is designed to speed servIce to customers.
Customer business offices moved for greater convenience
'le customer business offices were moved for greater speed and more ease in helping customers.
The Mesa Business office was moved in May to a larger facility, and customers in the Fountain Hills area found it more con-venient to receive help at the Fountain Hills office's new location.Courteous, helpful and quick replies to customer inquiries are goals at SRP.Tb increase the number of calls handled, SRP's phone center began opening at 7:00 a.m.instead of 7:30 a.m.The phone center was remod-eled and expanded to provide 12 additional work positions.
By rescheduling existing personnel to work during peak periods, an additional 90,437 calls were answered without hiring addi-tional people.Last year Project employees received more than 1.2 million calls.A major billing system change was implemented in February 1987 to bill accounts by route in-stead of by billing districts.
Regionalized billing has leveled the flow of customer traffic into the business offices, reducing customer lines and thereby pro-viding faster service.Reduced travel time to customers'eters also has resulted in increased SRP's newly remodeled History Center appeals to all ages.Through displays and vIdeos, the Center depicts the development of water usage In the Phoenix area from prehlstorlc times to the present.productivity and reduction of cur-rent and future costs.Continuation of that excellent customer service was enhanced last year when SRP and Local Union 266 of the International Brotherhood of Electrical Workers signed a three->mr labor agreement.
This longer-term con-tract enables management to more accurately predict future labor costs, provides employees with greater stability in wages and benefits, and provides SRP customers with reduced exposure to a work stoppage.Counties get monetary boost from SRP SRP contributed
$35.8 million of in-lieu property taxes to seven Arizona counties during fiscal year 198687.In effect, SRP is the state's third-largest property taxpayer.Under special legislation passed in 1963, SRP, as a political subdivision of the state, makes voluntary contributions in lieu of property taxes to school districts, cities, special districts, counties and the state.Employee programs save money Sixty-seven ideas from entre-preneurial employees saved the Project$423,000 in first-year sav-ings through the Better Way pro-gram.The Better Way program uses employee suggestions that deliver real dollar savings to SRP.Once a dollar savings is esta-blished, a percentage of the sav-ings is paid to the employee who submitted the idea.Last year employees received$34,000 in awards.The potential for savings to SRP and its customers is virtual-ly unlimited through the Better Way program.As long as SRP employees continue to think creatively and submit sugges-tions, the Project will continue to realize greater savings and employees will be rewarded for their creativity.
SRP's Quality Circle program uses a group approach to pro-blem solving.Employee groups develop consensus and report to management.
Since 1983, SRP's Quality Circle program has saved$3 million and improved service to customers.
Also, the program helps develop problem-solving skills and an enhanced sense of value for individual employees.
Research and development projects at SRP provide technical information that could benefit SRP's customers.
More than$3 million in research activity, involv-ing dozens of SRP employees went toward 29 major research and development products.Pro-jects included studies of thermal energy storage and solar resources, which could help customers save on their electric bills.Projects also included im-proved precipitation forecasting, which could help assure ade-quate water supplies and reduce potential for floods.A program at Arizona State University has meant multiple benefits for SRP and the com-munity.SRP sponsors the Elec-tric Pope Research Laboratory (EPRL), which is in its third year at ASU.SRP contributes
$100,000 per year to EPRL to fund research for power genera-tion projects conducted by ASU students, professors and SRP engineers.
15 SRP mini.bonds are proving to be popular investments.
Some bonds can be purchased for only S200.Management, economy combine to produce strong financial position areful management of Salt River Project resources, healthy financing opportunities and a strong local economy con-tributed to another good finan-cial year for SRP.During fiscal year 1986-87:~The debt service coverage ratio increased from 1.85 to 2.00~SRP bonds maintained their AA and Aa ratings~Gross revenues increased; but net revenues fell reflecting ac-counting transactions related to the start-up of Palo Verde Nuclear Generating Station.Debt service coverage rises A 4.70 percent increase in gross revenues in fiscal year 1986-87 raised SRP's debt ser-vice coverage to 2.00.That com-pares with last year's ratio of 1.85.The debt service coverage ratio measures the number of times the sum of principal and interest due on outstanding debt during the year is covered by revenues available after payment of operating expenses.Keeping healthy financially allows SRP bonds to continue to be rated highly by the nation's leading rating agencies.SRP first issued Electric System Revenue Bonds in 1973.The bonds have been rated investment grade-those suitable for purchase by prudent investors-ever since.Currently, the bonds are rated AA by Standard 6 Poor's and Aa by Moody's Investor Services, Inc.
Gross revenues increase Hot weather and nearly 30,000 new customers increased enerib sales, helping to build a 4.7 percent increase in gross revenues to$888.5 million, up from the previous year's revenues of$848.6 million.Average an-nual use for residential customers increased from 12,175 kilowatt-hours (kWh)to 12,440 kWh.Although gross revenues in-creased, so did the cost of doing business.Operating expenses in-creased 9.9 percent to$706.4 million from$643.0 million the previous year.SRP produced$74.8 million in net revenues during fiscal year 1986-87.That was a substantial decrease from the$158.3 million in fiscal year 198546.The decrease resulted from account-ing transactions related to the start-up, of the Palo Verde Nuclear Generating Station.Specifically, when the first unit of the Palo Verde Nuclear Generating Station began com-mercial operation in January 1986, SRP stopped making en-tries to record the allowance for funds used during construction.
Instead, these finance costs were listed as expenses.At the same time, SRP began recording depreciation, operating and maintenance expenses for the unit.System sales did not in-crease commensurate with the commercial operation of the first unit, resulting in a decrease in net revenues.Palo Verde's second unit was treated the same way when it began commercial operation.
The same format will follow for the third unit when it goes into commercial operation.
Commercial operation of the first Palo Verde unit also trig-gered an exchange of capacity with the Ias Angeles Deparbnent of Water and Power (LADWP).In 1977, LADWP purchased 30 per-cent of SRP's Coronado Generating Station near St.Johns, Arizona.LADWP agreed to trade its share of the station for 5.70 percent of Palo Verde Nuclear Generating Station when its first unit went into commer-cial operation.
With commercial operation of the first unit in January 1986, the, trade took place.SRP reduced its share of Palo Verde to 17.49 per-cent and regained 100 percent ownership of Coronado Gener-ating Station.At that time, LADWP also paid SRP a partial payment of$90.65 million in recognition of the greater cost of Palo Verde.A second payment of$74.75 million (including in-terest)was received during fiscal 198647.Despite the decline in net revenues, SRP's debt ratio dipped slightly from 68.06 percent in the previous fiscal year to 67.67 percent.The time was right for a com-petitive sale because interest rates were relatively low and stable and the then<urrent sup-ply of municipal bonds was limited.Salomon Brothers, Inc., of New York placed the winning bid.Three other groups also of-fered bids.SRP, as a special-purpose im-provement district, sells tax-exempt revenue bonds to finance new construction and im-provements to its electric system.Tax-exempt financing and SRP's solid credit ratings help keep financing costs relatively low.This, in turn, can help delay rate increases.
Low financing costs could also minimize rate in-creases.DEBT SERVICE COVERAGE RATIO As a public power utility, SRP does not issue stock or pay dividends.
Net revenues are reinvested in SRP to help replace equipment and finance construc-tion of new facilities.
Such reinvestment reduces the need to issue bonds, thus keeping rates Iow.Bonds sold on competitive basis For the first time since 1981, SRP sold bonds on a competitive bid basis.For the past five years, SRP has used negotiated sales.In October 1986, SRP sold$100 million in tax-free electric system revenue bonds.The bonds were sold in$5,000 denominations at an effective interest rate of 7.34 percent.SRP sold approximately
$18.70 million in interest-bearing mini-bonds for$500 each and$3.60 million in capital apprecia-tion bonds.The capital apprecia-tion bonds were purchased for$200 per bond and will pay$488.05 if held'to maturity in 2002.The sale closed May 15, 1987.Construction begins on corporate headquarters In January 1987, SRP began construction on the first building of a planned five-building cor-porate headquarters in north Tt.mpe.The corporate head-quarters, on 40 acres, is ex-pected to be completed by 2010.SRP expects to invest about 984==85 1986-87=1983 84==2:=={)
9M988 86==-2:=-00==-92:=-=1===.85=-===1:==:.85::=-
$290 million by 1992 on the first two of the five buildings.
The corporate headquarters will be the focal point of Papago Park Center, a business park on the adjacent 484 acres.SRP will coordinate development of the center which will be opened to private and commercial develop-ment.Revenues from the sale or lease of facilities in the center will help offset the costs of providing electricity to SRP customers.
In May, SRP estimated savings of$30 million over a 20-year period due to the operating effi-ciencies gained through central-izing administrative operations.
Compensation funds set aside for APS customers SRP set aside$3 milhon last year to compensate certain Arizona Public Service Company (APS)electric customers who are SRP shareholders.
Qualified SRP shareholders are those in-dividuals who own and live on land within the boundaries of the Salt River Valley Water Users'ssociation.
Some receive elec-tricity from APS.A comparison of 1986 electric bills from SRP and APS in-dicated that some SRP shareholders paid APS at least 15 percent more than they would have paid SRP for the same amount of electricity.
SRP's obligation to make payments to some APS cus-tomers is the result of a 1928 SRP bylaw which protects residential landowners residing within SRP boundaries, but served by APS, from paying sub-stantially more for electricity than if they were served by SRP.In 1967, the courts defined substan-tial as 15 percent or more.SRP shareholders in 1984 voted to grandfather the right to compensation to those share-holders who received electric ser-vice on or before Dec.31, 1984, and also voted to end the com-pensation program in 1994.17 Salt River Project Agricultural Improvement and Power District and its agent, Salt River Valley Water Users'ssociation Combined Balance Sheets As of April 30, l987 and 1986 Assets UTILITY PLANT, at historical cost (bootes 1, 2, 3 and 4): Plant in service-Electric Irrigation General Less-Accumulated depreciation on plant in service Construction work in progress.Nuclear fuel, net of amortization
(¹te 1)1987$3,721,898 92;127 166,559 3,980,584 861,043 3,119,541 740,767 92,736 3,953,044 ($000)1986$3,132,867 87,503 143,021 3,363,391 738,283 2,625,108 1,025,680 92,596 3,743,384 SEGREGATED FUNDS, consisting of cash and U.S.Government obligations set aside in accordance with resolutions of bond issues: Debt service funds, excluding$61,916,000 in 1987 and$51,032,000 in 1986 for payment of accrued interest (¹te 5).Construction fund.99,318 49,652 148,970 94,769 23,000 117,769 CURRENTASSETS:
Cash and temporary investments, at cost Deposit in debt service fund for payment of accrued interest on bonds.Trade and other accounts receivable, less reserves of$1,207,000 in l987 and$1,120,000 in 1986 for doubtful accounts...
Note receivable (Arote 4)Fuel stocks, at last-in, firstwut cost Materials and supplies, at average cost Prepayments, interest receivable and other.111,412 61,916 46,754 28,969 81,144 69,297 13,433 412,925 108,967 51,032 61,071 90,653 55,522 4?,095 8,119 422,459 DEFERRED CHARGES AND OTHER ASSETS (¹tes 1 and 57 l86,181$4,701,120 169,60?$4,453,219 The accompanying notes are an inlegrai part of these combined balance sheets.18 Capitalization and Liabilities LONGTERM DEBT (Pote g: Electric system revenue bonds Commercial paper and other (h'ote 8)1987$2,626,709 360,028 2,986,737 ($000)1986$2,541,383 339,024 2,880,407 ACCUMULATED NET REVENUES: Balance, beginning of year Net revenues for the year Balance, end of year 1,351,904 74,761 1,426,665 4,413,402 1,193,588 156,316 1,351,904 4,232,311 CURRENT LIABILITIES, excluding$26,140,000 in 1987 and$17,775,000 in 1986, representing current portion of long-term debt which is to be paid from segregated funds: Accounts payable....
Accrued taxes and tax equivalents Accrued interest..Customers'eposits Other liabilities.
85,428 41,434 63,761 21,462 24,881 236,966 66,657 36,142 52,628'17,619 24,223 197,269 DEFERRED CREDITS AND RESERVES (Ãote 7).50,752 23,639 COMMITMENTS AND CONTINGENCIES (Notes 3, 5 and 7j$4,701,120$4,453,219 Salt River Project Agricultural Improvement and Power District and its agent, Salt River Valley Water Users'ssociation Combined Statements of Net Revenues For the Years Ended April 30, 1987 and 1986 1987 ($000)1986 OPERATING REVENUES (Note 2): Electric Water and irrigation Total operating revenues..$881,340 7,166 888,506$841,936 6,682 848,618 OPERATING EXPENSES: Purchased power.Fuel used in efectric generation
.Other operating expenses~...........
Maintenance....
, Depreciation and amortization (Note 1).Taxes and tax equivalents.
Total operating expenses...
Net: operating revenues., 49,086 181,331 151,308 88,231 133,324 103,097 706,377 182,129 49,151 216,083 122,304 80,985 90,576 83,864 642,963 205,655 FINANCING COFIS: Interest on bonds.Amortization of bond discount, issue and refinancing expenses (Note 1).....,...........
Interest on other obligations...
Interest earned on investments, deposits and other.Net financing cos(sLess-Allowance for funds used during construction (AFUDC)state 1)~6 v~~~~~~e~~~~i r w~~~~~~~~~~~6~~~~w~Financing costs less AFUDC..............
.....179,109 6,089 16,081 (36,08()165,195 (59,902)105,293 179,928 2,387 17,864 (37,681)162,498 (120,161)42,337 OTHER EXPENSES, net 2,075 5,002 NET REVENUES$74,761$158,316 The accompanying notes ar)e an integral part'f these combined statements 20 Salt River Project Agricultural Improvement and Power District and its agent, Salt River Valley Water Users'ssociation Combined Statements of Cash Flows For the Years Ended April 30, 1987 and 1986 1987 ($000)1986 NET CASH FLOWS FROM OPERATING ACTIVITIES:
Net revenues.Noncash items included in income: Depreciation and amortization.
Amortization of bond related expenses.Increase in fuel stocks and materials and supplies Increase in other assets, net Increase (decrease) in accounts payable.Increase in accrued taxes and tax equivalents Increase (decrease) in accrued interest Increase in other liabilities, net~.Gain on sale of property Net cash provided from operating activities NET CASH FLOWS FROM INVESTING ACTIVITIES:
Gross additions to utility plant, net of AFUDC.Allowance for funds usia during construction
.Gross additions to nonutility plant Proceeds from sale of plant Decrease (increase) in note receivable
.Contributions in aid of construction Net cash used by investing activities.
NET CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of bond issues Other long-term borrowings, net of repayment.Repayment of principal on bonds and U.S.debt.Defeasance of revenue bonds Deferred loss on defeasance of bonds Net cash provided by financing activities........
NET INCREASE (DECREASE)
IN CASH AND TEMPORARY INVESTMENTS AND SEGREGATED FUNDS......
BALANCE AT BEGINNING OF YEAR IN CASH AND TEMPORARY INVESTMENTS AND SEGREGATED FUNDS....~........BALANCE AT END OF YEAR IN CASH AND TEMPORARY INVESTMENTS AND SEGREGATED FUNDS.......
$74,761 133,324 6,089 (47,824)(8,897)18,771 5,292 ll;133 9,317 (96)201,870 (309,356)(59,902)(10,812)972 61,684 25,395 (292,016)120,814 21,845 (18,867)123,792 33,646 226,736$260,382$158,316 90,576 2,38?(14,234}(21,967)(67)1,781 (9,587)6,375 (4,268)209,312 (352,993)(120,161)(658)194,192 (90,653)19,181 (351,092)596,143 30,318 (18,917)(472,692)(81,168)53,684 (88,096)314,832$226,736 The accompanying notes are an integrai part of these combined stalemenls.
21 Salt River Project Agricultural Improvement 6 Power District and its agent, Salt River Valley Water Users'ssociation Notes to Combined Financial Statements For The Years Ended April 30, 1987 and 1986 (1)Summary of Significant Accounting Policies: (a)Principles of Combination The combined financial statements include the accounts of the Salt River Project Agricultural Improvement and Power District (the District)and the accounts of its agent, the Salt River Valley Water Users'ssociation (the Association) and a wholly-owned subsidiary, Salt River Generating Company, together referred to as the Salt River Project (the Project).All significant intercompany transactions have been eliminated.
The Project follows the accounting principles promulgated by the Financial Accounting Standards Board.(b)Regulatory Agency The District's Board of Directors serves as its regulatory agency.(c)Utility Plant, Depreciation and Maintenance The accounting records of the Project are maintained substantially in accordance with the Uniform System of Accounts prescribed for electric utilities by the Federal Energy Regulatory 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 construction work in progress (AFUDC)is capitalized as a part of the electric and general plant.This allowance is deducted from net financing costs in the combined statements of net revenues and added to utility plant.Capitalization rates of 10.7/o and 9.7/o were used in 1987 and 1986, respectively.
Depreciation expense is computed on the straight-line basis over estimated useful liam of the various classes of plant.Rates in erect resulted in provisions approximating 3.37'/o and 3.31/e for 1987 and 1986, respectively, on the average cost of depreciable electric plant, and 1.42'/o and 1.39/o for 1987 and 1986, respectively, 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 and replacement of minor items of property.(d)Bond Expense Bond discount, issue and refinancing expenses are being amortized over the terms of the related bond issues.(e)Revenues Meters for residential, commercial and small industrial customers are read cyclically and sales recorded only when billed.This system of billing results in estimated earned but unbilled revenues which amounted to$20,273,000 and$22,100,000 at April 30, 1987 and 1986, respectively.
For large industrial customers, meters are read near month-end and billings recorded on the accrual basis.Electric revenue billings 22 are adjusted periodically for changes in costs of fuel and purchased power.Revenues from water and irrigation operations are recorded when earned.(I)Electric Rates Under Arizona laiv, the District's Board of Directors has the exclusive authority to establish electric rates.The District is required to follow certain procedures, including certain public notice requirements and holding a special Board meeting, before implementing any changes in the standard electric rate schedules.
The District is currently studying the need for an additional rate increase to be effective in October 1987.Such increase is anticipated to be approximately 6e/o.The current rates have been in place since October 1985.(g)Nuclear Fuel The District amortizes nuclear fuel to fuel expense on a unit of production method.Under the provisions of the Nuclear Waste Act of 1982, the District is charged one mill per kilowatt-hour (kWh)on its share of electricity produced by Palo Verde Nuclear Generating Station (PVNGS)Units 1 and 2.The District records this charge as a current year expense.(h)Decommissioning The District began reserving for the cost of decommissioning PVNGS Units 1 and 2 commencing with their dates of commercial operation.
The estimate to decommission the District's share of PVNGS Units 1 and 2 of$108 million is based upon an outside engineer's study.The estimated costs will be reviewed and adjusted periodically.
Decommissioning funds collected from the ratepayers will be deposited in a separate bank account which is classified as part of the general fund.(i)Income ihxes The District is exempt from federd and state income taxes.(j)Reclassifications Certain 1986 amounts have been reclassified to conform to the current year presentation.
Electric generating facilities
.............,..Transmission and distribution
..Irrigation plant......,...,.......>......>
Other construction
.Total$529$873 124 80 16 12 72 61 S741 S1,026 (2)Possession and use of utility plant: The United States of America retains a paramount right or claim in the Project which arises from the original construction and operation of the Project's facilities as a Federal Reclamation Project.The Project's right to the possession and use of, and to all revenues produced by, these facilities is evidenced by contractual arrangements with the United States.(3)Construction program: Balances shown for construction work in progress (CWIP)represent expenditures for new facilities required to service anticipated customer needs, and consist of: Plillions) 1987 1986 Construction expenditures planned for fiscal years 1988 through 1992 are shown below.1988 1989 1990 1991 1992 Construction
$404 629 491 360 296 (hlilllons)
AFUDC$47 34 39 39 14 Total$451 663 530 399 310 These expenditures will be financed primarily by funds currently on hand, future net revenues and the sale of revenue bonds.Construction of PVNGS Unit 3 is proceeding on a schedule for commercial operation in late 1987.PVNGS Units 1 and 2 were placed into commercial operation in January and Sept-ember of 1986, respectively.
Construction of Coronado Unit 3, a planned 350,000 kw coal-fired unit is proceeding on a schedule for commercial operation in the spring of 1991.The total estimated construction costs for Unit 3, including AFUDC, is approx-imately$790 million.Projected construction expenditures include contingency allowances to reflect potential cost increases.
At April 30, 1987, commitments had been entered into for delivery of materials and services on construction projects.In~addition, various firm commitments exist under coal and fuel oil supply contracts.
The Project had committed to spend approximately
$50 million over the next eight years for its share of a project to build or modify dams on the Salt, Verde and Agua Fria rivers for flood control, to ensure dam safety and provide water storage associated with the Central Arizona Project.Recent actions by legislators will result in significant changes to the project.Management has not yet been able to determine the impact upon the construction program, however it is not believed the previously committed amount will increase significantly.
(5)Long-term debt: Interest Rate Electric System Revenue Bonds.....
4.7-11.5%Unamortized Bond Discount...,......(Millions) 1987 1986$2,716$2,633 (89)(92)Maturitles 1988-2025 Total Revenue Bonds Outstanding U.S.Government Non Interest Bearing Debt.......
Commercial Paper...3.44.9'ther,............
6.5-7.7%Total Long-Term Debt...........
2,627 8 350 2$2,987 2,541 9 325 5$2,880 1987-2004 1988-1989 On January 29, 1986 the District exchanged 5.7%interest in PVNGS for the Los Angeles Department of Water and Power's (LADWP)30%share of the Coronado Generating Station Units 1 and 2.Of the net cash settlement,$162.4 million has been received by the District.The remaining due from LADWP of$28.9 million (including accrued interest)has been withheld.LADWP claims that the amount of AFUDC charged to PVNGS construction is excessive.
It is the opinion of management and legal counsel that the AFUDC amount is in agreement with the contract exchange agreement, Federal Energy Regulatory Regulations and past and current practices.
At this time negotiations are continuing; however, legal action may be required to settle the matter.The District acts as the operating agent for the participants in the Navajo Project.As operating agent, the District utilizes advanced billings to the participants, based on ownership percentage, to pay the cost of operations.
A separate operating fund is maintained by the District to process Navajo transactions.
The District's share of direct.expenses of the jointl~wned plants is included in operating expenses in the combined statements of net revenues.(4)Interests in jointly-owned electric utility plants: The District has entered into various agreements with other electric utilities for the joint ownership of electric generating and transmission facilities.
Each participating owner in these facilities must provide for the cost of its ownership share.The following schedule reflects the District's ownership interest (at cost)in jointly-owned electric utility plants at April 30, 1987: (Millions)
Electric system revenue bonds are secured by a pledge of, and a lien on, the revenues of the electric system after deducting operating expenses, as defined by the bond resolution, subject to amounts due the United States of$7,768,532.
The debt service coverage ratio, as defined in the bond resolution is used by bond rating agencies to help determine the financial health of the District and other bond issuers.For the years ended April 30, 198?, and 1986, debt service coverage was as follows: Ownership Share Plant Name Percent Four Corners (New Mexico)...........10.00Yo Mohave (Nevada)........10.00 Navaio (Arizona)........21.?0 Hasten (Colorado).......50.00 Craig (Colorado)
........29.00 Palo Verde (Arizona)..~..17.49 Plant In Service$81 43 212 67 225 1,106$1,734 Accumulated Depreciation
$16 16 77 24 50 42$225$4 1 7 414$426 Revenues Available for Debt Service.......:
Total Debt Seince Requirements Debt Service Coverage Ratio~.....(Millions, except for ratios)1987 1986$399$365 200 197 2.00 1.85 23 The annual maturities of long-term debt (excluding commercial paper)as of April 30, 1987, due in the fiscal years ending April 30, are as follows: 1988 1989 1990 1991 1992 Thereafter (Millions)
$26 29 32 31 37 2,571 82,726 Interest and amortization of discount on the various issues results in an effective rate of approximately 7.18%over the remaining terms of the bonds.At April 30, 1987, The Project has authority to issue additional electric system revenue bonds totaling$131,426,260 principal amount and electric system refunding revenue bonds totaling$806,840,000 principal amount.On April 1, 1986, the District defeased$486,150,000 of electric system revenue bonds, resulting in lower future debt service requirements as well as a loss of$81,168,089.
The District's Board of Directors determined that such loss should be recovered from the ratepayers during the period of reduced debt service requirements.
Accordingly, under the provisions of Statement of Financial Accounting Standards (SFAS)No.71, the loss is being amortized on a monthly basis over the life of the Electric System Refunding Revenue Bond Issue, 1986 Series C.On February 9, 1984, the District refunded its then outstanding General Obligation Bonds.Although the refunding constituted a legal defeasance of the prior lien on revenues which secured said bonds, the General Obligation Bonds continue to be general obligations of the District, secured by a lien upon the real property included in the District, a guarantee by the Salt River Valley Water Users'ssociation, and by the District's taxing authority.
As of April 30, 1987 the amount of defeased general obligation bonds outstanding was$129,705,000.
The discount rate used in determining the actuarial present value of the projected benefit obligation was 9.0%.The rate of increase in future compensation levels used varies from 9.0%to 5.5%, on a graded scale, based on the age of the participant The expected long-term rate of return on assets is 9.75%.The following schedule reconciles the funded status of the Plan with amounts reported in the Project's combined financial statements as of April 30, 1987: Plan assets at fair value Actuarial present value of projected benefit obligation:
Vested bendit obligation.
Nomested benefit obligation
..Accumulated benefit obligation.......,............
Excess of projected benefit obligation over accumulated benefit obligation,.............,.Projected benefit obligation
.Plan assets in excess of projected benefit obligation Unrecognized net assets.Unrecognized net gain Prior service cost not)et recognized in net periodic pension cost.Prepaid Pension Cost.(Millions)
$259 (111)(12)(123)(45)068)91 (65)(21)s 6 In addition to providing pension benefits, the Project provides certain health care and life insurance bendits for retired persons.Substantially all of the Project's employees may become eligible for those benefits if they reach normal retirement age while working for the Project, retire from the Project, are eligible for pension benefits, and have completed a minimum of 5 years regular employment.
The cost of retiree health care and life insurance benefits is recognized as expense as the premiums and/or deposits to the mustee are paid.For 1987 and 1986, those costs totaled$1,361,170 and$1,172,077, respectively.
(6)Employees'etirement Plan The Project has a retirement plan covering substantially all employees.
The Plan is funded entirely from Project contributions and the income earned on invested assets.Contributions to the Plan were$2,181,799 and$9,515,491 in fiscal years 1987 and 1986, respectively.
The Project recorded income of$4,098,777 for fiscal year 1987 and expense of$6,264,699 for 1986 related to the Plan.Plan assets consist primarily of common stocks, U.S.obligations and corporate bonds.In'1987, the Project adopted Statement of Financial Accounting Standards No.87, Employers'ccounting for Pensions.Net periodic pension cost under that statement is made up of the components listed below as determined using the projected unit credit actuarial cost method.(No comparable analysis is required to be made for 1986): (Millions)
Service cost.....,....................
$8 Interest cost...,............,...,.....
13 Actual return on assets...~~.....~..(45)Net amortization and deferral.......,.20 Net periodic pension income.........
S (4)(7)Litigation and other contingencies:
Environmental:
Various pending litigation or administrative proceedings involving environmental matters could affect the Project and its present and proposed generating facilities.
In general, these lawsuits seek to impose higher air quality standards for generating plants.If ultimately decided adversely to the interest of the Project, the lawsuits could result in increased construction costs, increased future operating costs or possible loss in the operational reliability of certain generating plants.Such increased costs would be passed on to customers through increased electric rates.Other Litigation:
In the normal course of business, the Project is a defendant in various litigation matters.In management's opinion, the ultimate resolution of these matters will not have a significant adverse effect on the Project's financial position or results of operations.
Payments to Certain Property Owners in the Association's Service Areas Now Provided Electric Power by Others: The Articles of Incorporation of the Association provide for the indemnification of certain property owners in the Association's service areas now provided electric power by others 24 4 if they are required to pay substantially more for power than they would if they were furnished electric power by the Association.
A reserve for these payments has been established which, in the opinion of management, adequately covers the Project's liability as of April 30, 1987.Navajo taxes;In 1977 and 1978 the Nav@o Thbal Council promulgated three tax resolutions affecting electric generating stations, in which the District has an interest.The District and other participants in the affected generating stations filed lawsuits challenging the resolutions on grounds the 1Nbal Council had previously approved generating station leases containing covenants not to tax.In 1981 the lawsuits were mooted by the enactment of a Thbal Council Advisory Committee resolution reaffirming the convenant not to tax.In the fall of 1984 the Navajo Ve Commission notified the District of its enactment of amended tax resolutions, which contained provisions purporting to repeal any prior waiver of the power to tax.The District responded by reminding the Commission of the prior resolution, reaffirming its tax covenants.
The District has recently received a ruling by'he Commission, denying the contractual claim of immunity from taxation under the covenant not to tax contained in the Navajo Generating Station Lease.The District is unable to predict the ultimate outcome of this action.However, management believes that the District has a valid immunity from such taxation and if necessary will challenge the Nav@o Tax Commission ruling.In addition, the Board of Directors of the District has approved an action allowing it to recover from its customers the amounts of such taxes if the payment thereof is ultimately required.liquidity support for the Promissory Notes.Under the terms of the Agreement, the District may borrow up to$350,000,000 until October 14, 1988.If the agreement is not: renewed prior to,October 15, 1987, the District may continue to borrow but must reduce its outstanding borrowings to not more than$250,000,000 by October 14, 1988 and to not more than$150,000,000 by October 14, 1989.Following October 14, 1989, the District may not make additional borrowings and must repay all outstanding borrowings by October 15, 1990.As of April 30, 1987, the District had no borrowings outstanding under the Agreement.
The indebtedness of the District evidenced by the Promissory Notes and/or borrowings under the Agreement is an unsecured obligation of the District payable from the general funds of the District lawfully available therefore, subject in all respects to the prior lien of the United States, the Revenue Bonds, and other indebtedness of the District secured by revenues or assets of the District.The Promissory Notes and borrowings under the Agreement are not payable from taxes, The District's Board has limited the total amount of indebtedness evidenced by the borrowings under the Agreement and Promissory Notes to an aggregate of$350,000,000.
(9)Irrigation and water operations:
Irrigation and water operations expenses, including depreciation, exceeded the assessments, delivery fees, and other revenues therefrom by approximately
$15,975,000 for 1987 and$12,384,000 for 1986.These amounts do not include expenditures for additions and improvements to irrigation plant and for repayment of long-term debt.(8)Revolving credit agreement/commercial paper program: The District's Board has authorized the issuance of up to$350,000,000 of short-tenn promissory notes (the Promissory Notes), which are sold in the tax-exempt commercial paper market.The Promissory Notes will mature in no more than 270 days from the date of issuance and in no event after October 15, 1990.As of April 30, 1987, the District had$350,000,000 of the Promissory Notes outstanding at an average interest rate to the District of 4.30/0.The District maintains a revolving credit agreement (the Agreement) with a consortium of bventy-two banks to provide (10)Subsequent events: On May 26, 1987, the District entered into a revolving credit agreement with Fuji Bank, Limited to provide support for the District's mini-bond program.Under the terms of the agreement, the District may borrow up to$30,000,000 at the Federal Funds Rate plus one-quarter to one-half percent, based on length of time outstanding.
The agreement expires November 15, 1988.On May 15, 1987, the District sold approximately
$22,300,000 of 1987 Series A and B Mini-Bonds.
The proceeds were used to refund the costs of construction pursuant to the District's capital improvement program and to pay financing expenses.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 sheets 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 April 30, 1987 and 1986 and the related combined statements of net revenues and cash flows for the years then ended.Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the financial statements referred to above present fairly the financial position of the Salt River Project as of April 30, 1987 and 1986 and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.Arthur Andersen k, Co, Phoenix, Arizona, June 26, 1987.25 Statistical Review PROJECT GENERAL Operating revenues.Electric Water and irrigation.
Operating expenses Net financing costs less capitalized interest.....,..Other deductions (revenues), net...,.............
Net revenues Gross additions to plant, excluding allowances for funds used during construction Utility plant, gross.Contributions of electric revenues to support water operations.
..Taxes and tax equivalents Employees at)mr-end.'Does not include temporary employees.
$1987 888,506 881,340 7,166 706,3?7 105,293 2,075 74,761 309,356 4,814,087 15,975 103,097 5 735 ($000)12 Months Ended April 30 1986$848,618 841,936 6,682 642,963 42,337 5,002 158,316 352,993 4,481,667 12,384 83,864 5,468'981$539,669 534,357 5,312 400,323 47,460 (1,644)93,530 302,702 2,843,247 4,8?0 58,134 4,580 12 Nonths Ended December 31 1976$225,268 220,961 4,307 182,662 31,060 259 11,287 234,012 1,229,617 7,341 30,869 3,325 KATER*Total storage and pumping capacity (acre-feet)
Storage capacity (six reservoirs).................
Installed pumping capacity Water in storage Jan.1 (acre-feet)
.................
Project storage only Runoff (acre-feet)
Water in storage Dec.31 (acre-feet)................
Project storage only Sources of water for deliveriers (acre-feet)...........
Gravity supply.Groundwater supply (pumping by SRP)...........
Groundwater supply (pumping by others).........Use of water (acre-feet)
.Agricultural Urban.City domestic Subdivision irrigation.
Other non-agricultural irrigation (schools, parks, churches, etc.)................
Decreed deliveries......
Contract deliveries Seepage and evapotranspiration
................
Canals, total (miles)Lined..Laterals, total (miles).Lined and piped Drainage and waste ditches (miles).................
Lined and piped Assessed area (acres).Number of assessed accounts...Number of times water delivered to water users......1986 2,889,725 2,019,102 870,623 1,671,535 1,445,710 1,070,214" 1,691,741 1,464,978 993,591 928,053" 50,482 15,056 870,658 290,572 395,158 284,192 60,877 50,089 47,963 136,965 122,933 133 91 892 792 240 82 238,170 181,894 471,845 1985 2,863,769 2,019,102 844,667 1,781,671 1,543,5?1 1,774,667 1,671,535 1,445,710 1,136,429 1,072,373 46,593 17,463 1,016,612 381,341 396,228 281,464 60,263 54,501 52,410 186,634 119,817 133 87 890 783 240 78 238,170 181,645 468,144 1981 2,891,177 2,063,948 815,229 1,480,332 1,227,055 566,245 1,116,338 895,118 1,222,376 870,262 337,424 14,690 896,802 440,047 381,457 265,002 62,908 53,547 64,431 108,358 240,326 131 70 884 758 243 63 238,221 178,796 456,129 1976 2,841,818 2,072,050 769,768 1,040,000 771,440 817,419 9?6,725 711,353 1,190,720 848,734 335,988 5,998 1,190,720 451,377 295,123 187,044 56,753 51,326 58,464 82,467 315,632 131 59 878 715 251 52 238,266 166,048 500,607 Water statistics are computed on a calendar year basis." Based on V.S.G.S.provisonal records and are subject to adjustment.
26 PolVER 1987 12 Nonths Ended April 30 1986 1981 12 Nonths Ended December 31 1976 Energy Sources (kWh)Net nuclear generation Net steam generation'et gas turbine generation...,.......~....Net combined cycle generation
......,...,......
Net run of river generation
.Pumped storage generation,.......,...,,......
1btal net generation'urchased......,...........,............
~..Interchange receimd...
Wheeling received Total energy sources'nergy disposition (kWh)"'esidential Commercial R Industrial
.Irrigation pumping,..~...............,.......
Street Ei highway lighting............,.........
Public authorities
.Interdepartmental
.Sales for resale...'Ibtal sales.Interchange delimred.........................
Wheeling delivered, Energy losses Energy for pumped storage operation............
'Ibtal disposition of energy Peak omrall power system (kW)Date and time (MST)........,......,......,.
Peak Project customers (klV).Date and time (MST)Generating capability (kW)" Nuclear Steam', Gas turbines.Combined cycle................, Hydroelectric conventional
.H>droelectric pumped storage.....
Total operating capability'.
Contract purchase at peak...,...
lbtal resources'lectric customers->ear end'Residential Commercial R Industrial
........, Other.......,....,..'Ibtal.Average annual kWh use"'esidential
.......,,.
~.Average annual klVh revenue"'esidential (cents/kWh) 1,955,479,000 9,667,574,000 2,287,000 991,739,000 410,679,000 211 F088,000 13,238,846,000 3,586,056,028 105,3 87'00 15,091,962 16,945,380,990 5,333,601,362 6,252,344,184 233,684,815 98,746,120 270,239,264 82,902,577 3,294,959,549 15,566,477,871 104,549,000 13,887,031 958,912,088 301,555,000 16,945,380,990 3,264,000 Aug.20, 5 p.m.2,785,000 Aug.20, 5 p.m.213,730 2,411,115 393,000 288,000 96,400 137,000 3,539,245 605,547 4,144,792 441,293 37,218 8,810 487,321 12,440 7.54 149,186,614 10,957,903,000 45,396,000 813,684,000 451,783,000 236,545,000 12,654,497,614 3,207,390,046 106,666,000 11,912,340 15,980,466,200 4,889,987,668 5,931,148,985 248,577,084 88,327,881 257,127,813 72,022,538 3,016,789,686 14,503,981,655 93,'772,000 10,891,950 1,033,899,395 337I921,000 15,980,466,000 2,9?1,000 July 9, 5 p.m.2,658,000 Aug.29, 5 p.m.0.2,201,115"" 393,000 288,000 96,400 137,000 3,329,245 410,547 3,739,792 414,140 34,973 8,376 457,489 12,175 7.56-0-10,385,225 F000 62,336,000 4,110,000 468,174,000 118,324,000 11,038,169,000 2,098,800,868 145,837,000 9,793,314 12,292,600,000 3,674,758,035 4,430,656,608 243,257,760 43,203,039 351,055,276 80,008,412 3,205,534,954 12,028,474,084 245,224,000 9,024,579 840,845,337 169,032,000 13,292,600,000 2,386,000 Aug.11, 6 p.m.2,057,000 July 28, 5 p.m.-0-1,919,250 393,000 288,000 95,000 137,000 2,832,000 329,547 3,'161,797 305,870 22,771 1,610 330,251 12,310 5.78 i0 5,637,595,000 93,811,000 459,155,000 243,951,000 89,536,000 6,524,048,000 2,561,076,900 162,016,000 13,389,100 9,260,530,000 2,931,444,260 3,594,531,963 282,916,839 36,456,046 288,417,414 186,729,026 818,405,306 8,138,900,854 384,440,000 12,643,696 598,785,450
.125,760,000 9c260i530i000 2,089,000 July 7, 6 p.m.1,732,000 July 7, 6 p.m..0.1,548,250 378,000 288,000 94,000 140,000 2,448,250 325,563 2,773,813 238,989 17,591 1,361 257,941 12,597 3.51'ncludes SRP participation in jointly owned projects" Unit capabilities during summer peak"'nergy disposition kWh through total sales, electric customers pear end, average kWh use, and average annual revenue are, estimated figures."" Decreased due to a rating change at Four Corners Units 4 and 5.27 Board Members B oard members establish policies for the management and conduct of Salt River Project's business affairs.The 10 members of the Board of Governors of the Salt River Valley Water Users'ssociation are elected every tm years by the shareholders (property owners)of the Association.
The Board of Directors of the Salt River Project Agricultural Improvement and Power District consists of 14 members who serve four-year terms.One District boanl member is elected from each of the 10 SRP voting divisions, and four members are elected at-large.'Iladitionally, members of the Association board are elected to similar positions on the District board.Pictured at right are SRP Board Members (lop row from left)Joe Bob Neely, John L.Burton Jr., William W.Arnett, (bollom mw from lefl)Olen Sharp and John M.Williams Jr.Pictured below are SRP Board Members (lefl lo right)Fred J.Ash, Rudolph Johnson and Thomas P.Hurley.Salt River Project Board Members shown above are Pelt lo right)Clarence C.Pendergast Jr., Stanford F.Hartman and Gilbert R.Rogers.Pictured at left are SRP Board Members aft lo right)William P.Schrader, Dwayne E.Dobson and Bruce B.Brooks.District 1 Rudolph Johnson District 2 Clarence C.Pendergast Jr.District 3 Bruce B.Brooks District 4 Gilbert R.Rogers District 5 John M.Williams Jr.J District 6 Thomas P.Hurley District 7 william P.Schrader District 8 Joe Bob Neely District 9 Olen Sharp District 10 Dwayne E.Dobson At-large lVilliam W.Arnett Fred J.Ash John L.Burton Jr.Stanford F.Hartman Council Members iYQ J V T he councils enact and amend bylaws relating to the management and conduct of SRP's business affairs, and they approve negotiated revenue bond sales.Three council members are elected by SRP shareholders to two-year terms in each of the 10 areas of the Salt River Valley Water Users'ssociation.
Three council members are elected to staggered four-~mr terms in each of the 10 divisions of the Salt River Project Agricultural Improvement and Power District.'&aditionally, Association council members seek identical positions on the District council.*)~t Ji t SRP Council Members pictured at left are aft io righi)Roy W.Cheatham, John A.Vanderwey, Carl E.Weiler (Chairman), Wayne A.Hart, James L.Diller, George B.Willmoth, Robert E.Hurley and Levi H.Reed.SRP Council Members pictured below are (iop row fiom iefl)Martin Kempton (Vice-chairman), Lester R.Nowry, Wayne A.Marietta, (botiom iow from left)Orland R.Hatch, C.Dale Willis, William P.Schrader Jr.and Larry D.Rovey.V))I E fi I.r/f',~<<i Q<<<<V'RP Council Members pictured above are (lop iow fiom lefi)Dean W.Lewis, James R.Marshall, Edmund Navarro, Michael K.Gantzel, Mark V.Pace, (bottom iow from left)W.Curtis Dana, Emil M.Rovey and Lee L.Tregaskes.
C 0 E District 1 Robert L.Cook Howard W.L>dic Emil M.Rowy District 2 Wayne A.Hart Larry D.Rovey John A.Vandemey District 3 James M.Accomazzo John E.Anderson Elvin E.Fleming District 4 Lloyd Lee Banning Levi H.Reed Byron G.Williams District 5 Roy W.Cheatham Edmund Navarro Carl E.Weiler, Chaiiman District 6 James L.Diller Dean W.Lewis James R.Marshall District 7 EVayne A.Marietta Lester Mowry George B.Willmoth District 8 Michael K.Gantzel Martin Kempton, Vice-chairman Mark V.Pace District 9 W.Curtis Dana Robert E.Hurley Lee L.Iiegaskes District 10 Orland R.Hatch William P.Schrader Jr.C.Dale Willis SRP Council Members pictured above are (left to righi)James N.Accomazzo, Elvin E.Fleming, John E.Anderson, Robert L.Cook, Byron IVilliams, Howard W.Lpllc and Lloyd Lee Banning.
SALT RIVER PROJECT Box 52025, Phoenix, AZ 85072-2025 Return requested BULK fA~~U.S.POLI'AuE PAID PHOENIX, ARIZONA Permrt No.395~~EWTJ>~SALT RIVER PROJECT AN EQUAL OPPORTUIVITY EMPLOYER As a special service, SRP is making this Annual Report information available throru8r the Arizona State Library for the Blind and Physically llandicapped, 1030 N.32nd St., Phoenix, AZ 85008 (602)2554578.Annual Report do Salt River Project Communications 6'r Public Affairs Box 52025 Phoenix, AZ 85072-2025 (602)2368240