SRP Board Approves 2022 and 2023 Fuel and Purchased Power Increases
The Board also decided to forgo $124 million of the under collected fuel costs to reduce impact to customer prices
In an effort to adjust for the increasing costs of fuel and purchased power agreements to Salt River Project, the SRP Board of Directors voted to approve an annual Fuel and Purchased Power Adjustment Mechanism (FPPAM) increase effective November of this year and then a subsequent adjustment for the same amount effective one year later in November 2023. To minimize the financial impacts to customers, the Board voted not to collect from customers $124 million of the existing under-collected balance of fuel costs.
With this Board action, effective with the November 2022 billing cycle there will be an overall 4.7% average annual increase implemented through the FPPAM. While impacts will vary based on customer price plans and seasonal usage, this will mean an average $5.58 increase in a typical residential monthly bill for the first year, and then a subsequent adjustment for the same amount effective one year later beginning in November 2023.
SRP routinely monitors costs incurred to purchase fuel for generating stations and buys supplemental power on the wholesale and spot markets to meet customer demand. FPPAM was established to ensure SRP recovers these costs and has flexibility to adjust its mechanism when fuel and spot power prices rise or fall. SRP passes fuel costs directly to customers without any markup. In recent months, fuel and purchased power expenses have increased faster than SRP had adjusted, and SRP’s under-collection balance was $306 million at the end of July 2022, necessitating this Board action.
“SRP is rebalancing our prices to address our substantial under collection with two incremental increases and forgoing collection of a significant amount so that price changes are gradual, and costs are spread equitably among all customers,” said SRP General Manager and CEO Mike Hummel. “By breaking up the necessary increase and announcing this upfront, we allow customers to anticipate and plan for upcoming changes.”
The FPPAM cost increases are primarily being driven by higher costs to procure natural gas to operate generating stations, and summer power purchases to meet increasing demand. SRP is not alone in its experience with higher fuel costs and indeed many western United States utilities have also had to pay higher costs for fuel as well as substantial premiums to secure power resource capacity for the peak-demand summer months given the capacity shortage in the region.
SRP is a community-based not-for-profit utility that aims to keep prices as low as possible for customers. SRP customers pay among the lowest power prices in the western U.S., and part of customers’ monthly bills go toward helping SRP recover fuel and wholesale electricity costs. To learn more about the FPPAM and related pricing increases, SRP customers can visit its FPPAM FAQ webpage.
SRP is a community-based, not-for-profit public power utility and the largest electricity provider in the greater Phoenix metropolitan area, serving approximately 1.1 million customers. SRP provides water to about half of the Valley’s residents, delivering more than 244 billion gallons of water (750,000 acre-feet) each year, and manages a 13,000-square-mile watershed that includes an extensive system of reservoirs, wells, canals and irrigation laterals.