SRP Considering Fuel-Cost Adjustment

Because the price of all forms of fuel – from oil to gasoline to natural gas and others – has increased dramatically in recent months, SRP’s purchases of fuel for current and future use to produce electricity for its customers have increased as well.

As a result, SRP management is planning to ask its Board of Directors to approve an increase in the Fuel and Purchased Power Adjustment (FPPA) to recover undercollected fuel costs.

The amount of the increase is still being calculated and will be presented to the Board for consideration at its October 6 meeting.  If approved, any change to customers’ bills will take effect November 1 when lower winter electric prices begin for SRP customers.

The FPPA is a straight pass-through of actual fuel and purchased-power costs and reviewed by SRP every six months to address the recovery of these expenses.  According to management’s calculations, the current level of the FPPA is too low to recover increased costs.

According to Chief Financial Executive Mark Bonsall, SRP’s “hedging” program – in which natural-gas supplies are purchased at a certain cost today for use in the future – has helped slow the increased cost of fuel but has not eliminated the need for the FPPA increase.

SRP is the largest provider of power to the greater Phoenix metropolitan area, serving more than 935,000 electricity customers.