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2016 SRP ANNUAL REPORT New Horizons 2016 SRP ANNUAL REPORT New Horizons
2016 SRP ANNUAL REPORT
N e w H o r i z o n s
2016 SRP ANNUAL REPORT
N e w H o r i z o n s
ABOUT SRP
SRP (Salt River Project) provides reliable, affordable electricity and water to more than 2 million people living in central Arizona.
As one of the nation’s largest public power utilities, we provide generation, transmission and distribution services to homes and businesses in our 2,900-square-mile service area known as the Valley. We also are the area’s largest raw-water supplier, with a service area covering more than 375 square miles and management responsibilities for a 13,000-square-mile watershed.
For more than a century, SRP has demonstrated foresight in providing the essential resources to meet the needs of our power and water customers and to help the Valley grow into one of the most vibrant metropolitan areas in the country.
On the cover: An aerial view of SRP’s Horse Mesa Dam and Apache Lake looking downstream toward Canyon Lake
SRP Annual Report 2016
table of
CONTENTS
From the President and the Vice President � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 2
From the General Manager & CEO �� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 4
Understanding Our Customers � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 6
Managing Our Resources � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 10
Celebrating Our Culture � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 14
Reviewing Fiscal Year Results � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 18
Introducing SRP Boards � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �22
Introducing SRP Councils � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �23
Recognizing Our Executive Team �� � � � � � � � � � � � � � � � � � � � � � � � �24
Comparing Our Previous Numbers � � � � � � � � � � � � � � � � �25
1
David Rousseau
President and
Chief Officer
John R� Hoopes
Vice President
TAKING THE LEAD
FROM THE PRESIDENT & THE VICE PRESIDENT
We commend management for its foresight and initiative in responding to an increasingly
dynamic and complex energy environment. We believe SRP’s “leaner, greener and
even more customer-centric” focus will ensure continued success in
our water and power stewardship.
SRP is taking a lead role, working collaboratively with stakeholders, to address concerns about water supplies.
SRP Annual Report 2016
SRP has delivered on its commitment to provide reliable and affordable power and water to the Valley for more than a century� And we intend to do so for the next century as well� To do that, the Board made an important decision this year — it approved a set of water pricing principles� The principles are similar to those in place on the power side of SRP’s business, and ultimately we contemplate SRP’s water operations achieving an increasing degree of financial self-sufficiency�
As a community-based not-for-profit energy and water company, we make decisions in the best interest of all customers� Acting from this perspective, we applied four pricing principles to set the new charges:
1� Ensure reliability through sound water management practices�
2� Preserve the water rights of member lands, regardless of end use�
3� Change prices gradually�
4� Move water operations to financial self-sufficiency�
These principles are consistent with our approach on the power side of SRP’s business and support water stewardship efforts that are vital to the residents and businesses of metropolitan Phoenix�
An extraordinary accomplishment this year was maintaining the level of SRP’s reservoirs� As of May 1, our reservoir system stood at 57% full, exactly the same as a year ago� That figure may not seem impressive, but consider that runoff from the Salt and Verde rivers has been below median for five consecutive years and the region has been in a drought for approximately 20 years� Despite the unfavorable conditions, SRP has been able to effectively manage through this extremely dry period to keep reservoirs stable and more than half full�
HOW WE’RE PLANNING FOR FUTURE WATER SUPPLIES
SRP takes a forward-thinking approach to protecting our water assets today and ensuring that our water supplies are sufficient for the future�
Conservation remains one of the most effective ways to reduce water consumption across the Phoenix metro area� SRP has engaged in many conservation efforts, including lining canals and enhancing water delivery systems to limit water loss by seepage� We support educational programs meant to increase efficient water use� This includes our annual Water Conservation Expo�
In partnership with municipalities and water agencies, we have “banked” water underground to help protect against drought�
The amount that has been set aside at the largest SRP groundwater
recharge facility could fill 27 million swimming pools�
HOW WE’RE PROTECTING OUR WATERSHED
In the last decade, more than a quarter of the forests in SRP’s
watershed have been damaged by fire� We’re working with
researchers to understand the impacts of these catastrophic
wildfires� And we’re supporting restoration efforts to improve forest
health� Our efforts include reforesting these areas and forming
the Northern Arizona Forest Fund in 2014 to invest in a variety
of forest and watershed projects that improve the resiliency of the
Valley’s water supply�
Since 2009, through our Trees for Change program, nearly
1 million trees have been planted in fire-ravaged areas� Native
seedlings added to the Kaibab, Coconino and Apache-Sitgreaves
national forests will help re-establish wildlife habitat, stabilize
watersheds and improve air quality�
This year SRP, together with the town of Payson, National Forest
Foundation, Coconino National Forest and Bureau of Reclamation,
proposed the Cragin Watershed Protection Project� The project
aims to protect against devastating wildfire by thinning the forest
that surrounds C�C� Cragin reservoir, one of seven reservoirs SRP
operates and maintains�
As the competition for water increases with Arizona’s growth, the
need for collaboration will continue to grow� SRP actively works with
stakeholders throughout the state to address concerns about water
supplies, identify alternative supply options to meet demands, and
collaborate on programs to resolve water resource conflicts�
Just as it has on the power side of SRP’s business, technology
will play a significant role in managing and creating new water
supplies and extending existing supplies further� For example,
we’ve automated controls on parts of our canal system and
explored desalinization of ocean water�
We and the other elected leaders of SRP are proud of the
direction in which this organization is headed and we remain
committed to working with management to reinforce principles
of stewardship, service and community responsibility in the
years ahead�
TAKING THE LEAD
FROM THE PRESIDENT & THE VICE PRESIDENT
3
making a
SHIFTFROM THE GENERAL MANAGER & CEO
More than a third of the energy produced by SRP resources this last fiscal year had no associated greenhouse gas emissions. Through our strong partnerships, we’ve stored a four-year water supply underground. We are recognized for our industry-leading power reliability, awarded for technology and honored for our top-ranked customer satisfaction.
SRP faced and handled significant challenges this year�
Responding to ever-changing consumer expectations, we
once again received recognition as the leader among
electric utilities for our high customer satisfaction� We
reduced our fixed costs — an important accomplishment
as energy sales remain relatively flat� Amid heightening
nationwide concern about cyber and physical security, we
have substantially intensified efforts to reduce risks to SRP
employees, customers and assets�
After the close of the fiscal year, we completed the purchase
of the Los Angeles Department of Water and Power’s share
of the Navajo Generating Station� This will help us implement
an Environmental Protection Agency (EPA) rule to significantly reduce emissions from the
plant by 2020 through the retirement of one generating unit, or its equivalent�
Our alternative compliance strategy for two units at Coronado Generating Station
also received support from the EPA� The strategy provides better visibility benefits
than what had been viewed as the Best Available Retrofit Technology, at lower
cost, and will reduce plant emissions at the time of year when they are most
impactful to visibility�
NEW PRICE PLANS FOR INNOVATIVE TECHNOLOGIES
SRP developed a new price plan for customers who drive plug-in hybrid
or battery electric vehicles (EVs)� The SRP Electric Vehicle Price Plan
offers customers an opportunity to save by charging EVs overnight
(11 p�m�–5 a�m�) when energy is lower-priced� The price plan is part
of our effort to promote the use of electric transportation�
By nearly
any measure,
SRP’s record
of providing
reliable, affordable
water and power is
very admirable.
Mark B� Bonsall
General Manager & CEO
SRP Annual Report 2016
2030
We also put in place a new Customer Generation Price Plan to
ensure that fixed costs related to maintaining the SRP energy
grid are shared equitably by all of our customers� The price plan
included demand charges�
As of fiscal year-end, customers on this plan were beginning to
alter their energy use patterns, reducing demand and lowering
their bills� We expect more customers will save as they become
more familiar with the plan, similar to results we have seen in
our experience with time-of-day pricing� By adjusting energy
use habits, whether through time-shifting or managing peak
demand, customers have the opportunity to substantially
reduce their energy costs� And they do so in response to the
right price signals�
This price plan also encourages technology innovation� Several
local Arizona solar companies have begun combining rooftop
panels with demand management and energy monitoring devices
that help customers manage peak demand and lower their bills�
HOW WE’RE PLANNING TO CONTINUE OUR SUCCESS
More than a third of the energy produced by SRP resources this
last fiscal year had no associated greenhouse gas emissions�
Through our strong partnerships, we’ve stored a four-year water
supply underground in our storage facilities� We are recognized
for our industry-leading power reliability and great safety
record, awarded for technology and honored for our top-ranked
customer satisfaction�
By nearly any measure, SRP’s record of providing reliable,
affordable water and power is very admirable�
We:
• Rank in the top decile in the industry for system reliability
• Have been honored with more than two dozen
J�D� Power awards
• Offer competitive pricing
• Have consistently earned high credit ratings
However, we don’t think this will be enough to succeed in the
future� Given the profound changes that are taking place in our
industry and the nation, we have begun making a shift�
Customer energy consumption trends indicate that we have likely
entered a “new normal” of flatter load growth�
The “customer experience” is now measured against new
perceptions and different value equations�
At the same time, increased environmental regulations, along
with political and social preferences, are moving toward a less
carbon-intense future for the economy�
To address the business environment we see ahead, our path
forward focuses on three elements�
• Be leaner. Expenses have been growing faster than revenues�
We are working to add new revenue sources, increase the
productivity of assets and reduce expenses by improving
business processes�
• Be greener. We have been moving toward a less carbon-
intense mix over time� SRP reduced its carbon intensity by
23% from fiscal year 2006 to 2014, and we plan to further
reduce emissions by 40% by fiscal year 2043�
• Be even more customer-centric. We are enhancing digital
interactions with our customers� They are helping us design
the products and services they value and want to use� We
are improving the flexibility and responsiveness of our grid to
facilitate new uses, technologies and customer experiences�
I am excited to be moving in these new strategic directions,
toward a new horizon� We have recently reset our organizational
structure to reflect this strategy� Getting from where we are today
to where we need to go is highly motivating� Because of the skill,
knowledge and goodwill of SRP’s employees, I’m confident we will
arrive at an outcome that is better for SRP, our customers and the
communities we serve�
I thank our executive management team and our elected leaders for
their ongoing support� It is a pleasure and honor to work beside you�
5
HELLO, ROSIE AND RAMON
Many customers use smartphones to call the SRP Contact
Center to request service or discuss their accounts� With that in
mind, we launched a new automated interactive voice response
(IVR) system that provides a great experience whether you’re
connecting with us by mobile device or landline�
The new system uses natural, interactive conversation instead
of touchtone prompts and call menus — which can be
burdensome to use with smartphones — to help customers
complete their requests and increase self-service functionality�
It also frees up representatives so they can be very responsive
to more complex calls�
Conversational IVR mimics the experience of talking with
a real person� In a way, it’s similar to Apple’s Siri — but
smarter� When customers call SRP, they’ll be greeted by
Rosie (English) or Ramon (Spanish)� The virtual assistants can
help callers complete tasks, such as checking their balance,
receiving a payment extension, making a payment or getting
outage information 24/7�
The system routes customers to the correct place quickly, helping
them avoid time-consuming transfers� If there is a word or
phrase the system doesn’t understand, a live person (real-time
“intent adviser”) clarifies the phrase and enters it back into the
system within seconds� This helps the system learn over time�
Within two years, we plan to offer functionality where 30% of
the calls will be completed using the new system� In addition
to Rosie and Ramon, customers can easily speak to a live
representative at any time�
understanding our
ADVANCED METERS = SAVINGS + CHOICES
Since 2003, SRP advanced meters have helped customers save energy and reduce costs� The first-generation meter’s digital technology allowed customers to review daily energy usage online (with SRP My Account™) and easily switch to the most beneficial pricing options� Customers can view hourly usage online, receive email and text alerts about their usage and review demand data (for price plans that include demand charges)� We have now installed more than 200,000 next-generation meters to replace those first digital meters� The advanced meters will enable us to enhance customer outage reporting and will allow us to expand credit and prepay price plan options�
24/7 Assistanceavailable from our
Contact Center
We are working to better understand the changing needs
of our customers and exploring options for using data and
technology to personalize how they interact with SRP�
CUSTOMERS
SRP Annual Report 2016
THE GRID SPOTS TROUBLE
New grid technology gives us the ability to swiftly isolate outages, limit the number
of impacted customers, identify potential hazards and speed restoration efforts� For
example, SRP’s outage restoration times improved compared to last summer despite
a series of powerful monsoon storms this year� One reason for the improvement is the
placement of remote fault indicators in areas prone to storm outages� These devices
are installed directly on power lines to continuously monitor the electric flow� When an
abnormal condition exists, the indicators relay information to SRP� Operators use this
information to more closely pinpoint where system problems have occurred�
We are working to better understand the changing needs
of our customers and exploring options for using data and
technology to personalize how they interact with SRP�
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A PARTY FOR WATER SAVERS
Approximately 800 customers
attended the 2016 Water Conservation
Expo� For the past nine years, SRP
has hosted the conservation event�
The main draw is discounted pricing
on smart irrigation controllers�
WaterSense-labeled irrigation
controllers use local weather and
landscape conditions to tailor
watering schedules to actual site
conditions� When properly installed,
programmed and maintained,
controllers can deliver water
savings of at least 20%� That’s a
big deal considering that up to
70% of the Phoenix area’s water
use occurs outdoors�
SRP has distributed approximately
4,000 smart irrigation controllers
over the years� That translates to
about 330 million gallons of water
saved — enough to fill 22,000
average-sized swimming pools�
AIDING A GOOD CONNECTION
Abundant sunshine and environmental interest have led SRP
customers to consider private solar electric systems� Sometimes
connecting a home system can be complicated, so we help
customers calculate potential costs, understand connection
requirements and select qualified installation contractors�
In partnership with Arizona State University, we are
studying the performance and capabilities of battery
storage devices that can work with these solar
systems, which may help optimize use of solar
energy and lower energy bills for customers�
Research results look promising�
understanding our
CUSTOMERS
SRP Annual Report 2016
6,663Aug. 8,2012
6,716July 24,2014
6,781Aug.14,
2015
6,806Aug. 15,
2015
2012 2014 2015 2015
SRP All-Time System Peak Record(megawat ts)
PLUGGING NEW ELECTRIC RIDES
One of the biggest opportunities for utilities today is the growth of electric vehicle
(EV) use� As an increasing number take to the road, demand for energy (vehicle
charging) and related energy services will climb�
Helping grow the EV market is a long-term investment for SRP� We have focused
initial efforts on assessing the impact on our electrical grid and demonstrating our
commitment to the technology�
We launched SRP Drive Electric™ to develop products and services that will
promote the use of electric transportation� So far, we have created an active
community for SRP customers who drive EVs and added a website that offers
advice to help people make informed decisions about EV purchases� A new online
calculator estimates electric bills, fuel savings and government incentives� The site
includes information about SRP’s Electric Vehicle Price Plan and maps highlighting
public charging stations�
READY TO TAKE THE HEAT
Thanks to investments in new technology and a comprehensive
maintenance plan, SRP’s electrical grid handles record-setting
energy demand during sweltering summers�
ONLINE: SIMPLE, EASY AND NO� 1
In 2015, E Source named srpnet.com as the top utility website among 102 U�S� and Canadian electric and
gas utilities� E Source provides independent research, advisory and information services to utilities, major
energy users and other key retail energy players� As part of the E Source residential customer study,
13 features were tested from mobile devices and laptop computers� Sites were rated for ease of use,
navigation, look and feel, and functionality� The SRP website was recognized for providing the best
user experience�
9
managing our
RESOURCES
BENEFITS FLOW FROM WATER AGREEMENT
A water rights agreement with the White
Mountain Apache Tribe, more than 30 years
in the making, will provide water certainty to
Valley water users� The agreement, which
reflects SRP’s collaborative approach to
watershed management, will provide
funds for the design and construction
of a water delivery system on the
reservation and help stimulate
the tribal economy�
TURNING DISCARDS INTO DOLLARS
By selling surplus and inactive assets, SRP has saved $150 million over
the past two decades� We reached the impressive recovery milestone
during this fiscal year�
We’ve sold a variety of merchandise, from old electric meters full of
copper to circuit boards and power generators� A large part of our
investment recovery success is owed to broken down cable� The cable
is put into a machine called the “chopper,” where it is granulated and
separated into copper, aluminum and trash� If the cable
isn’t broken down, scrap yards offer significantly less
money for it� The chop operation has returned more than
$32 million to SRP since its installation in 1995�
At an eBay site, SRP sells IT-related items, auto parts and other
small assets� Since 2008, we have increasingly used online auctions
for investment recovery�
SRP Annual Report 2016
We are developing a process where advanced meters will send us a “last gasp” message when power goes
out. We’ll know about outages sooner and will be able to respond quicker than we can today.
The electric grid has traditionally delivered power to customers and was designed for one-way flow of electricity, from generating
station to end user� Now, as more distributed generation, such as residential rooftop solar units, springs up around the electric
system, there is an increasing amount of two-way traffic�
Being smart, the grid has protective devices in place to prevent service disruption and damage when electrical conditions
change� When solar generation is connected to our grid, conditions can change constantly� During periods of full sun and low
energy demand, there may be too much voltage flowing back into the grid� Suddenly, voltage can dip when skies become
overcast, reducing solar generation and possibly causing electric system instability, especially when there are a greater
number of solar units connected to our grid�
How can SRP safely integrate potentially tens of thousands of small distributed generation sources with the grid? Two
words: “advanced inverters�”
Advanced inverters work with customers’ photovoltaic systems and our grid to help address potential voltage and
interconnection issues� SRP is performing field evaluations of advanced inverters in conjunction with the Electric
Power Research Institute� Using advanced inverters, we can accommodate greater amounts of customer-
owned generation while maintaining high levels of power reliability�
CAN A SMART GRID LEARN A NEW TRICK?
11
A BRIGHT FUTURE FOR RENEWABLES
The Sandstone Solar Facility is now the largest solar resource in the SRP renewable fleet�
SRP is purchasing all 45 megawatts of the solar energy produced at the Florence facility, which is
owned and operated by sPower, a Utah-based independent power producer�
The project broke ground in July 2015 and began operating at the end of December 2015� The new solar
farm symbolizes a very bright future for renewable energy in our state�
Sandstone Solar is located on more than 300 acres� It uses more than 182,000 photovoltaic modules mounted
on a single-axis tracking system that follows the sun, allowing the panels to efficiently capture energy as the sun
moves across the sky�
This solar facility benefits all SRP customers and produces enough green power to supply more than 8,000 homes,
which reduces carbon emissions by more than 88,800 metric tons annually — the equivalent of removing nearly
19,000 cars from the road each year�
The SRP Board has set a goal to meet 20% of SRP’s retail electricity requirements through sustainable resources by 2020�
SRP is ahead of schedule, providing more than 14% of retail energy needs with sustainable resources, which include solar,
wind, biomass, landfill gas and geothermal energy, hydropower and energy efficiency programs�
Renewable, clean energy from Sandstone is helping us achieve our goal of providing customers with a diverse portfolio of
energy sources� This facility is part of SRP’s strategy for the future — a future where no single fuel source is the answer and
where sustainability and reducing carbon emissions are key� Projects such as Sandstone are and will be critical to our renewable
energy mix�
In addition to Sandstone, other SRP solar resources include the 20-megawatt Copper Crossing Solar Ranch in Florence and a system
at the Arizona State University Polytechnic Campus in Mesa�
managing our
RESOURCES
SRP Annual Report 2016
UNDERGROUND MOVEMENT MAKES HISTORY
This year SRP crews installed the largest irrigation
lateral in our water delivery system� An existing
irrigation ditch was moved underground along
99th Avenue between Camelback and Bethany
Home roads on the Phoenix-Glendale border�
Undergrounding the ditch will allow the cities to
widen the road and potentially develop farmland
to the west� The 2,300-foot pipeline serves
customers south and west of the location who
receive irrigation water�
WARNING! ANTICIPATING A BREAKDOWN
Members of SRP’s Performance Monitoring Center in Scottsdale act
as extra eyes for generation facilities as far away as Page, Arizona�
Predictive software tracks and analyzes equipment performance at
power plants� The software sends alerts to the team when equipment
deviates from expected operating norms for temperature, pressure
and valve positions� These alerts prevent costly unplanned outages
by identifying potential breakdowns before they happen� The center
has enabled SRP to save millions of dollars� We are investigating how
this software can increase reliability and lower costs in other areas of
the company�
Concrete segments measuring 8 feet long by 90 inches high, and weighing 22,000 pounds, make up SRP’s largest lateral.
13
celebrating our
CULTURE
EXTRA CREDIT FOR SCHOOL SUPPORT
May Millies (pictured above), SRP O&M Manager, and her Valley Leadership team, along with corporate and city sponsors, developed a campaign that included events, social media, public service announcements and education efforts to encourage increased participation in Arizona’s school tax credits�
As a result of the campaign, an additional $4 million was donated in 2015–2016� Increased taxpayer contributions to school extracurricular activities will help fund after-school programs dedicated to the arts and sciences�
Community outreach is the hallmark of SRP’s corporate culture� Leadership programs promote strong civic engagement, and we encourage and support employee participation in these programs to reinforce our commitment to the communities we serve�
SRP-originated educational programs reached 774 teachers and their 39,450 students this year� We provide grants, curriculum support and a host of other resources for students and educators alike, which impact more than 100,000 students�
SRP employees share a passion for community service� Our volunteers devoted 31,243 hours this fiscal year to assist 200 nonprofits�
Through the Boosters Association, employees give more than $1�5 million every year to nonprofit organizations through payroll deductions� SRP corporate contributions totaled $3�3 million in support of key Arizona human service, civic, education, environmental, and arts and culture initiatives�
In addition, SRP Safety Connection™ provides vital information in English and Spanish to more than 250,000 people annually to keep families and children safe around water and electricity�
SRP Annual Report 2016
463 tonsOffice paper and corrugated cardboard
12 tonsPlastic
24 tonsAluminum and other commingled materials
FUELED FOR CLEANER AIR
More than 50% of SRP fleet vehicles, from light-duty trucks to
large trucks, are now powered by B20 biodiesel fuel� B20 is a
blend of 20% vegetable oil and 80% diesel fuel� According to
the Alternative Fuels Data Center, B20 reduces carbon dioxide
emissions by 15%� In addition to improving air quality, use of
biodiesel fuel has helped save money� SRP plans to grow its
B20 fleet by another 11 vehicles this year�
A “super-sized bucket truck” joined SRP’s alternative fuel fleet
in January� The 88,980-pound vehicle runs on biodiesel fuel
and features the tallest insulated aerial platform in the United
States� The platform can extend 213 feet into the air, which
allows SRP linemen to perform work safely on 500-kilovolt
transmission lines without interrupting power� The customized
truck, which took one year to build, was manufactured in both
Germany and Canada and assembled in New Jersey� It can
maneuver and travel off-road on desert terrain to maintain
and repair remote transmission lines�
We enjoy a well-earned reputation as a leading corporate citizen
with a culture committed to making Arizona a great place to live�
KEEPING STUFF OUT OF LANDFILLS
Reducing our waste on the job and recycling more can help the environment
and SRP’s bottom line� That’s good for our company, our employees and
our customers� This year we initiated a recycling program at two SRP
locations, and we plan to expand this effort to Valley facilities in the
next fiscal year� Although we expect to vastly reduce our waste,
we are proud of the first-year results� Employees recycled
nearly 1 million pounds of paper, plastic and aluminum�
RECYCLING AT SRP
15
HAWK RECOVERS, FLIES AGAIN
A red-tailed hawk that only months
earlier had been sick and unable to fly
spread its wings and soared skyward in
Arizona’s Tonto National Forest� Two SRP
employees had spotted the injured hawk in a
substation switchyard and contacted SRP’s bird
line, part of our Avian Protection Program�
Liberty Wildlife, a nonprofit wildlife rehabilitation
foundation that supports our program, took the
hawk into its care for rehabilitation� The hawk was
suffering from a disease that prevented it from eating,
which made it too weak to fly� Once healthy, the bird
was returned to the wild� This is just one of the many
bird-related stories addressed each year by our Avian
Protection Program�
SRP is dedicated to preserving the balance between serving
growing customer needs and protecting natural resources� We
are continually looking for optimal ways to share habitat and
safeguard birds to limit impacts on flight, perching and nesting
habits while also limiting power disruptions� With its temperate
climate, the region is part of a migration route for many bird species
and a winter breeding destination for others�
Through our Avian Protection Program, SRP employees promote the
harmonious coexistence of power facilities and wildlife habitat� The program
was developed to protect all birds, such as eagles, hawks, owls, vultures,
herons and ravens, that encounter problems with power lines and electric
facilities� SRP’s Avian Protection Program has been in continuous development
for decades�
GRANTS BUILD A STRONG TOMORROW
SRP offers a total of $200,000 in direct classroom funding annually through
three Classroom Connections grant programs� One of the programs,
SRP Learning Grants, provides hands-on learning, such as robot building
(pictured at right), for K–12 students in science, technology, engineering and
math, which creates the foundation for a strong future workforce�
celebrating our
CULTURE
SRP Annual Report 2016
A PLACE TO INNOVATE
One of the ways we intend to succeed in the future is by
getting the most value from assets such as our headquarters,
the Project Administration Building�
The building and its systems are many decades old,
and the decision was made to renovate�
To get better usable space from the same footprint,
we are constructing a new five-story infill office
tower on what was a ground-level loading dock
area� The tower will feature different types of
work spaces, natural light and new technology
that will encourage employee collaboration�
We expect the addition to be complete by
September 2016�
Completion of the tower will enable us
to relocate employees without major
work disruptions and begin extensive
renovations on the aging structure�
Our goal for the renovations is to
achieve Leadership in Energy and
Environmental Design (LEED)
Gold certification�
Safety is an important part of SRP’s culture� Working safely is
a daily personal commitment�
The last steel beam put in place on the PAB
five-story addition was painted white and
adorned with a U�S� flag and a small
evergreen tree, customary symbols of
continued good luck for the project�
17
reviewing fiscal year
RESULTS OVERVIEW OF BUSINESS
SRP is two entities: the Salt
River Project Agricultural
Improvement and Power District,
a political subdivision of Arizona,
and the Salt River Valley Water Users’
Association, a private corporation�
SRP’s power business (the District) owns
and operates an electric system that
generates, purchases, transmits and distributes
electric power and energy and provides electric
service to residential, commercial, industrial and
agricultural power users in a 2,900-square-mile
service territory spanning portions of Maricopa, Gila
and Pinal counties, plus mining loads in an adjacent
2,400-square-mile area in Gila and Pinal counties�
SRP’s water business (the Association) manages a system of
dams and reservoirs, and it is responsible for the construction,
maintenance and operation of a supply system to deliver
raw water for irrigation and municipal treatment purposes� The
Association provides the water supply for an area of approximately
248,200 acres within the major portions of the cities of Phoenix,
Avondale, Glendale, Mesa, Tempe, Chandler, Peoria, Scottsdale and
Tolleson; the town of Gilbert; and the Gila River Indian Community�
RESULTS OF OPERATIONS
Operating revenues were $3�05 billion for fiscal year 2016 (FY16), compared
with $3�02 billion for FY15, an increase of 0�8%� The increase in operating
revenues was primarily due to increased retail electric revenues, partially offset
by decreased wholesale revenues� During FY16 retail electric revenues increased
$100�6 million to $2�7 billion while wholesale revenues decreased $79�9 million to
$212�9 million� The increase in FY16 retail revenues was primarily due to a previously
approved price adjustment and an increase in kilowatt-hours (kWh) sold to residential and
commercial customers� Wholesale revenues decreased primarily due to lower wholesale
market prices and a reduction in kWh sold during FY16� Wholesale revenues also included an
FY16 fair value loss of $5�4 million, reflecting a $22�7 million reduction from the $17�3 million
gain in FY15� Without the effect of the fair value adjustment, FY16 wholesale revenues would have
been $218�2 million compared to $275�5 million in FY15� The total number of customers increased
by 1�2% from the previous year and totaled 1,009,108 as of April 30, 2016�
SRP Annual Report 2016
SRP owns and operates an electric system that produces
and delivers energy to metropolitan Phoenix�
Operating expenses were $2�7 billion for FY16 and $2�9 billion for FY15, reflecting a decrease of 8�2%� Fuel and
purchased-power expenses decreased $265�9 million, or 21�8%, compared to FY15� SRP’s fuel and purchased-
power costs include adjustments for the fair value of fuel and purchased-power contracts� Without the fair
value adjustments, fuel and purchased-power costs would have decreased $123�3 million, or 11�2%, from the
previous year� This decrease in fuel and purchased-power expense is primarily due to continued declines in
the cost of gas used in the production of energy� Depreciation and amortization expense increased by
$16�4 million compared with FY15 primarily as a result of additional assets being placed into service in
recent periods� Operations and maintenance expense increased by $6�3 million, or 0�6%, during FY16�
Taxes and tax equivalents expense increased by $2�8 million compared with FY15�
Investment income resulted in a $14�2 million loss for FY16 compared with a $47�6 million gain for
FY15� Financing costs were $185�3 million and $184�6 million in FY16 and FY15, respectively�
The effects of the previously mentioned activities resulted in net revenues for FY16 of $144�6
million, compared with a net loss of $41�2 million for the prior year� Without the effects of the
change in the fair value of fuel and purchased-power contracts, wholesale positions and
investment income, net revenues would have been $144�2 million for FY16, compared
with net revenues of $15�7 million for FY15�
ENERGY RISK MANAGEMENT PROGRAM
The District’s mission to serve its retail customers is the cornerstone of its risk
management approach� SRP builds or acquires resources to serve retail
customers, not the wholesale market� However, as a summer-peaking utility,
there are times during the year when the District’s resources and/or reserves
are in excess of its retail load, thus giving rise to wholesale activity� The
District has an Energy Risk Management Program to limit exposure to
risks inherent in retail and wholesale energy business operations by
identifying, measuring, reporting and managing exposure to market,
credit and operational risks� To meet the goals of the Energy Risk
Management Program, SRP uses various physical and financial
instruments, including forward contracts, futures, swaps and options�
Certain of these transactions are accounted for under Accounting
Standards Codification (ASC) 815, originally Statement of
Financial Accounting Standards No� 133, “Accounting for
Derivative Instruments and Hedging Activities�” For a detailed
explanation of the effects of ASC 815 on SRP’s financial
results, see Note 5 in the notes to the Combined Financial
Statements (available at srpnet.com/annualreport)�
19
SRP manages a system of dams and reservoirs that deliver raw water to the Valley for irrigation
and municipal treatment purposes.
SRP Annual Report 2016
The Energy Risk Management Program is managed according to a policy approved by the District’s Board of Directors (Board) and overseen by a Risk Oversight Committee� The policy covers market, credit and operational risks and includes portfolio strategies, authorizations, value-at-risk limits, stop-loss limits, and notional and duration limits� The Risk Oversight Committee is composed of senior executives� The District maintains an Energy Risk Management Department, separate from the energy marketing area, that regularly reports to the Risk Oversight Committee� SRP believes that its existing risk management structure is appropriate and that risks are properly measured, reported and managed�
ELECTRICITY PRICING
SRP has a diversified customer base, with no single retail customer providing more than 3% of its retail electric revenues� The District has implemented projects and programs geared toward enhancing customer satisfaction by offering customers a range of pricing and service options� Moreover, SRP is one of the low-price leaders in the Southwest�
The District is a summer-peaking utility, and it has made an effort to balance the summer-winter load relationships through seasonal price differentials� In addition, SRP offers prices on a time-of-use basis for residential, commercial and industrial customers�
SRP’s retail electric prices consist of three components: base prices, a Fuel and Purchased Power Adjustment Mechanism (FPPAM) and an Environmental Programs Cost Adjustment Factor (EPCAF)� Base prices can be changed only through a formal public price process, while the FPPAM and EPCAF can be changed during a price process or with Board approval outside of a formal price process, but not more than once per quarter�
On Feb� 26, 2015, SRP’s Board concluded a public process by approving changes and adjustments to its price plans, including an overall average annual price increase of 3�9%, to be phased in beginning with the April 2015 billing cycle, which for most customers begins sometime in March� This overall increase was comprised of a 4�4% base increase and a 0�5% EPCAF decrease� There was no material change to the FPPAM�
In addition to other approved changes and adjustments, the Board approved a new price plan for residential customers who, after Dec� 8, 2014, add solar or other technologies to generate some of their energy requirements� SRP structured the new E-27 Customer Generation Price Plan for distributed generation customers to be in line with what non-distributed generation customers pay for the same services� The price plan includes a demand charge to better recover fixed costs related to the solar customer’s service facilities and their use of the grid, but also reduces the price the customer pays per kWh for energy�
On Sept� 29, 2015, the Board approved a temporary 1�2% reduction to the EPCAF for the six-month winter season (November 2015 through April 2016)� On June 23, 2016, the Board approved a temporary 1�0% decrease for the EPCAF and a 2�7% decrease for the FPPAM for the two-month summer peak season (July and August 2016)�
CAPITAL IMPROVEMENT PROGRAM
The Capital Improvement Program is driven by the need to sustain the generation, transmission and distribution systems of the District to meet customer electricity needs and to maintain a satisfactory level of service reliability�
FY16 capital spending levels were somewhat below original expectations� Generation projects accounted for 22% of the year’s expenditures� These projects included significant emissions control activity at Craig, Hayden, Four Corners and Coronado as well as plant modification costs for Palo Verde�
Expansion of the electrical distribution system to meet future growth and to replace aging underground cable accounted for 39% of FY16 capital expenditures� More than one quarter of the distribution system spending was for New Business projects� The addition of new transmission facilities made up 11% of FY16 capital expenditures� These projects included transmission pole asset management as well as the newly purchased Kyrene-Knox transmission line�
21
The Salt River Valley Water Users’ Association (the Association)
is SRP’s private water corporation� It administers the water rights
of SRP’s 375-square-mile water service area, and it operates
and maintains the irrigation and drainage system�
The 10 members of the Association Board of Governors form
the elected governing body of the Association (one member
is elected from each voting district of the Association)� The
Board of Governors, among other things, is involved in the
policies, annual budget, major contracts, water rates, fees
and assessments for the Association�
The Salt River Project Agricultural Improvement and Power District (the
District) is SRP’s public power utility and a political subdivision of Arizona�
The 14 members of the District Board of Directors form the elected
governing body of the District (one member is elected from each voting
division of the District and four are elected at-large)� The Board
of Directors, among other things, establishes overall District policy,
approves the annual budget and major contracts, authorizes major
purchases and sales of assets, and sets electric prices for the District�
Members of both boards are elected by property owners within
the respective boundaries and serve staggered four-year terms�
BOARDSintroducing SRP
Glendale
Peoria
Tolleson Phoenix
Tempe
Scottsdale
Mesa
Chandler
Gilbert58 10
9
67
4
3
2
1
Guadalupe
Avondale
The 10 SRP voting districts and divisions for SRP Boards and Councils are included in the Salt River Reservoir District boundaries�
Larry D� Rovey Kevin J� Johnson Paul E� Rovey Mario J� Herrera Leslie C� Williams Stephen H� Williams
Jack M� White Jr� Keith B� Woods Deborah S� Hendrickson Robert C� Arnett Mark V� Pace Paul W� Hirt District/Division 6 District/Division 7 District/Division 8 District/Division 9 District/Division 10 Director-at-Large, seat 11
William W� Arnett Nicholas R� Brown Wendy L� Marshall
District 1 Division 1 District/Division 2 District/Division 3 District/Division 4 District/Division 5
Director-at-Large, seat 12 Director-at-Large, seat 13 Director-at-Large, seat 14
SRP Annual Report 2016
District/Division 4
District/Division 9
District/Division 1
Tyler M� Francis Ronald S� Kolb John R� Starr
John R� Augustine J� Weston Lines John R� Shelton
AARON M� HERRERA RICHARD W� SWIER PAUL A� VAN HOFWEGEN
District/Division 3
Aaron M� Herrera Richard W� Swier Paul A� Van Hofwegen
District/Division 5
Mark A. Lewis Barry E. Paceley Harmen Tjaarda Jr.
District/Division 7
Adam Hatley Laron J� DeWitt A� Allen Freeman Mark A� Freeman District 9 Division 9 District/Division 9 District/Division 9
District/Division 10 (Vacancy in District/Division10)
District/Division 2
Jacqueline L� Diller Miller Nicholas J� Vanderwey Robert W� Warren
AARON M� HERRERA RICHARD W� SWIER PAUL A� VAN HOFWEGEN
District/Division 6
Christopher J� Dobson Mark L� Farmer Mark C� Pedersen Council Chair
District/Division 8
Jerry E� Geiger Kimberly A� Owens William W� Sheely
Garvey M� Biggers M� Brandon Brooks Michael G� Rakow Council Vice Chair
Dave B� Lamoreaux William P� Schrader Jr�
The two Councils enact and amend bylaws relating to the governance of SRP and approve the issuance of bonds�
As with the SRP Boards, there is one Council for the Association and one for the District� The 30 Association
Council members are elected to staggered four-year terms from 10 voting districts�
The 30 District Council members are elected to staggered four-year terms from 10 voting divisions� Most
often, candidates seek election to both Councils�
COUNCILSintroducing SRP
23
CORPORATE OFFICERSDavid Rousseau President & Chief Officer
John R� HoopesVice President
Stephanie ReedCorporate Secretary
Steven HuletTreasurer
EXECUTIVE MANAGEMENTMark B� BonsallGeneral Manager & Chief Executive Officer
Mike HummelDeputy General Manager Resources & Finance
Michael LoweDeputy General Manager, Customer Operations & Services, and Chief Customer Executive
Aidan McSheffreyAssociate General Manager & Chief Financial Executive
Alaina ChabrierAssociate General Manager &Chief Communications Executive
Dave RobertsAssociate General Manager Water Resources
Peter HayesAssociate General Manager & Chief Public Affairs Executive
Michael O’ConnorAssociate General Manager & Chief Legal Executive
BLOG
CORPORATE HEADQUARTERSStreet address Mailing address
SRP SRP
1521 N� Project Drive P�O� Box 52025
Tempe, AZ 85281-1298 Phoenix, AZ 85072-2025
FINANCIAL INQUIRIESSteven Hulet, Treasurer & Senior Director,
Financial Services
(602) 236-2675
REQUESTS FOR ANNUAL REPORTSPlease send requests for additional
printed copies to ARcopies@srpnet�com�
CHANGES TO MAILING LISTPlease send mailing address changes for
this report to ARcopies@srpnet�com�
BONDHOLDER INFORMATION
For all bond information, call the SRP
Treasury Department at (602) 236-2222�
FOLLOW US ON: facebook.com/srpconnect
twitter.com/srpconnect
youtube.com/srpconnect
instagram.com/srpconnect
srpconnect.com
CONTACTING US
recognizing our
EXECUTIVE TEAM
Peter Hayes Michael O’Connor Michael Lowe Mike Hummel Dave Roberts Alaina Chabrier Aidan McSheffrey AGM AGM DGM DGM AGM AGM AGM
SRP Annual Report 2016
FINANCIAL DATA ($000) 2016 2015 2014 2013 2012Total operating revenues (2) $3,047,272 $3,022,854 $2,959,948 $2,803,946 $2,734,103
Retail Electric Revenues (2) 2,749,131 2,648,484 2,566,587 2,546,614 2,470,058
Water Revenues 15,853 15,802 14,171 15,163 14,868
Other Revenues 282,288 358,568 379,190 242,169 249,177
Total operating expenses (2) 2,705,929 2,946,353 2,654,300 2,430,714 2,490,842
Total other income (loss), net (11,467) 66,981 96,741 58,596 (20,350)
Net financing costs 185,273 184,632 190,306 196,808 203,468
Net revenues for the year 144,603 (41,150) 212,083 235,020 19,443
Taxes and tax equivalents 164,475 161,644 160,492 141,788 129,383
Utility plant, gross 15,139,862 14,659,479 13,956,662 14,260,038 13,487,735
Long-term debt 4,579,919 4,274,885 4,413,028 4,624,547 4,786,995
Electric revenue contributions to support water operations
60,511 59,033 62,184 54,438 39,360
SELECTED DATA
Total debt service coverage ratio 3�36 3�21 3�19 2�56 2�59
Debt ratio 48�6 47�7 48�2 50�6 52�7
Total electric sales (million kWh) 33,912 34,227 33,429 32,452 31,485
Peak-SRP retail customers (kW) 6,806,000 6,716,000 6,567,000 6,663,000 6,394,000
Water deliveries (acre-feet) (1) - 747,239 721,993 736,041 767,445
Runoff (acre-feet) (1) - 581,961 348,373 716,148 344,608
Employees at year-end 5,230 5,021 5,132 4,772 4,390
Customers at year-end 1,009,108 996,682 983,745 969,046 956,757
(1) Water data is by calendar year, all other data is by fiscal year ending April 30.
(2) Amounts reflect the revision adjustment described in Note 2 to the Combined Financial Statements for 2015 and related adjustments for the years 2014, 2013 and 2012.
comparing our
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