Salt River Project's annual profit grew 26 percent after the utility raised its rates 4.9 percent in May 2010 at the beginning of its 2011 fiscal year. Officials said that electricity sales were actually less than anticipated for the year but that profit increased because several maintenance projects were delayed. Residential-electricity sales were below budget, and wholesale-energy sales to other utilities were far below expectations, said Ron Koenigsfeld, manager of financial accounting. SRP's profit rises despite drop in electricity use
"People are just being more conscious of what they are using," he said.
He reported preliminary financial data at a special board meeting Thursday. PricewaterhouseCoopers has not finished its audit of the figures.
Because the municipal utility operates as a non-profit, the positive revenue is reinvested in the electric system, SRP spokesman Jeff Lane said. The earnings mean SRP has less need to borrow money and therefore can reduce the overall cost of providing customers power.
SRP's water-delivery operations lost about $46 million for the fiscal year, so some of the profits will be used to cover those expenses, Koenigsfeld said.
SRP uses the profits from electricity to keep the price of water low for the cities in its territory.
Residential power use fell 1.2 percent for the fiscal year, according to SRP.
Energy use by commercial and industrial facilities was down about 1 percent, slightly better than expected, but the bigger factors benefiting SRP finances were delayed construction projects and power lines, Koenigsfeld said.
"The Coronado (coal-fired power plant) is our largest capital project, adding scrubbers to the plant, and much of that expense has been pushed into the next fiscal year," he said.
The $500 million Coronado project and $1 billion new generator at the Springerville Generating Station were the main reasons SRP raised rates at the start of fiscal 2011, which ran from May through April.
The increase averaged $6 a month on residential customers throughout the year: $8.50 in summer months when air-conditioners are used and $3.50 in winter months when electricity use is low. That rate hike was scaled back from one that would have added $12 a month to the average residential bill.
SRP spent $582 million on capital projects such as power-plant repairs in fiscal 2011, but officials had anticipated those expenses to be $770 million, Koenigsfeld said.
"We had to spend much less at Palo Verde (Nuclear Generating Station, which SRP owns in partnership with other utilities)," he said. "That plant has been running well."
Except for April, the new coal-fired unit at Springerville has been operating well, he said.
January through April usually brings four consecutive months of financial losses to SRP, which makes up for it in the summer when electricity sales are high, but this April was especially hard.
SRP had to power down units at the Navajo Generating Station, Four Corners Power Plant, Craig Generating Station and Springerville for extra maintenance and repairs, Koenigsfeld said, adding that it had to buy power on the open market to take up the slack.
Because of those and other unexpected expenses, SRP lost $77.5 million in April alone, about double the budgeted monthly loss, he said.
But the preliminary figures still show a $41.8 million, or 26 percent, jump over the $161.5 million profit the utility recorded in fiscal 2010.
Including the "fair value" of the utility's investments and fuel-hedging contracts, a standard accounting practice to assess profitability, SRP's profit was even higher: $286 million compared with $371 million in fiscal 2010.
"People are just being more conscious of what they are using," he said.
He reported preliminary financial data at a special board meeting Thursday. PricewaterhouseCoopers has not finished its audit of the figures.
Because the municipal utility operates as a non-profit, the positive revenue is reinvested in the electric system, SRP spokesman Jeff Lane said. The earnings mean SRP has less need to borrow money and therefore can reduce the overall cost of providing customers power.
SRP's water-delivery operations lost about $46 million for the fiscal year, so some of the profits will be used to cover those expenses, Koenigsfeld said.
SRP uses the profits from electricity to keep the price of water low for the cities in its territory.
Residential power use fell 1.2 percent for the fiscal year, according to SRP.
Energy use by commercial and industrial facilities was down about 1 percent, slightly better than expected, but the bigger factors benefiting SRP finances were delayed construction projects and power lines, Koenigsfeld said.
"The Coronado (coal-fired power plant) is our largest capital project, adding scrubbers to the plant, and much of that expense has been pushed into the next fiscal year," he said.
The $500 million Coronado project and $1 billion new generator at the Springerville Generating Station were the main reasons SRP raised rates at the start of fiscal 2011, which ran from May through April.
The increase averaged $6 a month on residential customers throughout the year: $8.50 in summer months when air-conditioners are used and $3.50 in winter months when electricity use is low. That rate hike was scaled back from one that would have added $12 a month to the average residential bill.
SRP spent $582 million on capital projects such as power-plant repairs in fiscal 2011, but officials had anticipated those expenses to be $770 million, Koenigsfeld said.
"We had to spend much less at Palo Verde (Nuclear Generating Station, which SRP owns in partnership with other utilities)," he said. "That plant has been running well."
Except for April, the new coal-fired unit at Springerville has been operating well, he said.
January through April usually brings four consecutive months of financial losses to SRP, which makes up for it in the summer when electricity sales are high, but this April was especially hard.
SRP had to power down units at the Navajo Generating Station, Four Corners Power Plant, Craig Generating Station and Springerville for extra maintenance and repairs, Koenigsfeld said, adding that it had to buy power on the open market to take up the slack.
Because of those and other unexpected expenses, SRP lost $77.5 million in April alone, about double the budgeted monthly loss, he said.
But the preliminary figures still show a $41.8 million, or 26 percent, jump over the $161.5 million profit the utility recorded in fiscal 2010.
Including the "fair value" of the utility's investments and fuel-hedging contracts, a standard accounting practice to assess profitability, SRP's profit was even higher: $286 million compared with $371 million in fiscal 2010.
