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2017 SRP ANNUAL REPORT
SRP 2017 ANNUAL REPORTOn the cover: A view from the top of Theodore Roosevelt Dam looking downstream toward Apache Lake
Photo by Michael McNamara
About SRPThe Salt River Project (SRP) story is an integral part
of Arizona’s history. Founded a decade before Arizona
was a state in 1903, SRP has helped make it possible for
millions to live in the desert. SRP is the oldest multipurpose
federal reclamation project in the United States.
Water has always been the key. As settlers moved into
the Salt River Valley in the late 1800s, a haphazard canal
system was built to support the boom in agriculture. One
group of settlers soon realized that to thrive they would
need to work together. Through coordinated efforts, they
were able to secure federal government funding to build
a massive water storage and delivery system, which led to
the formation of SRP.
To complete construction of the Theodore Roosevelt
Dam, the cornerstone of the SRP water storage system, a
power source was needed. A hydroelectric generator was
added at the site in 1906.
Beginning in 1909, excess power from Theodore
Roosevelt Dam was delivered to irrigation pumps and
other customers in the Salt River Valley, establishing
hydropower as a “paying partner” for the water
reclamation project.
Today SRP provides reliable, affordable power
and water to more than 2 million people living in
central Arizona.
SRP’s water business is one of the largest raw-water
suppliers in Arizona. We deliver about 800,000 acre-feet
of water annually to a 375-square-mile service area and
From the President & the Vice President . . . . . . . . . . .02
From the General Manager & CEO. . . . . . . . . . . . . . . .04
Leaner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .06
Greener . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
More Customer-Centric. . . . . . . . . . . . . . . . . . . . . . . . . . .14
Reviewing Fiscal Year Results . . . . . . . . . . . . . . . . . . . . .18
SRP Boards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
SRP Councils . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
SRP Executive Team. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Comparing Our Numbers . . . . . . . . . . . . . . . . . . . . . . . .23
manage a 13,000-square-mile watershed that includes
an extensive system of reservoirs, wells, canals and
irrigation laterals.
SRP is one of the nation’s largest public power utilities.
We provide electricity to approximately 1 million retail
customers in a 2,900-square-mile service area that spans
three Arizona counties, including most of the metropolitan
Phoenix area (known as the Valley). We are an integrated
utility, providing generation, transmission and distribution
services, as well as metering and billing services.
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.
TABLE OF
uring the past year, SRP has continued to
meet customers’ needs for reliable, affordable
power and water. It’s a vital role we have
been proud to fulfill for the shareholders and
customers we represent, as well as our neighbors, for more
than 100 years.
We acknowledge our role as a community-based,
not-for-profit organization that has the responsibility to
protect our natural resources, manage our future water and
energy supplies, and help the Valley of the Sun provide an
ever-improving quality of life for millions. SRP meets these
needs year after year because of our deep commitment to
our foundational values, which guides our organization to
make decisions in the best interest of our customers and the
communities we serve.
This commitment is reflected in the achievements detailed
in this letter and throughout this report.
Protecting our water suppliesOur watershed had an outstanding year that saw more
than 1 million acre-feet of water from a strong winter runoff
nearly fill six of our seven reservoirs located on the Salt and
Verde rivers. This is in stark contrast to an unprecedented six
previous consecutive runoff seasons of below-median inflow.
While the strong runoff has given us adequate, stable reservoir
levels in the near term, we still face an ongoing drought in
the region that must continue to guide our planning of crucial
water supplies. This includes “banked” water underground,
establishing innovative new conservation and augmentation
initiatives with municipalities and Native American tribes,
and championing numerous customer programs for wise
water usage.
Most of the water now in SRP reservoirs started out as
snow in the forests of northern Arizona. Forest health is vitally
important to the quality and sustainability of our water supplies.
Through our participation in the Four Forest Restoration Initiative
and Northern Arizona Forest Fund, we support thinning and
restoration efforts to reduce wildfire risks on our watershed.
Continuing a legacy of financial stewardship
Last year we established pricing principles to ensure water
supply reliability, preserve water rights and facilitate gradual
price changes that are equitable to all concerned. The water
pricing principles are similar to those that have been in place
on the power side of the business.
With these principles in mind, we instituted a limited
price increase for our irrigation and water service customers
and a $40 million temporary price decrease for our electric
customers (the second time in less than a year our Board
has decreased prices). The 10-month temporary reduction
resulted from employee efforts to reduce costs while meeting
Horseshoe Dam
2 SRP Annual Report 20172 SRP Annual Report 2017
David Rousseau John R. Hoopes
President Vice President
our sustainable goals and supplying power.
SRP remains at the forefront among utilities in its
consideration of emerging energy generation, storage
and distribution technologies. We are committed to
implementation of those innovations that can achieve
environmental objectives in a financially responsible way.
This past year, prudent long-term financial planning
necessitated difficult decisions with respect to our power
generation resources. A favorable and stable natural gas
market relative to coal for the foreseeable future led the SRP
Board to authorize the end of our ownership participation in
the Navajo Generating Station in 2019. The Board is mindful
of the significant impact of this decision on communities and
individuals. We are working with stakeholders to mitigate
that impact as much as possible.
Standing by our customers, employees and communities
As you review the remainder of this report, you will learn
about other achievements and initiatives that not only reflect
but are also driven by the values that are the foundation of
our culture. From our organic, top-to-bottom commitment
to employee and public safety, to our deeply rooted culture
of volunteerism and community involvement, to the spirit of
innovation and environmental stewardship found in every
corner of our organization, SRP continues to fulfill the mission
we have been entrusted with for more than a century.
Given the results presented in this report and through
our daily interactions with Board and Council members,
we and all of the elected leaders of SRP are proud of what
this organization has achieved over the past year and are
excited for the opportunities that lie ahead.
❝ We acknowledge our role as a community-based, not-for-profit organization that has theresponsibility to protect our natural resources,manage our future water and energy supplies,and help the Valley of the Sun provide anever-improving quality of life for millions.❞
SRP Annual Report 2017 3SRP Annual Report 2017 3
iscal year 2017 was a terrific year for SRP.
Just prior to the start of fiscal 2017,
management developed and our Board adopted a
“leaner, greener and even more customer-centric”
strategy. We have been working decisively in those three
directions, as the results highlighted in this report illustrate.
The three-part strategy provides a concise way
to describe how we seek to predict and meet our
customers’ needs.
Leaner means creating new efficiencies in our work and
identifying new and more productive uses for our assets.
Greener means developing solutions that are both
environmentally sensitive and affordable.
More customer-centric means anticipating and
delivering the ultimate customer experience.
Applying our strategyClearly the most obvious and profound example of
applying the three-part strategy is our decision to exit
ownership of Navajo Generating Station (NGS) by the end
of its lease in 2019. This was a very tough decision to make,
and we did not make it lightly.
After the close of the fiscal year, we reached an
agreement on new terms with the Navajo Nation that will
enable continued operation of NGS through 2019, with
decommissioning thereafter. Decommissioning otherwise
would had to have taken place before 2019. Thanks to
the cooperation and foresight of our utility co-owners,
the Navajo Nation, Hopi tribal leaders and other key
stakeholders, these new terms create a clear path forward
that will ensure proper decommissioning and provide time
for employee redeployment and the growth of opportunities
for future economic development in communities
surrounding the Navajo Generating Station.
Although challenging, this decision makes us leaner
by ultimately removing large financial and operational
obligations. It makes us greener by ultimately and
substantially reducing our emissions intensity. It makes us
Bonnybrooke solar plant
4 SRP Annual Report 20174 SRP Annual Report 2017
even more customer-centric, as our customers will clearly
see relatively lower prices than otherwise.
Recognizing notable achievementsWe had many notable successes in 2017. The following
are among our top accomplishments.
1. We continued to receive high marks from our electric
customers. According to the most recent study issued
by J.D. Power, SRP ranked highest for residential electric
service in the western United States among large electric
utilities for the 16th consecutive year. In the 19 years
that J.D. Power has surveyed electric utility customers,
SRP has scored the highest in the West among electric
utilities with 500,000 or more residential customers 18
times. That achievement reflects the extraordinary work
performed by SRP employees.
2. We acquired an existing gas-fired block at Gila
River Power Station, which will enable us to integrate
hundreds of megawatts (MW) of intermittent, renewable
resources into our portfolio as well as meet future load
growth at a fraction of the cost of building an equivalent
new gas-fired generating facility ourselves.
3. We helped Apple develop its latest solar project
in Arizona, the 50 MW Bonnybrooke solar plant,
associated with Apple’s global data command
center in Mesa.
4. We began an Integrated Resource Planning Process, a
public process where we periodically conduct a thorough
analysis of the marketplace and resource options using
scenario planning to identify a direction that best meets
the long-term energy needs of SRP’s customers.
5. We launched our first mobile apps on Android
and Apple platforms for both water and power
customers. Tens of thousands of customers have already
downloaded and used the apps.
6. We entered into a water transportation agreement
with the City of Goodyear. The approach was
developed by a cross-functional group of SRP
employees and marks the first time SRP has entered into
a water transportation agreement with an off-Project
municipality. This is a prime example of using assets
more productively.
7. We delivered industry-leading reliability. Reliability
is our No. 1 product. One hundred percent of our
operational metrics and reliability goals were achieved
in FY17. SRP was again in the top decile in the industry
for system reliability, according to the Institute of
Electrical and Electronics Engineers.
8. We completed a banner financial year, with combined
net revenues of $247,837,000 and a debt service
coverage ratio of 3.57.
I am encouraged by the gains we’ve made implementing
our strategy. We have continued to test new technology,
innovate to proactively prepare and plan for changes in our
industry, and meet the diverse needs of our valued customers
and the communities we serve.
I want to thank our employees
and our management team for their
outstanding performance. The people of
SRP are dedicated, talented and thoroughly
engaged, and I’m proud of what we have
accomplished together. I appreciate the
support of our elected leaders for their
vision and look forward to advancing our
strategic goals in the year ahead.
Mark B. Bonsall
General Manager & CEO
❝�The people of SRP are dedicated, talented and thoroughlyengaged, and I’m proud of what we have accomplished together.❞
SRP Annual Report 2017 5SRP Annual Report 2017 5
Rethinking how we rethink thingsRe-engineering some of our business processes is a starting point for the “leaner”
component of our three-part strategy. One key to being leaner is finding more effective
ways to do our work, be more efficient, generate savings, and free up resources
for new priorities.
At the start of fiscal year 2017, we launched eight improvement
initiatives. The concept behind business process re-engineering
isn’t anything new for SRP. For years we have been pursuing
ways to reduce costs, improve operations and provide greater
value to our customers. What we want now is a consistent
approach to rethinking how business activities are carried out.
In other words, we are rethinking how we rethink things.
One of these initiative teams is conducting an aggressive
review of our financial planning and reporting processes
which touch almost every area of the company. Through
this multiyear effort, concluding in mid-2019, we expect to
standardize and simplify financial reporting and planning.
Staying idle produces beneficial gainsA network of high-voltage power lines and equipment
connects electric utilities throughout our nation. The
interconnected electrical grid enables SRP and other power
providers to buy and sell energy depending on customers’
needs and delivery system capacity.
With the addition of increased solar generation in the
West and the availability of excess energy generated by
natural gas-fueled power plants, there are opportunities to
purchase electricity during certain hours of the day and times
of the year at a lower cost than we can make it at our coal-
burning power plants.
As a result of these current market conditions, we are testing
how we can temporarily “idle” our coal plants during low-price,
low-demand periods. This approach can reduce operating costs
and allow us to perform plant maintenance more effectively.
During the fiscal year, we piloted this idea. A six-week shutdown
of a unit at the Springerville Generating Station yielded
approximately $2.2 million in savings and we extended planned
maintenance work at our Coronado Generating Station by four
weeks to further reduce costs by about $1 million.
6 SRP Annual Report 20176 SRP Annual Report 2017
Ideas to keep maintenance checkup costs downSimilar to any motor vehicle, turbines in our power plants require regular
servicing to run efficiently. A turbine is a critical piece of machinery that spins
to produce electricity.
Fortunately, our plant maintenance and operations crews are
among the best in the industry. Through their efforts, SRP’s
power plant reliability ratings rank us among utility leaders.
Despite our impressive record, we are continually seeking
ways to improve cost efficiency.
During FY17 an SRP team thoroughly reviewed
turbine-maintenance practices for our natural gas
generating units and identified sizable potential
savings through identifying optimal inspection
intervals, overhaul schedules and repair
procedures.
The team’s recommendations also include
forming a dedicated, highly skilled mobile
maintenance crew to handle
overhauls at all SRP Valley
plants. This special crew,
made up of experienced
employees, will take over
maintenance work that was
performed by contractors in
the past. By implementing all the
recommendations, SRP expects to save
about $23 million during the next five fiscal years.
Gloves take a dip, get zapped and are then stretched to the limit
Employee and public safety is a foundational value at SRP. Keeping people safe around power and water is a responsibility we take very seriously. An example of the close attention we pay to safety occurs every day at our Rubber Goods/Safety Test Lab.
Rubber gloves worn by SRP employees who work on energized power lines must be frequently tested to ensure they provide sufficient protection. The gloves are dipped into a tank filled with more than 200 gallons of water
and “zapped” with 40,000 volts of electricity. After the gloves are exposed to electricity, they are filled with air to detect any holes. More than 3,500 pairs of gloves are tested annually and each glove is tracked
with a bar code that records when it entered SRP and the date of its last test.
SRP Annual Report 2017 7SRP Annual Report 2017 7
Agreement provides solution, opportunityNatural gas prices have sunk to record low levels, making
coal-fired power plants significantly more expensive than energy
alternatives. As a result of rapidly changing economics, SRP and
other utility owners of the Navajo Generating Station (NGS) voted
not to continue plant operations beyond when the lease with the
Navajo Nation is scheduled to expire in 2019.
This was a difficult decision. The plant and its employees have
contributed to the growth and prosperity of Arizona and the Phoenix
metropolitan area for the past 40 years. Although we admire the
achievement, SRP has an obligation to provide low-cost service to our
more than 1 million customers, and the higher cost of operating NGS
would be borne by our customers.
A recently negotiated replacement lease will permit NGS to
operate through the end of the 2019 lease term rather than close
this year, allow the ongoing operation of the transmission system on
the Navajo Nation, and enable the Navajo Nation to retain assets
associated with NGS such as buildings, the railroad and the lake
pump system.
Never too old to make a new connectionIdentifying productive uses for existing
assets is an important part of being leaner. Our
recent agreement with the City of Goodyear
illustrates a creative use of our water-delivery
system, specifically the 139-year-old Grand
Canal, to generate new revenue and build
partnerships.
The Goodyear City Council approved
a long-term transaction with SRP, which will
use the Grand Canal and other parts of our
delivery system (a network of canals, laterals
and ditches) to transport the city’s high-priority
Central Arizona Project (CAP) water, as well as
additional CAP supplies leased from the Gila
River Indian Community. The agreement helps
Goodyear maintain its assured water supply,
allows for future growth and provides a solution
to current water quality challenges, without
negatively impacting SRP water customers.
This marks the first time SRP has entered
into a water transportation agreement with
an off-Project municipality. The agreement will
be implemented when Goodyear completes
construction of a pipeline to connect a future
water treatment plant.
8 SRP Annual Report 20178 SRP Annual Report 2017
Drone charged with inside jobPower plants are massive structures filled
with precision equipment and confined spaces.
Inspections are needed to ensure unit reliability,
performance and environmental compliance.
These inspections can be time-consuming,
expensive and sometimes hazardous. Use of
a small drone, roughly the size of four stacked
pizza boxes, is improving inspections of heat
recovery steam generators at SRP gas plants.
Previously, workers would erect scaffolding
at the start of a plant outage to conduct
inspections of the large heat recovery steam
generators. Setting up tall scaffolding cost
us about $10,000 per section, and climbing
up the scaffold was potentially dangerous
for workers.
Now a plant technician stays on the
ground and controls a drone fitted with a
camera to scan an area about 70 feet high
and 5–10 feet wide. The tech views what
the camera sees via a tablet hooked up to
the controller. In addition to real-time video,
pictures and video can be recorded for
later analysis.
Because the drone can fly into hard-to-
reach, low-light places, scaffolding can be
avoided if no areas of concern are found or
can be limited to just the areas needing repairs.
Bond sale = two decades of savingsInterest payments are a large expense for utilities.
In SRP’s case, capital is borrowed to fund infrastructure
needed to deliver power. During FY17 we took advantage
of a significant refinancing opportunity.
SRP’s Board and Council approved the refunding
sale of approximately $761 million of highly rated 2016
Series A public power revenue bonds. The refunding will
save SRP customers more than $151 million during the next
21 years and lower SRP’s overall borrowing costs.
Proceeds from this sale were used to refund a portion
of bonds issued in 2005 and 2008 that had higher interest
rates. The 2016 tax-exempt bonds carried ratings of Aa1
from Moody’s Investors Service and AA from S&P Global
Ratings and received a very good response from the
municipal bond market.
The credit agency ratings and market response reflect
our record of financial strength and our continued focus on
controlling operations and maintenance costs.
❝ The refunding will save SRPcustomers more than $151 millionduring the next 21 years and lowerSRP’s overall borrowing costs.❞
❝�The tech views what thecamera sees via a tablethooked up to the controller.❞
SRP Annual Report 2017 9SRP Annual Report 2017 9
Backpacks track eagles on the moveSRP’s Avian Protection Program promotes the coexistence of power facilities,
native and protected species, and wildlife habitat. Our most recent proactive
measure is aimed at protecting bald eagles.
Bald eagles have traditionally been found near SRP’s reservoirs far from the
city. However, the number of eagles spotted in metropolitan Phoenix is increasing.
Urban areas pose new threats to eagles that they often don’t encounter in remote
parts of Arizona, such as overhead power lines and equipment.
SRP worked with the Arizona Game and Fish Department to band and place
GPS backpack units on young bald eagles nesting in the Phoenix area. Weighing
only about 3.5 ounces and fitting in the palm of a hand, the solar-powered GPS unit
uses cellular networks to transmit valuable data, including the bird’s location every
six seconds in flight and every 15 minutes when perched. With this information SRP
employees and wildlife managers can better understand bird behavior and ensure
the safety of urban nesting eagles.
A simple way to be greenFor many customers,
installing renewable energy
systems at their homes or
businesses may not be
possible or practical. Enter
SRP EarthWise Energy™.
The new program provides
customers with a simple way
to “green up their energy”
without having to install
actual systems. Even renters
can use renewable resources
through this green option.
SRP EarthWise Energy
makes it easy.
Customers can choose to supplement half or all of their
electricity use with renewable energy certificates (RECs)
from SRP renewables — a mix of wind, solar, biomass and
geothermal. EarthWise Energy customers pay 1 cent more per
kilowatt-hour for their energy. RECs are used throughout the
United States to verify energy was produced by renewable
resources. The certificates allow purchasers to support
renewable energy generation and create demand for the
development of new renewables.
With SRP EarthWise Energy, customers can choose the
power of renewable energy and make a difference they can
feel good about.
10 SRP Annual Report 2017
Power plant may be a forest friendUsing forest thinning debris as a fuel can potentially reduce
the risk of wildfires in northern Arizona, which will limit the amount
of erosion, sedimentation and ash on the Salt and Verde river
watersheds and protect the region’s vital water supplies.
SRP conducted a test burn of more than 2,600 tons — equivalent
to about 200 acres — of forest debris biomass at our Coronado
Generating Station
(CGS). Through the test burn, we
wanted to learn if using forest debris as a supplemental fuel in a
plant designed to burn coal was feasible.
Our test concluded that it is technically feasible to blend up to 3%
biomass with coal at one of the CGS units. Based on our learnings
from the first test burn at CGS last fall, employees are evaluating the
possibility of a second test burn and possibly a different fuel injection
method for the biomass.
If future testing returns successful results, CGS may be able to
create a market for forest thinning
debris and provide significant
assistance to keep
Arizona’s forests
and watersheds
healthy.
‘Getting our hands dirty’ helps neighborsVolunteerism is one of our foundational values. SRP employees
and retirees, as well as their family members and friends, invest time, skills and resources to build stronger Arizona communities. In fact, SRP volunteers devoted 28,870 hours during the fiscal year to assist 203 nonprofits.
One of the nonprofits volunteers assisted was the Society of St. Vincent de Paul. SRP volunteers worked the land by spreading mulch and pulling weeds at St. Vincent’s urban farm in Phoenix.
The nonprofit operates a nearly 1-acre farm that produces beets, radishes, lettuce, tomatoes, kale and other fresh produce.
The harvest is used at St. Vincent’s central kitchen to serve healthful meals to homeless guests (about 1.2 million
meals per year) and to supplement food boxes for families in need.
SRP Annual Report 2017 11
Charged up and ready to goThe number of electric vehicles in Arizona is expected to
more than double in the next four years. A growing number of
SRP customers are choosing electric vehicles, and we want to
support that environmentally beneficial choice.
Last fall SRP worked with EVgo® to promote new fast-
charging stations in SRP’s service territory. In less than 30
minutes, fast-chargers can deliver close to a full charge to
nearly any fast charge-capable vehicle on the road today.
SRP also offers a price plan for electric vehicle owners and
an incentive for commercial customers to invest in charging
stations. To make driving electric easier, SRP developed the EV
Community, which is open to all of our EV customers. Now
more than 1,400 customers can learn about new technologies
and participate in surveys, forums and research projects.
We also support electric vehicles in our day-to-day work
of delivering power and water. Today more than 80% of
SRP’s fleet operates on alternative fuels, including electric,
biodiesel and ethanol.
Trash talk advances recycling effortsWhat “stuff” gets tossed in an office trash can?
In 2013 SRP conducted an audit to find out what was
being thrown away. How we dispose of materials can
affect SRP’s bottom line, company information and the
environment.
Although recycling has been occurring at SRP
facilities for a few years, we recognized that we could
do better. This fiscal year we created a new process to
further reduce the waste we send to the landfill. SRP’s
enhanced recycling initiative:
• Brings consistency to trash and recycling collection
at our Valley offices, which makes proper disposal
easier for employees. It encourages more recycling
than before and increases the revenue SRP receives
for its recyclable materials.
• Protects company information by providing secured
recycling bins for paper business documents. This
paper is shredded before being recycled.
• Builds upon our commitment to environmental
stewardship. As a community-based nonprofit utility,
recycling is one of the ways we do what’s right for
the environment.
12 SRP Annual Report 201712 SRP Annual Report 2017
Batteries are included with this purchaseEfficient and economical battery storage could help SRP meet peak customer demand
and optimize solar energy output in the future. A recent agreement will provide valuable
experience with large-scale battery storage operations.
SRP announced a 20-year power purchase agreement for an integrated solar and
battery project. We will purchase all of the energy produced at the Pinal Central Energy
Center, located near Coolidge, Arizona, and owned by a subsidiary of NextEra Energy
Resources.
The future facility will consist of 20 MW of solar photovoltaic generation and a 10 MW
lithium-ion energy storage system. The solar plant will charge the battery system so it can
deliver energy when the sun is not shining. The project is expected to begin operations by
the end of 2017.
We will also participate in a separate project that will use a 10 MW battery that
will store a four-hour charge from the SRP grid. Battery technology will prove to be an
important part of our future energy portfolio.
On the way: More renewables, less carbon
SRP has set a goal to meet 20% of its
expected retail energy requirements with
sustainable resources by the year 2020.
Currently, we are on schedule to meet
our target. We are now delivering nearly
16% of SRP customers’ energy needs
through a mix of solar, wind, geothermal,
biomass, hydropower and energy
efficiency measures.
Our goal clearly supports the greener
part of our strategy and, by seeking
meaningful emission reductions at the lowest
cost to our customers, it helps SRP achieve
its other strategic objectives of being leaner
and even more customer-centric.
SRP plans to have more than 700
MW of renewables in our mix by fiscal
year 2020 to further reduce our carbon
dioxide emissions intensity. As we look
beyond 2020, we expect renewables to
play an increasingly significant role in our
resource portfolio.
FY17 Year-End
SRP Sustainable Portfolio*FY17 Final
*Resources in excess of requirementswill be banked for future use.
Energy Ef�ciency Hydro Resources Renewable Resources Banked Credits
Annual SPP Requirement
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%15.875%
8.90%
3.77%
2.32%
0.89% Banked
SRP Annual Report 2017 13SRP Annual Report 2017 13
Helping customers go solarInstalling solar on a home can be a complex
transaction. SRP’s new Preferred Solar Installer Program can
help customers who are shopping for rooftop solar systems
make informed decisions that work best for their
households.
The program provides referrals to qualified installers
who guide homeowners through the entire purchase and
installation. Preferred installers must meet certain safety and
quality specifications and also be in good standing with the
Better Business Bureau and the Arizona Registrar
of Contractors. SRP hosts regular training sessions to help
educate installers about how to optimize system performance
for homeowners under our Customer Generation Price Plan.
Our goal is to assist customers who are considering
solar in every step of the process, from evaluating financing
options to choosing a solar installer to interconnecting their
system to the SRP grid. We recognize that adding solar is a
big decision for customers, and we want their experiences to
be positive.
Virtual or real, both outstandingWhen customers call SRP, they are greeted by Rosie (in English) or Ramon (in Spanish). These
virtual assistants mimic how our real Contact Center representatives speak with
customers. The duo are part of SRP’s conversational interactive voice response
system (CIVR) that now operates 24/7.
Rosie and Ramon handle nearly 40% of incoming residential customer
calls. Often customers don’t know they are talking with technology-
created personas. Calls completed through the CIVR consist of simple,
common transactions.
Although virtual assistants provide a personal touch to the
technology, the system also provides easy access to real customer
service agents who are available to assist with more complex
matters. Whether speaking with a virtual or
real SRP representative, callers can expect
to receive outstanding service.
SRP’s Customer Experience Services
team was again recognized for customer
satisfaction excellence under the J.D. Power
Certified Contact Center Program℠. This is
the 10th time SRP has earned this honor.
14 SRP Annual Report 201714 SRP Annual Report 2017
Tap, swipe, fast and easyIncreasingly, customers are expressing their
preference to do business with SRP via their
mobile devices. Providing customers with
great experiences is critically important
to us, so we want to be sure that type
of experience occurs no matter how
customers get in touch with us.
Our new mobile apps for
smartphones and tablets offer another
opportunity to exceed expectations.
Residential customers can stay
connected with us by downloading the
free SRP Power and SRP Water apps.
With just a touch, customers
can pay bills fast and easily manage
common power and water transactions.
For example, our Power app provides
customers with a snapshot of energy costs and
usage by the hour, day or month. If a power
outage occurs, customers can quickly report it
with the app and get estimated restoration times.
The Water app enables irrigation customers to view
neighborhood water delivery schedules and deadlines
and modify their water orders.
This school for schools has a savings lessonCommunity involvement is a value we hold dear. More than a century ago, a
visionary act by SRP’s founders created a reliable, managed water source and, ultimately, led to electrification that unlocked the potential of our arid state.
We haven’t forgotten our community-based heritage. Through contributions, SRP supports key Arizona human service, civic, education, environmental, arts and culture initiatives. Our grants, curriculum support for teachers and other programs, such as the School of Energy, reach more than 1,400 teachers each year.
School of Energy is a partnership with public elementary schools that engages teachers, parents, students, administrators and facility managers in conservation efforts. We provide information, hands-on classroom activities and training throughout the year to achieve real results. Participating schools have reduced energy use by an average of 4%, a significant savings.
SRP Annual Report 2017 15SRP Annual Report 2017 15
A traffic cop for high-energy appliancesSRP is conducting a yearlong study to assess
technology that manages household electricity demand
during peak periods when prices are higher. The goal of
the study is to help residential customers on a demand-
based price plan manage demand automatically, which
will help them control monthly energy bills.
Demand is the amount of power being used by a
home at any given moment in time. For customers on
a demand-based price plan, keeping demand low is
essential for reducing electricity costs, since demand is a
key factor in determining the monthly bill.
We are testing a meter-based system that controls
home heating, ventilation and air-conditioning (HVAC)
equipment, and other major household electric appliances
such as dryers and water heaters. The system plays
the role of energy traffic cop, keeping the controlled
appliances from exceeding a maximum demand amount
set by the homeowner.
SRP offers study participants free system installation,
bill credits and, at the conclusion of the study, the option to
keep the system at no cost.
Site improves, visitors approveBeing more customer-centric is the third part of our strategy. The recent SRP
website redesign reflects our aim and people have taken notice.
SRP received the highest website satisfaction score among
73 of the largest U.S. electric, gas and water
companies, according to the 2017 Utility Website
Evaluation Study conducted by J.D. Power. The
study, now in its sixth year, is based on evaluations
from thousands of residential customers located
throughout the United States. Survey participants rate
their experiences with utility websites from desktop,
laptop and mobile devices.
To determine how easy it is to use a utility’s
website, the study examines 16 tasks. These
tasks include making a payment, reviewing account
information, researching energy-saving advice, logging in
to accounts and viewing and reporting outages.
Visitors to our site were particularly impressed with
the ease of viewing their consumption history, making a
payment and locating company contact information.
16 SRP Annual Report 201716 SRP Annual Report 2017
Smoothing out the peaksSizzling summer heat led to record-breaking energy use by
our customers during this fiscal year. If we can find ways to limit
or “smooth out” electric system peaks, savings from producing
or purchasing less energy can be passed on to our customers.
SRP is testing a smart thermostat and energy management
application that can help manage residential demand.
Managing energy demand is important because appliances
such as air-conditioning units require significant power from
our grid and contribute to system peaks.
Study participants receive the installation and use of a
smart thermostat and an energy management application
they can access from computers or mobile devices. In return,
participants allow SRP to adjust their thermostat settings up
to six times per month. During times when SRP’s electric
system is anticipated to reach a peak, a signal, known
as a “Conservation Event,” will be sent to the thermostat
to help reduce the demand for electricity. Customers also
receive a small incentive “bill credit” for participation in
Conservation Events.
Boosting efforts to weather stormsSevere weather periodically disrupts our very reliable
power delivery system. Seasonal storms that
roll through the Valley can down poles and
knock out power.
We can’t change the weather, but we
are taking action to limit the amount
of time storm-related interruptions
last. To increase customer
satisfaction, SRP has applied
new technology and
performed
comprehensive maintenance on our delivery system.
Our efforts include the placement of remote fault
indicators in areas prone to storm outages. Remote fault
indicators are sensing devices installed directly on power
lines. The devices provide information that enables us to more
quickly and accurately pinpoint and isolate system problems
and speed restoration.
SRP’s comprehensive line maintenance and infrastructure
improvement programs help to reduce outages from weather-
related damage. The programs include wood pole testing,
vegetation management and structure upgrades, such as the
installation of steel “stopper poles.” Stopper poles limit the
extent of cascading wood pole failures and are
strategically placed in areas vulnerable
to high winds.
SRP Annual Report 2017 17SRP Annual Report 2017 17
Overview of businessSRP 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 cities of Phoenix, Avondale, Glendale, Mesa, Tempe, Chandler,
Peoria, Scottsdale and Tolleson; the town of Gilbert; and the Gila
River Indian Community.
Results of operationsOperating revenues were $3.08 billion for fiscal year 2017
(FY17), compared with $3.05 billion for FY16, an increase of 1.2%.
The increase in operating revenues was primarily due to increased
retail and wholesale electric revenues. During FY17 retail electric
revenues increased $31.8 million to $2.8 billion while wholesale
revenues increased $4.7 million to $217.6 million. The increase in
FY17 retail revenues was primarily due to increases in kilowatt-hours
(kWh) sold to residential and commercial customers. Wholesale
revenues increased primarily due to increases in kWh sold and
higher wholesale pricing in FY17 compared to the prior year.
Wholesale revenues also included an FY17 fair value loss of $4.9
million, reflecting a $0.5 million reduction from the $5.4 million loss
recorded in FY16. Without the effect of the fair value adjustment, FY17
wholesale revenues would have been $222.4 million
compared to $218.2 million in FY16. The total number of
customers increased by 1.7% from the previous year and
totaled 1,026,118 as of April 30, 2017.
Operating expenses were $2.8 billion for FY17
and $2.7 billion for FY16, reflecting an increase of 2.0%. Fuel and
purchased-power expenses increased $42.2 million, reflecting
the majority of the increase in operating expenses. 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 increased $68.2
million, or 7.0%, from the previous year. Purchased-power expenses
increased due to the inclusion of additional renewable resources
and increased prices for peak and off-peak electricity during the
fiscal year, while fuel costs increased due to higher coal prices in
FY17 compared to FY16. Depreciation and amortization increased
$9.6 million and taxes and tax equivalents increased $2.4 million
compared to FY16. The increase in depreciation and amortization in
FY17 is due to asset additions placed into service in recent periods.
The increases were offset by a $1.2 million reduction in operations
and maintenance expense during FY17.
Investment income resulted in a $94.0 million gain for FY17
compared with a $14.2 million loss for FY16. Investment income
includes a fair value gain of $87.7 million in FY17, compared to an
$18.8 million loss recorded in FY16. Financing costs were $177.3
million and $185.3 million in FY17 and FY16, respectively.
The effects of the previously mentioned activities resulted in net
revenues for FY17 of $247.8 million, compared with net revenues of
$144.6 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
$114.4 million for FY17, compared with net revenues of $144.2
million for FY16.
Energy Risk Management ProgramThe 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
REVIEWING FISCAL
18 SRP Annual Report 201718 SRP Annual Report 2017
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).
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, which
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 pricingSRP 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 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). On Dec. 5, 2016, the Board approved a temporary
1.2% reduction to the EPCAF and a 0.4% reduction to the FPPAM
for 10 months (January 2017 billing cycle through October 2017
billing cycle).
Capital Improvement ProgramThe 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.
FY17 capital spending levels were somewhat below original
expectations. Generation projects accounted for 23% of the year’s
expenditures. These projects included significant emissions control
activity at Four Corners, Craig and Hayden 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
38% of FY17 capital expenditures. More than one-quarter of the
distribution system spending was for New Business projects. The
addition of new transmission facilities made up 9% of FY17 capital
expenditures. These projects included transmission pole asset
management as well as transmission substation improvements.
❝�During FY17 retail electric revenues increased $31.8 million to $2.8 billion while wholesale revenues increased $4.7 million to $217.6 million. The increase in FY17 retail revenues was primarily due to increases in kilowatt-hours (kWh) sold to residential and commercial customers.❞
REVIEWING FISCAL
SRP Annual Report 2017 19SRP Annual Report 2017 19
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.
Larry D. Rovey District 1
Kevin J. Johnson Division 1
Paul E. Rovey District/Division 2
Mario J. Herrera District/Division 3
Leslie C. Williams District/Division 4
Stephen H. Williams District/Division 5
Jack M. White Jr. District/Division 6
Keith B. Woods District/Division 7
Deborah S. Hendrickson District/Division 8
Robert C. Arnett District/Division 9
Mark V. Pace District/Division 10
Paul W. Hirt Director-at-Large, seat 11
William W. Arnett Director-at-Large, seat 12
Nicholas R. Brown Director-at-Large, seat 13
Wendy L. Marshall Director-at-Large, seat 14
Glendale
Peoria
Tolleson Phoenix
Tempe
Scottsdale
Mesa
Chandler
Gilbert5
8 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.
SRP BOARDS
20 SRP Annual Report 2017
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.
District/Division 4
District/Division 9
District/Division 1
District/Division 3
District/Division 5
District/Division 7
District/Division 10
District/Division 2
District/Division 6
District/Division 8
Tyler M. Francis Ronald S. Kolb John R. Starr
John R. Augustine J. Weston Lines John R. Shelton Council Vice Chair
Mark A. Lewis Barry E. Paceley Harmen Tjaarda Jr.
Adam S. Hatley District/Division 9
Laron J. DeWitt Division 9
A. Allen Freeman District/Division 9
Mark A. Freeman District 9
Jerry E. Geiger Kimberly A. Owens William W. Sheely
Garvey M. Biggers M. Brandon Brooks Michael G. Rakow
Jacqueline L. Diller Miller
Christopher J. Dobson
Dave B. Lamoreaux
Aaron M. Herrera
William P. Schrader Jr. William P. Schrader III
Mark L. Farmer Council Chair
Mark C. Pedersen
Nicholas J. Vanderwey Robert W. Warren
Richard W. Swier Paul A. Van Hofwegen
SRP COUNCILS
SRP Annual Report 2017 21
Peter Hayes AGM
Michael O’Connor AGM
Michael Lowe DGM
Mike Hummel DGM
Dave Roberts AGM
Alaina Chabrier AGM
Aidan McSheffrey AGM
Corporate OfficersDavid Rousseau
President & Chief Officer
John R. Hoopes
Vice President
John M. Felty
Corporate Secretary
Steven Hulet
Treasurer
Executive ManagementMark B. Bonsall
General Manager & Chief
Executive Officer
Mike Hummel
Deputy General Manager,
Resources & Finance
Michael Lowe
Deputy General Manager,
Customer Operations
& Services, and Chief
Customer Executive
Aidan McSheffrey
Associate General Manager &
Chief Financial Executive
Alaina Chabrier
Associate General Manager &
Chief Communications Executive
Dave Roberts
Associate General Manager,
Water Resources
Peter Hayes
Associate General Manager &
Chief Public Affairs Executive
Michael O’Connor
Associate General Manager &
Chief Legal Executive
SRP EXECUTIVE TEAM
22 SRP Annual Report 2017
Contacting usCorporate Headquarters
Street address
SRP
1500 N. Mill Ave.
Tempe, AZ 85281-2389
Mailing address
SRP
P.O. Box 52025
Phoenix, AZ 85072-2025
Financial Inquiries
Steven Hulet, Treasurer & Senior
Director, Financial Services
(602) 236-2675
Requests for Annual Reports
Please send requests for
additional printed copies to
Changes to Mailing List
Please send mailing address
changes for this report to
Bondholder Information
For all bond information, call
the SRP Treasury Department at
(602) 236-2222.
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Five-year Operational and Statistical Review
Financial Data ($000) 2017 2016 2015 2014 2013Total operating revenues $3,084,688 $3,047,272 $3,022,854 $2,959,948 $2,803,946
Retail Electric Revenues 2,780,916 2,749,131 2,648,484 2,566,587 2,546,614
Water Revenues 16,238 15,853 15,802 14,171 15,163
Other Revenues 287,534 282,288 358,568 379,190 242,169
Total operating expenses 2,758,949 2,705,929 2,946,353 2,654,300 2,430,714
Total other income (loss), net 99,373 (11,467) 66,981 96,741 58,596
Net financing costs 177,275 185,273 184,632 190,306 196,808
Net revenues for the year 247,837 144,603 (41,150) 212,083 235,020
Taxes and tax equivalents 166,898 164,475 161,644 160,492 141,788
Utility plant, gross 15,698,318 15,139,862 14,659,479 13,956,662 14,260,038
Long-term debt 4,465,538 4,579,919 4,274,885 4,413,028 4,624,547
Electric revenue contributions to support water operations 58,209 60,511 59,033 62,184 54,438
Selected DataTotal debt service coverage ratio 3.57 3.36 3.21 3.19 2.56
Debt ratio 46.7 48.6 47.7 48.2 50.6
Total electric sales (million kWh) 34,257 33,912 34,227 33,429 32,452
Peak-SRP retail customers (kW) 6,873,000 6,806,000 6,716,000 6,567,000 6,663,000
Water deliveries (acre-feet) (1) – 779,466 747,239 721,993 736,041
Runoff (acre-feet) (1) – 572,533 581,961 348,373 716,148
Employees at year-end 5,186 5,230 5,021 5,132 4,772
Customers at year-end 1,026,118 1,009,108 996,682 983,745 969,046
(1) Water data is by calendar year, all other data is by fiscal year ending April 30.
COMPARING OUR NUMBERS
SRP Annual Report 2017 23SRP Annual Report 2017 23
PAC170466-002
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