ML18192A384

Salt River Project, Annual Report 1976

ML18192A384
Person / Time
Site:	Palo Verde
Issue date:	12/31/1976
From:	Salt River Project
To:	Office of Nuclear Reactor Regulation
References
Download: ML18192A384 (28)

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~ Fit,E RECORDS FACILITYBRANCH SALT RIVER PROJECT ANNUALREPORT 1976

Page Highlights &, background.

1 Letter from management.

2 Review of the year 3

Financial section ll Statistical review 20 and 21 Board and Council members.

23 and 24 Project service area, watershed-map..... inside back cover

highlights 8 background OPERATIONS 1976 1975 166,048 817,679*

976,725 163,869 870,203 1,039,004 1,190,720 257,941 1,194,212 248,926 12,597 12,843 3.51 3.29 9,260,530,000 1,732,000 9,046,629,000 1,634,000 220,961~215

$211,016,136 4,307,032 2,821,516 225,268,247

$213,837,652 30,869,31 i

$ 26,278,119 182,662,201 180,048,472 11,287,259 '1 0,413,662 1,229,617,294 984,756,114 1,186,565,170 796,569,943 subject to adjustment.

Assessed water accounts.

Water runoff (acre-feet).

Water storage, year-end (acre-feet)..................

Water diverted into canals and pumped (acre-feet).

Number of power customers...........................

Average annual use per residential customer (kwh).

Average annual kwh cost per residential customer (cents).

Energy generated, pnrcgaaedt Integrc attend, and wheeled (kwh).

l'eak load for Project customers (kw).........'.<..

REVENUES J

Electric...... lC'..........................

Water and irrigation...........;:............................

Total operating revenQe)(............................

Taxes and tax equivalerits>..

Total operating expenses.

Net revenues...............g.

Plant investment, year-end, gross....................

Long-term debt "Based on U.S.G.S~provisional records and BACKGROUND The Salt~River

Project, the first multi-purpose project authorized under the Federal Reclamation Act of 1902, is comprised of the Salt River Project Agricultural Improvement and Power District and the Salt River Valley Water"Users'ssociation.

The District is an agricultural improvement district organized'under the laws of the State of Arizona. It operates the Salt River Project,~under contracts with the United States of America, and provides electric service to residential, commercial, industrial and agricultural power users in a 2,900 square-mile service territory in parts of Maricopa, Gila and Final counties.

The Association, a private Arizona corporation, encourages and participates in the management of the 13,000 square-mile watershed of the'Salt and Verde rivers, in cooperation with the U.S. Forest Service. The Association administers water rights of the Project's 250,000 acre

area, and operates and maintains the irrigation transmission and distribution system which provides Project w'ater for agricultural, municipal and industrial uses.

Following the longstanding reclamation principle, the Project uses electric revenues to support its water and irrigation operations, thereby keeping water delivery charges at reasonable levels. At the same time, tlte Project maintains competitive rates for the electric service it provides.

management letter Salt River Project entered the final quarter of the 20th Century on a solid foundation. The energy mix used to produce electricity continued to change in ways designed to keep power production costs to a minimum and promote energy independence.

This was accomplished through completion of two new coal-fired generating units, continued construction of four more, and the start ofconstruction of the Project's first nuclear power source.

At the same time the Project's program to promote load management appeared to produce beneficial results. This was reflected by the fact that the 1976 weather-adjusted peak demand was below the forecasted level. Several large industrial customers shifted their energy use to off-peak periods, taking advantage of a new time-of-day rate instituted by the Project. Many residential customers also reduced their usage at time of peak. Average annual use by residential customers declined by 246 kilowatt-hours (kwh).

SRP municipal revenue bonds were accorded higher ratings, reflecting the Project's strong financial position. At the beginning of the year Standard 8t, Poor's Corporation increased the Project's rating from "A"to "A+"and Moody's Investors Service, Inc., raised their rating from "A-1"to "Aa." The ratings helped reduce the interest rates SRP willpay on the $405 millionof revenue bonds sold during 1976.

The year's operating revenues exceeded

$225 million, operating expenses totaled more than $ 182 million, and net revenues topped $ 11 million.

Although residential customers'verage annual electric usage decreased slightly, electric bills were considerably below originally projected levels due to negative fuel cost adjustment factors in effect throughout all of 1976.

In keeping with the reclamation principle, a basic operating tenet followed by the Project since its inception in 1903, a relatively small percentage of power revenues was.applied to defray costs of operating the water system. Despite this, water charges had to be increased an average of42 percent to keep up with rising operating costs.

There were no electric rates increases during the year. However, in December the board authorized a rate increase to be effective in February 1977. The increase is designed to produce additional revenues of approximately $48 millionin 1977 to meet increasing operating costs and to aid financing of the very substantial future construction programs.

The composition of the SRP service area continued to change. At year-end almost 49 percent of land within the Project was dedicated to urban use, while land used for agriculture decreased to slightly more than 51 percent.

Responding to this change, the state legislature enacted a law which added four new members to the Power District's board. Two of those were appointed in 1976 and will be up for reelection in 1978; the other two willbe elected in 1980. All four new members will be elected at large on a one landowner, one vote basis, ensuring that the decision making of the District's board willcontinue to reflect the needs of the growing urban population.

A second law passed in 1976 codified steps the Project must take when changing electric rates.

Both laws were supported by Project management.

Many problems face SRP during the years ahead. They include the availability of fuel and the huge quantities of capital needed to finance facilities to m'eet the needs of our customers. To meet these future challenges SRP is involved in extensive research and planning efforts.

In 1976 those efforts were coupled with the solid financial and operational background the company developed during the first threeguarters of the century. Together they will enable SRP to adapt to its changing environment so that it can continue to deliver water at reasonable charges and serve its electric customers with a reliable supply of competitively priced power.

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A. J. Pfister, wlto became General hfanagcr July l, 1976 Karl F. hbcl, Prcsidcnt John R. Lassen, Vice President

ment, in 1982 Colorado-Ute will purchase an addi-tional 30 percent of the unit capability from SRP.

The Project and Colorado-Ute then willshare the unit evenly.

The year 1976 was characterized by moderate growth. The number of power customers increased by 9,014, bringing the total at year-end to 257,941.

They used a total of 8.1 billion kilowatt-hours (kwh) compared to 8 billion kwh in 1975. Demand on the Project's electrical system reached a new peak in July 1,732,000 kilowatts (kw). Average annual use by residential customers declined from 12,843 kwh in 1975 to 12,597 kwh in 1976. The average cost per kwh for those customers rose from 3.29 cents in 1975 to 3.51 cents in 1976.

Good planning helped SRP keep pace with in-creases in customers and their electrical needs as two coal-fired units were added to SRP's generating capability in 1976.

These were the Navajo Power Project's third 750,000 kw unit and a 261,000 kw unit at Hayden Generating Station in northwest Colorado.

SRP is construction manager and operating agent for the Navajo Generating

Station, which has six participants.

SRP owns 21.7 percent of the station, located near Page.

SRP owns 80 percent of Hayden Generating Station's second unit. Colorado-'Ute Electric Associa-tion, operator of the station, owns the remainder.

However, under the terms of the participation agree-PROJECT FUEL SOURCES Actual 1976, Estimated 1977-1982 Misc.

Year IHydro Gas Oil Coal Nuclear Purchases 1976 1977

1978, 1979 0

1980 1981 1982 15%

12 12 12 12 11 10 7%

12%

1 17 17 7

2 2

2 60%

6%

62

8 68

3 78

3 83

3 84

3 77 8

3 11ncludes hydro purchases Coal leads as 19'76 energy source During 1976, 60 percent of the energy delivered to Project electric customers was generated by coal-fired generating units, compared to about 48 percent in 1975. The increase reflects the Project's plan to use coal because of its low cost in comparison to oil and its availability in the Southwest.

The portion of SRP energy produced by oil decreased to 12 percent in 1976, compared to 18 percent in 1975. The Project's use of oil to produ'ce electricity declined from 2.84 million barrels during 1975 to 2.07 million barrels in 1976. Fuel oil is used in thermoelectric generators in the Valley primarily to meet intermediate and peak load requirements.

Unexpected availability of natural gas resulted in an increase in the percentage of power produced using that fuel; during 1976 seven percent of the Project's power was produced by natural gas, com-pared to four percent in 1975. Natural gas remains the least expensive fuel for SRP's generators in the Salt River Valley. However, its availability is limited and oil is the predominant fuel for those generators.

The remaining energy for both years came from hydroelectric production.and purchases.

By filling the majority.'f customers'resent energy needs with coal-fired power and relying on nuclear energy for a substantial portion of power in the future, the Project is striving to keep energy costs in line and is working toward national energy independence.

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A tv computerized system wasinstalled in 1976 to improve service to SRP electric customers.

Onc function ofthis multifaceted system is to help popover dispatchers determine the least expensive sources ofelec-tricityavai!able at any time.

Fuel cost adjustments reduce power bills No rate increases were necessary in

1976, and negative fuel cost adjustments in 1976 reduced the effect of the previous year's 25 percent increase to 13-15 percent.

Reasons for the negative fuel cost adjustments were:

Increased reliance on coal-fired generation; A warm winter and a cool spring, which reduced the quantity of costly oil required to produce electricity for heating and cooling; Good runoff into reservoirs and, consequently, abundant availability of hydroelectric power from other utilities in the West; Conservation efforts, and shifting of electrical usage from peak demand periods.

Finding the least expensive source of energy and dispatching it to customers were simplified in 1976 with the installation of a new computerized system to aid power operations.

The system serves two main functions. The first part of the

system, called automatic generation control (AGC), helps dispatchers determine available power and its cost, and control the amount of power being produced at Valley generating stations.

The second part, called supervisory control and data acquisition (SCADA), makes it possible for dispatchers in the Power Operations building to open and close substation circuit breakers by remote control. This means more rapid restoration of electric service, should interruptions occur.

Installation of the new system was a move to improve service to customers in 1976 and future years.

Messages support load management, safety programs The main thrust of messages to customers in 1976 was toward load management shifting power use from times of peak demand.

Characteristically, this peak period has been from 3 to 8 p.m. during summer months. The Project's "Power Saver Time" campaign encouraged customers to shift power use to before 3 p.m. or after 8 p.m.

Messages to customers also encouraged conservation with the

slogan, "Save a

Little for Tomorrow."

The Project's continuing marketing programs also focused on load management.

These included:

the Remarkable Energy Value Home Program, a joint effort of the electric utility and home building industries to increase the energy efficiency of new homes; industrial development

programs, designed to attract high load factor industries; and programs promoting heat pumps, re-insulation and security lighting.

Other messages during the year emphasized water and power safety.

The Project was instrumental in formation of Arizona Life Preservers, a coalition of organizations-involved in lifesaving, recreation or water storage and distribution, and dedicated to safe use of water for recreation.

Power past, present and future: (left) an 800 kilowatt (kwjgenerator used at the Soutii Consolidated Canal power plant in the early l900'st (right( one ofiVarajo Generating Station's three 750,000 kw generators; (abovej an artist's rendering of the first l,270,000 kw unit ofthe Palo Verde Nuclear Generating Station.

Coal, nuclear power to fillfuture electrical needs Construction progressed on Coronado Generating

Station, SRP's wholly owned source of coal-fired power near St. Johns.

Rights of way were secured for deep wells and a pipeline to supply water to the station. Associated work included design of the 21-mile Concho field

pipeline, completion of three production

wells, drilling of four more wells to observe the effects of pumping on the groundwater supply, installation of 10.9 miles of pipeline, and construction of roadways.

Coronado's first 350,000 kw unit is scheduled for commercial operation in April 1979, the second in April 1980.

Cost of the station's first two units is expected to be $646.7 million. The long-range plan includes possible addition of a third unit about 1993.

Transmission lines and substations needed to bring power from Coronado to the Valley are expected to cost about $90 million.

Construction continued on the coal-fired Craig Generating Station in the Yampa Valley in Colorado.

Salt River Project is a 29 percent participant in this

$585.1 million station, which will consist of two 380,000 kw units, scheduled to be operational in 1979.

The Arizona Nuclear Power Project, of which SRP is a 29.1 percent participant, in May received ap-proval from the Nuclear Regulatory Commission to begin construction. The first of three 1,270,000 kw pressurized water nuclear reactor units is scheduled to be in operation in 1982, with the other two units following in 1984 and 1986. Cost of the station is estimated at $2.8 billion.

Voters expressed their approval of nuclear power in Arizona when they defeated an anti-nuclear initia-tive in November elections by a margin of 70 percent to 30 percent.

Nuclear power will further decrease reliance on oil and natural gas as energy sources.

Participants in the Montezuma Pumped-Storage Project mutually agreed to defer construction indefinitely due to reduced load growth and other economic factors.

Environment-an important concern A sizeable percentage of generating construction costs is attributed to environmental protection. More than

$200 million was spent at the Navajo Generating Station for this purpose.

Pollution control equipment and installation costs will add more than

$200 million to the cost of Coronado Generating Station.

Electrostatic precipitators, water processing, solid waste disposal and noise abatement equipment account for

$35.5 million, or approximately 30 percent of the total cost of Unit 2 of the Hayden Generating. Station in Colorado.

Expenditures for pollution control equip'ment at Craig Generating Station will account for an estimated

$ 150 millionof the station's $585.1 million total cost.

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qadi'onstruction started on Coronado-Kyrene transmission line Due to enuiromnental considerations, SRP transmission lines have taken on a new lookin ntany areas.

u During 1976 construction began on SRP's 500 kilovolt (kv) power transmission system from Coronado Generating Station to the Valley.

Right of way clearing and tower staking began in the Superior area along the 100-mile, north-south transmission corridor which willbe shared by Arizona Public Service Co. (APS) and SRP. The corridor runs from APS's Cholla Generating Station, located north-west of Coronado.

By. sharing a portion of this corridor, SRP intends to reduce the environmental impact.

associated with separate line construction activities, as well as the costs ofright of way.

A contract for 156 miles of the transmission system was awarded.

One line covered by the contract runs from Coronado to APS's Cholla plant west of Holbrook. This line will help to intertie generating sources for system reliability. The other section runs from Coronado to the SRP-APS common transmission line corridor. Construction on these two segments of the line is expected to begin in March 1977 and should be finished by June 1978.

The" remainder of the Coronado transmission sys-tem is scheduled for completion by January 1, 1979.

Environmental considerations for the 26.5 mile sec-tion of the line running through the Valley have added approximately

$2.1 million to the cost of the line, based on 1976 estimates.

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New facilities built to deliver additional power Existing transmission and distribution facilities were updated to meet additional requirements resul-ting from customer growth in 1976 and future years.

Work included:

addition of 640 cable miles of underground distribution lines; installation of two new substations; and increasing the capacities of four substations.

The investment in new transmission and distribu-tion facilities in 1976 totaled

$31.5 million, com-pared to $26.9 million in 1975.

Construction improves

~ater service SRP continued its program for improving its water distribution system to reduce the quantity of water lost to seepage and facilitate more accurate measure-ment and control.

Major water construction and maintenance projects completed in the Valley in 1976 included installing 10.5 miles of irrigation pipeline, 4.9 miles of slipform lining and 145 lateral turnout structures.

One and one-half miles of the Arizona Canal were lined and a new radial gate structure was installed in the canal during its annual dry-up. During dry-up of canals south of the Salt River, structural improve-ments were made to improve the delivery of water to customers.

Also during this period SRP relocated a

portion of the Tempe Canal to accommodate a

planned extension of the Superstition Freeway. This project was carried out in cooperation with the Arizona Department of Transportation, which paid design and construction costs.

SRP's cost of work performed during fall dry-ups totaled approximately $465,000.

SRP made the right of way of the Old Crosscut Canal available to the Maricopa County Flood Control District. The canal, which SRP no longer used for normal water delivery, was modified by the county organization and the City of Phoenix to become part of the flood control system.

Growth in the Valley has dictated an increase in construction and maintenance activities. Reinforcing steel bars (above J begin to give form to the Palo Verde nuclear Generating Station. Dredgers like this one centerJ removed silt frotn Pro(ect waterways in SRP's earlier days.

oday, modern equipment (belowJ is used to clear canals.

Then the bottoms are covered with concrete and the sides gunited to conserve precious water and to improve flow.

Research and development look to the future During 1976 SRP participated in several projects to research future sources of power, develop present

sources, and study power system loads. The Project was directly involved in four major programs and contributed to several others.

The four programs in which the Project partici-pated directly were:

A research program to analyze the nature of electrical loads. It is designed to answer questions relating to the quantity of high energy use appliances, when they are used

most, and to what degree combinations of their use affect SRP's system peak.

A distribution transformer load management program, in its third year. Purpose of this continued program is to determine areas of growth in SRP's electric service

area, and help the Project plan facilities to deliver power to those areas in the future.

A small area load forecasting and distribution modeling program, which seeks better ways to predict system loads in areas as small as a quarter section (160 acres) and to plan SRP's distribution system to meet these loads. Electric Power Research Institute (EPRI) is funding the three-year

program, which began in June 1975.

EPRI commissioned Westing-house Electric Corporation for this program.

SRP, acting as subcontractor to Westinghouse, will receive

$ 159,341 for its work on the program in 1976.

A program designed to monitor solar radiation.

SRP has ordered approximately

$ 12,000 worth of equipment for two stations to measure the sun' energy. Utilities in Arizona, California, New Mexico, Colorado and Nevada are participating in the project, which will include 40 to 50 such stations.

The program is being coordinated by Western Energy Supply and Transmission (WEST) Associates. In 1976 SRP contributed $6,700 to WEST for development of solar monitoring equipment specifications and soft-ware necessary to analyze the data, as well as for other WEST research and development programs.

In addition, Salt River Project made a $566,349 contribution to EPRI to support a broad spectrum of research and development of present and future energy sources such as: coal gasification; fusion; solar; geothermal; and nuclear power. Other research'n-cluded studies of electro-chemical and thermal-mechanical energy conversion and storage. The funds also support EPRI efforts in transmission and distri-bution research.

SRP made its fifth contribution of $ 108,023 as part of a 10-year pledge to aid development of the nation's first liquid metal fast breeder reactor demonstration plant.

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'mproved facilitiesand equipment, but people continue to be important in providing the services needed by the growing number ofSRP power and water customers.

Contracts ensure work force stability On January 1, 1976, new two-year labor contracts went into effect between Salt River Project and International Brotherhood of Electrical Workers Local 266. The agreements provided for: changes in work practices to improve efficiency of SRP opera-tions; increased medical coverage; establishment of dental coverage; an additional holiday; improved early retirement benefits and retirees'ife insurance; and wage increases comparable to those throughout the utilityindustry.

The total number of employes increased from 3,205 at year~nd 1975 to 3,325 at the end of 1976.

Most of the additional employes were hired for positions at Navajo Generating Station, which began fullccale operation in 1976.

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. II '; o~'ater use shows continuing urbanization Providing a reliable supply of seater at reasonable charges to consumers in the Valley of the Sun vvas thc Project's prime purpose in the early 1900's. Itstillis.

riOMI=.SriC V W.rEn a>SE in acrc.fcct Phoenix..........

Tempo.......,....

Glendale.......

Mesa...............

Scot tsdaic.......

Chandler.........

Peoria.............

Gilbert............

Totul...........

1976 135,807.97 20,85631 9,446.18 15,519.81 2,491.91 1,064.27 983.73 874.12 187,044.30 1975 118 606.64 20,938.93 9,462.58 5,978.03 2,791.76 1,506.25 890.87 823.41 160,998.47

/o of Change 14.5 (0 4)

(0.2) 159.6 (12.0)

(41.5) 10.4 6.2 11.1 New legislation affects SRP Legislation passed in June 1976 enlarged the Power District's board from 10 to 14 members and extended the terms of office for District board members from two to four years.

Two of the four new board members were appointed to their seats in October 1976, in accordance with the law. Their positions will be up for election in 1978. The other two seats are to be filled in the SRP election in April 1980. All four new board members will be publicly elected at large on the basis of one landowner, one vote.

The remaining 10 members will continue to be publicly elected on a debt-proportionate basis ofone acre, one vote, with one member representing each of the 10 geographic voting areas in the District. The law, which applies to the Power District and not to the Association, staggers the terms so that at any given election only half the board will be elected. The law also states that candidates for president and vice president will run for four-year terms beginning in 1978.

Another law passed in 1976 formalized the actions SRP has been taking when changing electric rates.

Water deliveries for 1976 totaled 804,964 acre-feet (af), compared to 767,869 af. in 1975. Of the total water required during 1976, 71.3 percent was from Project lakes.

Water storage in Project lakes declined slightly in 1976.

Reservoirs contained 50.1 percent of their 2,072,050 af capacity at the beginning of the year'nd were 47.1 percent full at year-end. This repre-sents a difference of about 64,500 af in storage.

Reduction in the amount of storage was due to increased water use and decreased runoff, which resulted from reduced precipitation on the Project's watershed.

Runoff for 1976 totaled 817,679 af, 88 percent of the yearly average.

SRP water used for non-agricultural

purposes, including municipal and industrial

uses, and parks, playgrounds and residential irrigation, totaled 295,123 af in 1976, compared to 265,591 af in 1975.

Deliveries to cities during 1976 totaled 187,044 af compared to 160,998 af the previous year. Other non-agricultural uses required 108,079 af during the year, up from the 104,592 af,used in 1975.

Of the cities, Phoenix used the greatest amount of water, consuming 135,808 af, up 14.5 percent from 1975.

Mesa, which consumed nearly 6,000 af in 1975, almost tripled its domestic water use for a total of 15,520 af in 1976, while Chandler used 41.5 percent less water. Other cities (Tempe,

Glendale, Scottsdale, Peoria and Gilbert) received about the same amount of water from SRP as they did in 1975.

Water used by decreed lands, which include Indian reservations, totaled 58,464 af.

Agricultural water orders for 1976 totaled 451,377 af, compared to 44/,042 af in 1975.

The Project's role as a major contributor to the Salt River Valley's economy was reinforced by the values of crops and livestock produced, largely made possible through the Project's dependable supply of water. Although the amount of water delivered to agricultural accounts decreased, the combined values of crops and livestock increased 9.5 percent from

$ 131.3 million in 1975 to $ 143.8 million in 1976.

A total of 2,693 acres was converted from agricul-tural to urban use during 1976, compared to 1,289 acres in 1975 and 9,033 acres in 1974. At year-end there were 121,761 acres in the Project area being used for agricultural purposes and 116,505 acres being used for other purposes.

Assessments and other water charges rise to keep pace with costs Water assessment and delivery fees were increased an average of 42 percent in 1976. The increases, which took effect in January 1976, produced an additional

$ 1.1 millionin water revenues. This offset increases in water operating costs and helped to reduce the contribution ofpower revenues to water operations.

Electric revenues contributed to water operations decreased from

$ 10.5 million in 1975 to

$ 10.4 million in 1976. The effect was a reduction in the water subsidy from 4.9 percent ofelectric revenues in 1975 to 4.7 percent in 1976.

The SRP board set the 1976 water assessment at

$7.50 per acre 30 percent higher than in the 1975 assessment of $ 5.75 per acre. Since 1969, SRP water assessments have increased 200 percent, from $2.50 to $7.50 per acre.

Charges for water delivered to the cities also increased during 1976. The Project delivers water to eight cities in the Valley, in accordance with munici-pal water contracts. Cities, under these contracts, pay each account's assessment plus a shareholder

fee, which was increased from 50 cents to 75 cents per

account, a 50 percent increase.

Cities, rather than property

owners, pay the assessment for land no longer receiving irrigation. Then, acting as agents for the

Project, cities deliver treated water to city consumers.

SRP water delivery charges for irrigation water increased from $ 18 to $25 for active field accounts and from $ 10 to $ 14 for active subdivision accounts.

his cool, clear water, deliuercd by SRP to the new Val Vista lUater rcatment Plant in Mesa, ls trcatcd and then deliuered to homes in the Valley. SRP supp!les morc than half thc water used by Valley cities.

A.I. Pfister AJ. Pfister named general manager 1976 was a year of top management changes. A. J.

Pfister, former deputy general

manager, succeeded Rod J. McMullin,who retired after serving 19 years as general manager.

In other executive management

changes, Robert F. Amos was promoted to deputy general manager and John R. McNamara was promo-ted to associate general manager for power.

Qhp 10

C made possible by an actual decrease of $ 14.8 million (compared with 1975) in the cost of fuel and purchased power.

This was due in part to the Project's continuing program of converting to coal-fired power generation to replace higher cost oil-fired generation.

In addition, there was increased availability of low-cost hydroelectric power from outside sources and greater availability of natural gas than had been planned.

These lower fuel costs were passed along to customers during the year through negative fuel cost adjustments.

All other operating expenses were higher than in 1975. Depreciation expenses totaled

$27.1 million, an increase of $4.1 million or 17.9 percent. Taxes and tax equivalents rose by 17.5 percent to $30.9 million.

Other operation expenses were up 16.4 percent to

$38.8 million. These included costs for salaries,

wages, supplies and services.

Maintenance costs increased by 20.3 percent to

$ 19.6 million. The higher maintenance cost is largely the result of new coal-fired generating units going into service and the increasing costs to maintain the older facilities already in service.

However, in 1976 maintenance costs declined to 2.1 cents per dollar of plant in service, compared with 2.2 cents in 1975.

Uncertainties in the national economy during 1976 were reflected in the results of Project operations.

Sales of electric energy were only slightly higher than in 1975.

Although there was a substantial improvement in the fuel cost picture, other costs continued to show the effects of inflation.

Expenditures for capital improvements reached a new high as work continued on facilities required to meet estimated future loads. The Project retained its high credit rating and successfully marketed

$405 million of revenue bonds.

Operating revenues increase Operating revenues for 1976 totaled

$225.3 million, up

$ 11.4 million from 1975. Electric sales provided $221.0 million, an increase of $ 10.0 million or 4.7 percent over 1975. Water revenues grew 52.6 percent from last year and totaled $4.3 million. The modest increase in electric revenues was the result of the lowest energy sales and customer growth rate in recent years coupled with various weather factors and consumers'fforts to conserve.

The large increase in water revenues was due primarily to an increase in water charges.

Operating expenses reach

$ 182.7 million Operating expenses of $ 182.7 million were only

$2.6 million, or 1.5 percent, greater in 1976 than in 1975.

This very modest increase in expenses was ll Plant value exceeds S1 billion Gross investment in plant and equipment, including construction in progress, was

$ 1.2 billion, up 24.9 percent from 1975. Funds required for additions to plant amounted to $234.0 million, a 51.6 percent increase from 1975. Of the funds required,

$ 199.4 million, or 85.2 percent, came from new financing.

The remaining 14.8 percent came from accumulated net revenues.

Financing costs up Financing

costs, less allowance for funds used during construction, were

$31.1 million in 1976, an increase of $7.2 million, or 30.4 percent, since 1975.

Interest on long-term debt rose by $ 18.5 million, an increase of 44.5 percent over 1975. This was partially offset by an increase of $5.3 million in interest earned on temporary investments.

Repayments of long-term debt required

$ 10.5 million in 1976 compared with $ 11.1 million in 1975.

Net revenues increase slightly Net revenues for the year were

$ 11.3 million, an increase of $874,000, or 8.4 percent, over 1975. The

increase, though modest, shows that earnings have been maintained by moderating operating costs in the face of economic uncertainties, lower growth rates and continued inflation. The results help to fulfillthe expectations held for increasing energy independence as the Project continues its transition to more coal-fired generation.

COM'BIiNEDg TATEMENTOF net revenues Salt River Frojeet Agricultural Improverueiit and Power District and-its'agent, Salt River Valley Wpfcr Users'ssociation I'or the years ended December 31, 1976 and 1975 OPERATING REVENUES:

Electric.

Water and irrigation.

Total operating revenues OPERATING EXPENSES:

Power purchased Fuel used in electric generation.

Other operation expenses.

Maintenance..............................................

Depreciation and amortization (Note I).

Taxes and tax equivalents (Note 5)

Total operating expenses.

Net operating revenues FINANCINGCOSTS:

Interest on bonds at coupon rates.

Amortization of bond discount Amortization of bond issue expense.

Interest on other obligations Interest earned on investments and deposits.....

Net financing costs.

Less-Allowance for funds used during construction (Note 1),.

Financing costs less allowance forfunds used during construction.

OTHER DEDUCTIONS (REVENUES), NET-"

NET REVENUES FOR THE YEAR 1976

$220,961,215 4,307,032

$225,268,247

$ 18,103,516 48,285,472 38,786,480 19,562,273 27,055,149 30,869 311

$ 182,662,201

$ 42,606,046

$ 60,074,044 657,176 167,854 294,059 (12,775,619)

$ 48,417,514 (17,357,802)

$ 31,059,712 259,075 S '11,287,259 1975

$211,016,136 2 821 516

$213,837,652

$ 32,230,873 49,007,365 33,309,186 16,265,728 22,957,201 26 278 119

$ 180 048 472

$ 33,789,180

$ 41,585,531 544,801 151,228 1,064,051 (7,517,472)

$ 35,828,139 (12,007,218)

$ 23,820,921 (445,403)

$ 10,413,662 The accompanying notes to combined financial statements are an integral part of this statement.

/.,i

~

COMBINED ST E';EN g OF sources'o, fiends or~dditions to,utihty plant J

.v:Salt Ritjcr rojcct Aprtcnttdral Improvement and Power District o

and s agent;Salt River Valley )Va cr Users'ssociation o

r'ordthe years ended December 3, 19 6 and l975 GROSS ADDITIONSTO UTILITYPLANT, excluding allowance for funds used during construction.

1976 1975

$234,011,818'154,321,134 FUNDS GENERATED FROM OPERATIONS:

Net revenues for the year.

Add Depreciation and other charges not requiring current funds Deduct Allowance for funds used during construction not providing current funds.

Total fiinds generated from operations before retirement ofdebt Less Repayment of long-term debt.

Net funds generated from operations FUNDS OBTAINEDFROM FINANCING:

S 1 I,287,259 29,919,879 (17,357,802)

$ 23,849,336 10,527,234

$ 13,322,102

$ 10,413,662 26,737,369 (12,007,218)

$ 25,143,813 11,121,486

$ 14,022,327 Proceeds of bond issues Advances from U.S. Government for rehabilitation of irrigation plant.

Other advances and contributions, in aid ofconstruction.

Other long-term obligations.

Short-term borrowings, net of repayments.

Total fiinds obtained from financing.

$398,749,762

$ 168,108,201 1,704,239 I,'126,874 3,062,146 40,000 000 2,746,483 108,649 (20,000,000

$362,938,782

$ 152,667,572 Less Increase in segregated funds set aside for debt service...

Increase in segregated funds set aside for construction Increase in temporary investments held primarily for construction Net funds obtained from financing.

(16,023,299)

(96,825,635)

(50,652,353)

$199,437,495 (10,747,293)

(473,402)

(10,026,145)

$ 131,420,732 CHANGES IN QTI-IER ITEMS AFFECTING FUNDS:

Reduction in advances for dedicated capacity in electric plant Increase in deposits for payment of accrued interest on bonds.

Increase in accrued interest payable...............

(Increase) Decrease in fuel stocks and materials and supplies.

.r..............

(Increase) Decrease in cash.

Increase in accounts payable Decrease (increase) in other assets and liabilities, net...

Net changes in other itenis (11,122,078 10,991,331 7,416,227 6,544,295 6,888,304'34,142

$ 21,252,221

$ 12,627,615 (6,458,315) 6,046,033 (3,192,102)

(115,599) 4,313,309 (4,342,866) 8,878,075 FUNDS USED FOR ADDITIONS TO UTII.ITYPl ANT

$234,011,818

$ 154,321,134 Thc accompanying notes to combined financial statcmcnts arc an integral part of this statcmcnt.

, baI Salt River Project'Ag it l',

'a'I

} vementa aid its ageht, SaltI Riv t0.0 r'Va Cl t

e-

'97 I'

iDeccntber;,31; 197,

=

e Ij Assets UTILITYPLANT, at original cost (Notes I, 2 and 3):

Plant in service Electric Irrigation.

General.

Total plant in service Less Accumulated depreciation on plant in service.....

Construction work in progress.

l976 812,169,386 62,549,894 39483,750

.S 914,203,030 192,839 319 S

721,363,711 315,414,264 1975 626,893,594 60,513,571 37,431,992 724,839,157 167 179 412 S

557,659,745 259 916 957

$ 1,036,777,975 S

817,576,702 SEGREGATED FUNDS, consisting of cash and U.S Government obligations set aside in accordance with resolutions of bond issues:

Debt service funds excluding $33,481,000 in 1976 and

$22,359,000 in 1975 for payment of accrued interest (Note 10).:

Construction funds..

S 86,902,964 97,582,811 70,879,665 757,176 CURRENT ASSETS:

Cash Temporary investments, at cost, held primarily for construction Deposit in debt service fund for payment of accrued interest on bonds Accounts receivable from insurance carriers (Note 9)

Trade and other accounts receivable, less reserves of $967,000 in 1976 and $927,000 in 1975 for doubtful accounts.

Fuel stocks, at average cost Materials and supplies, at average cost Prepayments, interest receivable and other.

S 184,485,775 71,636,841 106,090,055 33,481,367 1,887,870 55,437,702 22,359,289

- IS,325,360 11,133,659 15,296,886

, 7,788,908 21,149,691 18,549,886 15,186,066 3,074,780 S

194,403,797 142,701,401 S

'99,692 S

6,943,987 OTHER ASSETS:

Nonutility plant, less accumulated depreciation of $500,000 in 1976 and $458,000 in 1975..........

Bond expense being arnoitized.

Miscellaneous deferred charges (Note 9)

- 2,389,661 2,725,782 5,934,333 2,418,024 2,201,207 7,417,115 S

11,049,776 12,036,346

$ 1,426,717,323

$ 1,043,951,290 14 Thc accompanying notes to combined financial

1 Liabilities and Capitalization LONG-TERM DEBT (Note io):

General obligation bonds.

Electric system revenue bonds.

Obligations to U.S. Government Other obligations..

I07(j S

278,915,016 893,317,068.

12 570 867 1,762,219

$ 1,186,565,170 1975 S

287,219,590 495,065,557 12,225,830 2,058,966 S

796,569,943 ACCUMULATEDNET REVENUES, invested principally in utilityplant:

Balance beginning of year..

Net revenues for the year Balance end ofyear Total capitalization, consisting oflong-term debt and accumulated net revenues S

146,394,829 11,287,259 S

157,682,088 S f,344,247,258 S

135,981,167 10,413,662 S

146 394.829 S

942,964,772 CURRENT LIABILITIES,excluding $ 15,260,000 in 1976 and $ 10,491,000 in 1975 representing current portion of long-term debt which is to be paid from segregated funds:

Notes payable to banks (Note 7).

Accounts payable.........................

Accrued taxes and tax equivalents (Note 5)

Accrued interest Customers'eposits.

Other current and accrued liabilities.

S 1,000,000 25,461,S03 12,822,109 33,483,423 3,340,486 2,710,770 S

78,818,291 S

41,000,000 18,573,199

~ 10,698,544 22,492,092 2,565,951.

2,519,269 S

97,849,055 DEFERRED CREDlTS AND RESERVES:

Irrigation assessments levied for subsequent year..

Advances for construction.

Other.

2,69'0,66,0 397,342

'S63,7.72 S

3,651;774 S

2,159,711 473,112 504,640 S ',137,463 COMMITMEN1S AND CONTINGENCIES (Notes 3,4,5 and 6)

$ 1,426,717,323

$ 1,043,951,290 lj I

statcrncnts are an integral part of this balance shcct.

15

,(,K

<<l t ~'II~là I"g'~

lk ~kklI

"(,

lIIlik/~I I(i i,

, kk,'.I.-',>,',I.q,~lkI)]q l] II,,I,liitrlIg'l<

OI

... llIi IllIrn rlIIIItI

"""4'i Ail.,

Ik ll I.r'Iuti< r'jht;I~i,l'r!'(Ii'i rid.>

'II'5Q'rIk'IDMp

'QElpI F'INANE>'IA,L'--,

I "I II TFMF Salt River, ProjecIIrkkgricultural Irnprovein'enKhhd I

I

'l 'Pri&er'OiStrlct -and its agent,,','Salt River Valley,)Vatei 'Users'ssoclatlod Becekkkber,al, 1916 akkd 3975, (b) UtilityPlant, Depreciation and Maintenance The accounting records of Salt River Project are maintained substantially in accordance with the Uniform System of Accounts prescribed for electric utilities by the Federal Power Commission. Utility plant is stated at the historical cost of construction.

Construction costs include labor, materials, services purchased under contract, and allocations of indirect charges for engineering, supervision, transportation, and administrative expenses.

An allowance for funds used to finance construc-tion work in progress is capitalized as a part of the electric and general plant. This allowance is deducted from net financing costs in the combined statement of net revenues and added to utilityplant. A capitali-zation rate of 6% was used for several years but was changed to 7.25% on July I, 1975.

Depreciation expense is computed on the straight-line basis over estimated useful lives of the various classes of plant. Rates in effect during the years 1976 (I)

SUMMARY

OF SIGN IFICANT ACCOUN riNG POLICIES:

(a)

Principles Underlying Combined Statements The combined financial statements include the accounts of the Salt River Project Agricultural Improvement and Power District and the accounts of its

agent, the Salt River Valley Water Users'ssociation, together referred to as the Salt River

Project, and a wholly owned subsidiary, Salt River Generating Company.

All significant intercompany transactions have been eliminated.

16 and 1975 resulted in provisions approximating 3.71%

for 1976 and 3.68% for 1975 on the average cost of depreciable electric plant, and 1.90% for 1976 and 1.90% for 1975 for depreciable irrigation plant. When property representing a retirement unit is replaced, removed, or abandoned, the cost of such property is credited to the appropriate utilityplant account, and such cost together with removal costs less salvage is charged to accumulated depreciation.

The Project charges to maintenance expense the cost of labor, materials, and other expenses incurred in the repair, restoration of condition and replace-ment of minor items of property.

(c)

Bond Expense Bond discount, premium, and bond issue expense are being amortized over the terms of the related bond issues.

(d) Employes'etirement Plan The Project has a retirement plan covering substan-tially all employes. The plan is funded entirely from employers'ontributions and the earnings of the invested assets.

Thekestimated unfunded past service liability, as determined by the plan's actuary using the "entry age norinal cost" valuation method, with frozen initial liability, was

$7,720,585 as of July 1,

1976, and is being funded over a period ending in 2001. The employers'ash contributions to this plan totaled

$4,552,082 in 1976 and $4,323,770 in 1975.

At July I, 1976, the plan's assets exceeded the actuarially computed value of the vested benefits at the same date.

(e)

Revenues Meters for residential, commercial and small indus-trial customers are read cyclically and sales recorded only when billed. This system of billing results in earned but unbilled revenues which amounted to

$8,769,000 at December 31, 1976, and $8,102,000 at December 31, 1975. For large industrial customers, meters are read near month-end and billings recorded'n the accrual basis.

Electric revenue billings are adjusted periodically for changes in costs of fuel and purchased power. Revenues from water and irrigation operations are recorded when earned.

(2) POSSESSION AND USE OF UTILITYPLANT:

The United States of America retains a paramount right or claim in the Salt River Project which arises from the original construction and operation of the Project's facilities as a Federal Reclamation Project.

The Project's right to the possession and use of, and to all revenues produced by, these facilities is evidenced by contractual arrangements with the United States.

notes (3) CONSTRUCTION PROGRAM:

Balances shown for construction work in progress represent expenditures for new facilities required to serve anticipated customer needs, and consist of:

Electric generating facilities.

Transmission and distribution................

Irrigation plant...........

Other construction.....

Total..........................

December 31 1976 1975

$276,195,260

$222,994,877 32,176,139 2,807,137 4,235,728 30,706,351 2,530,106 3,685,623

$315,414,264

$259,916,957 Construction expenditures planned for 1977 approximate

$400 million, which includes

$350 million to be expended in 1977 on the major projects shown below.

At December 31, 1976, substantial commitments had been. entered into for delivery of materials and services o'n construction projects. In addition, various firm commitments exist under coal and fuel oil supply contracts.

Based on prior agreement, the major portion of advances for dedicated capacity in Unit One of the Hayden Generating Station was recaptured during 1975.

The remainder, representing common plant attributable to Unit Two of the Hayden Generating

Station, was transferred to construction work in progress.

Recent forecasting studies have caused manage-ment to reduce projections of future power resources requirements, and to explore possible reductions in the range of $250 million to

$500 million to the schedule of construction expenditures shown below.

Options presently under consideration include sale of partial ownership interests in the Coronado and/or Palo Verde stations, or a delay in construction of the Coronado Generating Station combined with sales of excess capacity on a prepayment basis. Management expects that any action taken with regard to these matters would result in full realization of all costs currently invested in the construction program.

(4) ENVIRONMENTALLITIGATION:

Various pending lawsuits involving environmental matters could affect interests owned by Salt River Project in present generating facilities and in pro-posed generating facilities and transmission lines. In

general, these lawsuits seek to impose higher air quality standards for generating plants. Ifultimately decided adversely to the interest of Salt River Project, the outcome of the lawsuits could result in increased construction costs, increased future operating costs, and a possible loss in the operational reliability of certain generating plants. All of these effects would increase the costs to be passed on to customers through increased electric rates.

(5) PROPERTY VALUATION LITIGATION Salt River Project makes voluntary contributions to taxing bodies in lieu of payment of property taxes.

The Department of Revenue of the State of Arizona has filed lawsuits requesting increases in the values used to compute the voluntary contributions for the years 1970, 1971, 1972, 1973 and 1974. No lawsuits or claims have been-filed concerning 1975 and 1976 valuations.

The general effect of the claims made under the lawsuits would be to increase the contributions for the years in dispute by a total of approximately

$3,650,000. In 1973, in connection with a portion of the lawsuits, the Superior Court of Arizona granted a summary judgment in favor of Salt River Project.

Navajo Generating Station.......................

Navajo Railroad..

Hayden Generating Station-Unit 2.........

Craig Generating Station.............'............

Coronado Generating Station..................

Coronado Railroad Coronado Transmission System...............

Palo Verde Nuclear Generating Station...

Palo Verde Transmission System.............

1974-76 1974-76 1976 1979 1979-80 1979 1979-80 1982-86 1982-86 EXPECTED CONSTRUCTION EXPENDITURES (NOte 3)

Expected In-Service Date Prior to 1977

$ 142,269 18,351 93,234 82,539 131,397 5,189 25,493 42,300 659

$541,431

($000)

Expenditures Expected Expected in 1977 After 1977 2,678 3,484 309 2,520 51,267 59,715 180,557 404,677 18,414 22,188 38,256 41,453 53,975 984,986 1 625 43 132 5349,601 51,559,635 Overall 148,431 18,660 95,754 193,521 716,631 45,791 105,202 1,081,261 45 416

$2,450,667 17

notes This summary judgment was later reversed in part in appellate decisions within Arizona, and this reversal is now in process of appeal to the United'tates Supreme Court. If the reversal is upheld, the claims will be litigated in Superior Court with the decision of that court possibly subject to the appellate process.

Under Arizona law, the amount of each voluntary contribution made by Salt River Project to taxing bodies in lieu of payment of property taxes is subject to review and

approval, or disapproval, by the Secretary of the Interior of the United States of America. In the opinion of legal counsel, any addi-tional contributions required as a result of the above litigation would be subject to the approval or disapproval of the Secretary prior to payment.

No reserve for additional contributions has been provided at December 31, 1976. Ifany liabilitywere to result from this litigation, management expects that the amount of such liability would be recovered when paid through increased rates collected from electric customers.

(6) OTHER LITIGATION:

Principally as a result of certain water flooding in 1970 and 1972, various lawsuits and claims have been filed against Salt River Project alleging that the Project has a responsibility in regard to flood control and a liability in regard to flood damage.

The ultimate liability, if any, is not determinable, but management expects that a significant portion of any liabilities which might result from flood damage claims willbe covered by insurance.

(7) LINE OF CREDIT:

The District has a line-of-credit agreement with 13 banks, which provides for a maximum commitment of $60,000,000 with interest on borrowings at a rate equal to 75% of the banks'rime rate as established from time to time by the lead bank. No compensating balances nor commitment fees are required under the line of credit; in lieu thereof the District has agreed to use the full amount of the line for a specified minimum number of days during the year.

The current agreement terminates on October 15, 1977.

The line-of-credit borrowings are borrowed in the name of and payable from the General Fund and rank junior to payments required for the Prior Lien Bonds and the Revenue Bonds.

At December 31,

1976, there were no outstanding borrowings on the line of credit. Other bank borrowings totaled $ 1,000,000 at December 31, 1976, and carried an interest rate of 4.17%. The average interest rate on bank borrowings for 1976 was 4.69%.

On January 21,

1977, the District borrowed the full $60,000,000 at an interest.

rate of 4.69%, repayable in full on or before October 15, 1977.

18 (8) IRRIGATIONAND WATER OPERATIONS The expenses, including depreciation, for irrigation and water operations exceeded the assessments, deli-very fees, and other revenues therefrom by approxi-mately $7,341,000 in 1976 and

$7,248,000 in 1975.

These amounts do not include expenditures for additions and improvements to irrigation plant.and for repayment of long-term debt.

(9) OTHER MATTERS:

During

1976, Salt River Project terminated its participation in the Montezuma Pumped-Storage Generation Project because of projections of reduced capacity requirements.

The Board of Directors approved the deferral of approximately

$ 1,800,000 of Montezuma Project costs and the amortization of this charge over a period of five years, with the intention that the costs be considered for inclusion in amounts to be recovered from consumers over the same five-year period.

A receivable from insurance carriers arises from an accident at the Kyrene Station.

Damage from the accident has been fully repaired and billed to the carriers. Management believes that the amount billed willbe collected.

Salt River Project is actively engaged in research and development programs related to new energy sources and improved technologies for power genera-tion.

During

1976, operating expenses included approximately

$ 1,800,000 related to research and development projects.

(10) LONG-TERM DEBT:

Bonds outstanding are general obligation bonds and electric system revenue bonds. In all years to

date, net electric revenues have been more than sufficient to meet all debt service requirements.

General obligation bonds are a lien upon the real property included in the District and are additionally secured by a pledge of revenues from the operation of the electric system. If the net electric revenues, as defined in the bond resolutions, are not sufficient to meet the principal and interest payments, the bonds and interest are payable from a levy of taxes on the real property.

Electric system revenue bonds are secured by a pledge of, and a lien on, the revenues of the electric system after deducting "operating expenses" as defined in the bond resolutions, subject to prior liens of general obligation bonds and amounts due the United States.

In all years to date electric revenues, after deducting

".operating expenses" as defined in the bond resolutions, have been more than sufficient to meet all debt service requirements.

nofes The annual maturities of bonds and other long-term debt outstanding as of December 31, 1976, due in each of the years 1977 through 1981 are:

1 5,2 60,000;

$ 15,646,000;

$ 16,397,000;

$ 17,545,000 and $ 18,324,000 respectively.

Interest and amortization of discount on the various issues outstanding during the year resulted in an effective rate of 6.17% for 1976.

This rate approximates 6.50% over the remaining terms of the bonds.

At December 31, 1976, electric system revenue bonds totaling $240,000,000 principal amount were authorized, but unissued.

The debt service portion of segregated funds includes

$ 16,896,000 at December 31, 1976, and

$ 16,272,000 at December 31, 1975, restricted for operating reserve requirements under bond resolutions.

Long-term debt outstanding at December 31, 1976, and December 31, 1975, was as follows:

LONG-TERM DEBT OUTSTANDING

($000)

Interest Issued Outstanding Rate In Year 12/31/76 12/31/75 Future hlaturities General Obligation Bonds Issue No.

4 Issue No.

5 Issue No.

6 Issue No.

7 Issue No.

8 Issue No.

9 Issue No. 10 Issue No. 11 Issue No. 12 Issue No. 13 Issue No. 14 2-5/8 2-1/2 2-3/4 to 3-5/8 3.1 to 3.4 3.6 to 3-5/8 I to 4.1/4 I to 3.6 3.1/4 to 3-1/2 3to5 4to5 3.1/2 to 6 1950 1951 1953 1956 1959 1960 196245 1965 1968.69 1969 1970.72 700,000 2,500,000 8,000,000 7,045,000 3,830,000 22,805,000 15,730,000 10,900,000 37,000,000 7,900,000 165.900.000 1,400,000 3,000,000 8,500,000 7,095,000 3,950,000 23,860,000 16,575,000 11,400,000 38,650>000 8,250,000 368 300 MO 1977 1977-80 197742 1977-87 197747 1977-92 1977-94 197747 1977-99 1977-99 1977-2003 Unamortized bond discount Total general obligation bonds outstanding

$282,310,000 (3,394.984)

$278915,016

$290,980,000 (3,760,410)

$287,219,590 Electric System Revenue 1973 Series A 1973 Series B 1974 Series A 1974 Series B 1974 Series C 1975 Series A 1975 Series B 1975 Series C 1976 Series A 1976 Series B 1976 Series C 1976 Series D Bonds:

5 to 6.1/2 5 to 6-1/2 5.7 to 7.2 6.1 to 7.6 6-1/2 to 7-3/4 7.1 to 8.1/8 7.0 to 7.6 7.2 to 8-1/8 5.0 to 7.2 4.7 to 6-5/8 6.0 to 6-3/4 4.0 to 6.4 1973 1973 "

1974 1974 1974 1975 1975 1975 1976 1976 1976

'976'74,210,000 75,000,000 90,000,000 50,000,000 40,000,000 60,000,000 75,000,000 35,000,000 100,000,000 140,000,000 40,000,000 125,000,000

$ 75,000,000 75,000,000 90,000,000 50,000,000 40,000,000 60,000,000 75,000,000 35,000,000 1977-2010 1977-2011 1983-2012 1983-2012 1983-2012 1983-2013 1983-2015 1983-2015 1985-2016 1984-2016 1982-2016 1980-2016 Unamortized bond discount Total electric system revenue bonds outstanding Total bonds outstanding Obligations to U.S. Government for irrigation plant None Equipment contracts 6-7/8 g$ 7-1/2 Other obligations None Total long.term debt 1935-/6 1974-75'950 904,210,000 (10,892g32)

$500,000,000 (4,934,443)

$495 065 557

$782,285,I47 5 893,3I7 068 SI.I72 232084 12,225,830 2,013,444 45 522 12,570,867 1,728,048 34 37 I 5 I,I86.565.370

$796 569 943 1977-2001 1977 82 1977-79 auditnrs report To tlic Board ofDirectors, Salt River Project AgriculturalImprovement and Power District, and Board ofGovernors, Salt River Valley IVater Users'Association:

We have examined the combined balance sheet of SALT RIVER PROJECT AGRICULTURALIhlPROVEhIENT AND POWER DISTRICI'a political subdivision of the State of Arizona) and its agent, SALT RIVER VALLEYWATER USERS'SSOCIATION, together referred to as the SALT RIVER PROJECT, as of December 31, 1976, and Deccmbcr 31, 1975, and the related combined statements of net revenues and sources of I'unds for additions to utilityplant for the years then ended. Our examination was made in accordance with generally accepted auditing standards and accordingly included such tests of the accounting records and such other auditing proccdurcs as we considered necessary in the circumstances.

In our opinion, the financial statements referred to above prcscnt fairly thc financial position of thc Salt River Project as of Dcccmbcr 31, 1976, and December 31, 1975, and the results of its operations and sources of funds for additions to utilityplant for the years then ended, in conformity with generally accepted accounting principles consistently applied during the periods.

ArthurAndersen if'o.

Phoenix, Arizona February 23, 1977 19

PROJECT GENERAL Operating revenues.........................

Electric.

Water and irrigation.

Operating expenses.

Net financing costs Less capitalized interest................

Other deductions (revenues), net......

Net revenues.

Construction expenditures...............

Electric and irrigation plant, gross...

Contributions of power revenues to support water operations.............

Taxes and tax equivalents.................

Employes at year~nd.

WATER Total storage and pumping capacity (acre-feet).

Storage capacity (six reservoirs).............

Installed pumping capacity.....................

Water in storage January 1

(acre-feet).

Project storage only.

Runoff (acre-feet)

Released from storage (acre-feet)...............

Water in storage December 31 (acre-feet).

Project storage only Water diverted into canals and pumping (acre-feet)

From gravity sources.

From pumping by Association pumps....

From pumping by others........................

Contract deliveries (acre-feet).....................

From gravity sources.

From pumping.

Canals, total (miles)..

Miles lined.

Laterals, total (miles)

Miles lined or piped Drainage and waste ditches (miles).............

Miles lined or piped Assessed area Number of assessed accounts......................

Number of individual water deliveries........

1976 S

225,268,247 220,961,215 4,307,032 182,662,201 31,059,712 259,075 11,287,259 223,448,000 1,229,617,294 7,341,000 30,869,311 3,325 1976 2,841,818 2,072,050 769,768 1,040,000

. 77j,440 817,679""

826,546" 976,725 711,353 1,190,720 848,734

• 335,988 5,998 121,058 99,229 21,829 131 59 878 715 251 52 238,266 166,048 500,607 1975

$213,837,652 211,016,136 2,821,516 180,048,472 23,820,921 (445,403) 10,413,662 166,328,352 984,756,114 7,248,000 26,278,119 3,205 1975 2,869,649 2,072,050 797,599 1,056,410 798,815 870,511 809,063 1,040,000 771,440 1,194,212 849,875 337,516 6,821 112,599 91,556 21,043 131 57 876 702 254 53 238,264 163,869 469,071 1971

$ 85,422,463 83,335,209 2,087,254 74,856,121 5,148,087 193,829 5,224,426 74,702,708 433,573,063 9,600,000 9,570,688 2,522 1971 2,896,542 2,072,050 824,492 1,090,552 784,312 693,147 729,008 1,014,578 723,247 1,207,201 723,493 476,924 6,784 113,004 91,368 21,636 131 50 880 594 279 47 238,264 146,541 477,079 1966

$ 47,639,572 46,231,776 1,407,796 39,862,336 2,459,249 (108,546) 5,426,533 15,647,300 233,213,665 6,000,000 3,474,924 1,959 1966 2,843,863 2,072,050 771,813 1,991,240 1,678,488 1,237,127 1,128,138 1,667,772 1,341,588 1,235,933 1,059,325 171,672 4,936 110,316 89,336 20,980 138 47 873 444 284 34 238,252 133,046 505,472 20

<<Based on U.S.G.S. provisional records and subject to adjustment

POWER Sources:

(kwh)

Net steam generation.

Net diesel generation.

Net combustion turbine generation.....

Net combined cycle generation...........

Net run of river hydro generation**....

Pumped-storage generation..................

Total net generation.

Purchased Interchange received.

Wheeling received.

Total energy sources........................

Disposition: (kwh)

Residential Commercial and industrial...................

Irrigation pumping Street and highway lighting.................

Public authorities.

Interdepartmental Sales for resale.

Total sales Interchange delivered Wheeling delivered Energy losses Energy for pumped-storage operations...

Total disposition ofenergy.............

Peak overall power system (kw)

Date and time (MST).

Peak, Project customers (kw)...

Date and time (MST).

I Generating capability (kw) 2 Steam.

Diesel.

Combustion turbine Combined cycle..............

Hydroelectric, conventional...................

Hydroelectric, pumpedctorage...............

Total operating capability......................

Contracted purchase at time of peak Total resources.

Electric customers, year-end Residential Commercial and industrial......................

Other.

Total Average annual kwh use-residential Average annual kwh price-residential (cents) 1976 5,637,595,000*

93,811,000 459,155,000 243,951,000**

89,536,000 6,524,048,000*

2,561,076,900 162,016,000 13,389,100 9,260,530,000&

2,931,444,260 3,594,531,963 282,916,839 36,456,046 288,417,414 186,729,026 818,405,306 8,138,900,854 384,440,000 12,643,696 598,785,450 125,760,000

',260,530,000 2,089,000 July 7, 6 p.m.

1,732,000 July 7, 6 p.m.

1,548,250*

3378,000 3288,000 3 94,000 3 140,000 2,448,250~

325,563 2,773,813*

238,989 17,591 1,361 257,941 12,597 3.51 1975 4,050,267,000*

144,899,000 706,469,000 297,858,000**

81,916,000 5,281,409,000*

3,515,476,241 211,365,000 38,378,759 9,046,629,000*

2,878,957,582 3,387,045,196 310,750,959 39,259,768 260,297,826 176,855,758 988,241,889 8,041,408,978 279,381,000 34,847,914 574,735,108

'16,256,000 9,046,629,000 1,939,000 July 10,5 p.m.

1,634,000 Aug. 6,3 p.m.

1,181,900*

424,800 292,000 94,300 147,200 2,140,200*

450,500 2,590,700*

230,712 16,918 1,296 248,926 12,843 3.29 1971 3,400,750,000*

3,485,000 144,635,000**

24,610,000 3,573,480,000*

2,256,408,845 525,764,177 38,802,965 6,394,455,987*

1,911,775,663 2,362,228,051 234,805,839 31,507,462 203,198,169 231,383,473 850,215,920 5,825,114,577 105,476,100 421,909,991 35,582,319 6,373,000 6,394,455,987 1,291,000 June 30, 6 p.m.

1,120,000 July 28, 6 p.m.

774,400" 21,200 50,000 845,600*

607,410 1,453,010*

172,217 13,117 992 186,326 11,738 1.95 1966 1,396,832,000 326,778,000 1,723,610,000 1,266,859,922 369,430,884 29,360,340 3,389,261,146 1,039,717,668 1,336,308,822 189,554,725 22,614,624 157,147,272 96,908,267 93,221,250 2,935,472,628 187,550,764 26,902,960 239,334,794 3,389,261,146 752,000 June 16, 6 p.m.

652,000 July 18, 6 p.m.

532,200 7,900 73,700 613,800 353,050 966,850 124,644 11,134 839 136,617 8,522 1.97 IUnit ratings reported in earlier years werc nameplate capacities.

2208,000 kw added September I, 1976, as Ilayden Unit ll began commercial service.

3Figurcs reported indicate unit capabilities during the summer peak. Combustion turbine and combined cycle capabilities under actual operating conditions proved to be less than previously reported figures, which were based on manufacturers'ata and test conditions. Ilydroclec(ric unit capabilities for 1976 are less than 1975 because tests showed that excessive wear occurs at or near previously reported operating capabilities. These capabilities willbe utilized while units are under automatic generation control and may vary periodically due to system requirements and seasonal variations in tcmpcrature.

'Includes SRP participation in jointly owned projects "Includes run of river generation by pumped.storage units 21

financial highlights SOURCES DOLLARS PERCENT Residential energy sales..

Commercial and industrial.

Sales for resale Agricultural pumping, street and highway lighting, and public authorities Water and irrigation revenues Other.

Total

$ 102,912,463 45.7%

85,420,402 37.9 18,702,594 8.3 5.2 1.9 1.0 11,745,596 4,307,032 2,180,160

$225,268,247 100.0%

USES Fuel used for generation.~......................................

$ 48,285,472 21.5%

Other operating expenses c

38,786,480 17.2 Purchased power 18,103,516 8.0 Taxes and tax equivalents..........g..

30,869,311 13.7 Depreciation and amortization. <.......................

27,055,149 12.0 Net interest on indebtedness

~

31,059,712 13.8 Maintenance.....

19,562,273 8.7 Reinvested.

11,287,259 5.0 Miscellaneous deductions........ ~............

259,075 0.1 Total.;:'a

$225,268,247 100.0%

0

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'it 22

board 8 officers BOARD MEMBERS (Pictured belowJ The 10 members of the Board of Governors of the Salt River Valley IVater Users'Asrociation are elected biennially from among the shareholders oftire Association.

The Boanf of Directors of the Salt River Project Agricultural Improvement and Power Distrfct consists of 12 members and will be expanded to 14 in 1980. One District board member is elected from each of tire 10 SRP voting areas. In addition, the District's board Includes trvo members to be elected at large. These board members were appointed to the Distrfct's board in 1976 as prescribed by state Iaw.

Their positions willbe up'for election to four-year terms in 1978. The new state Iaw also provided that two additional at large reprcsentatfves willbe added in 1980, bringing the total number ofDfstrict board members to 14.

The boards establish the policies for the managemerrt and conduct ofthe business affairs ofthe Project.

COUNCIL MEMBERS (Pictured next pageJ Three council members are elected for twoyear terms from among the shareholders in each ofthe 10 district areas of the Salt River Valley Water Users'Associatfon and from among the members In each of the 10 divisfon areas of the Salt River Project Agricultural Improvement and Power Distrfct. The state law passed in 1976 provides that beginning in 1978 District council members willbe elected to four-year terms with /raff the council seats up for election every trvo years.

The councils enact and amend bylaws relatfng to the management and conduct of business affairs ofthe Project.

PRINCIPAL OFFICERS AND OTHER EXECUTIVES A.J. Pfister (l)............

Robert F. Amos (2).....

Kenneth J. Knaucr R. B. Ludcman E.W. Yorkc..........

Reid W. Tecples Don L. Weesner......

John R. hlcNamara (3)..

Trent O. hleacham John O. Rich.............

Vaughan A.Pierce Lcroy hlichacl, Jr. (4)....

Stanley E. Hancock Carroll hl. Perkins........

Paul D. Rice (5).............

General hfanager Deputy General Manager Treasurer'irector, Operations Services Director, Personnel Associate Genenrl hfanager - IVater Assistant General hfanager Water Associate Genenrl hfanagcr Power Assistant General hfanager -Power Construction and hfaintenance Assistant General hfanager Power Operations Assistant General Manager -llfarketingand Commercial Services Assistant General hfanager Law, Resources and Land Director, Communications and Public Affairs Director, Proj ect Planning Secretary ELECTED OFFICERS Karl F. Abel President

~ ~ ~

John R. Lassen Vice President Promoted to position (1) July 1, 1976; (2J July 12, 1976; (3) July 12, 1976; (4) hfarch I, 1916. Appointed to position (5J April1, 1976 Consultants Legal Advisors............. Jennings, Strouss &Salmon Auditors........................ ArthurAndersen & Co.

Consulting Engineers..... Ford, Bacon &Davis Incorporated Bond Counsel..............

Mudge Rose Guthrie &Alexander Financial Consultant.....

Smith Barney, Harris Upham & Co. Incorporated From thc tops) IUiffiam It?. Arnctt, at large; Thomas P.

urley, IVo. 6; BillRousseau, IVo. 3; John hf. IVilfiams,Jr.,

1Vo. 5; Alex hf. Conovaloff, IVo. 2; Lco C Smith, IVo. 4 not pictured

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(From the top:J John S. Hoopes, IVo. 8; INlfam P.

Schradcr, fVo.

7; Germain H. Ball, hfo.

1; John L.

Burton, Jr., at large; Tom Finley, No. 10; Larkin Fitch, IVo. 9 not pictured p;5

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23

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council--

VrftPictured.*'IUfleUR. BakerE'Vo. I, fcbnund.'Vasarro, fVo. 51 Jatn~ i R,,Ifarshal(,,Nt> 6

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lp,'

E "EE ffoward IU. Lydic, Rudolph Jolmson, Pfo. 1 f

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L'milM Rovey, fVo. 1; A. IUarren Austin, fVo. 7; George 8. IUillmoth,jVo. 7 Cal A. Sutton, fVo. 2; Ray C. Roles, fVo. 6 E E

":i, S,,if@

E I ',*

c /

Roy IU. Cheatham, Carl 1. IUeiler, ufo. 5 Olen Sharp, Robert IU. Birchett, IU. Curtis Dana, fVo. 9 l-i Orland R. flatch, Otto B. JVeely, 6 Max Pace, fVo. 10 C

I Thomas M Owens, Jr.,

fVo. B; IUilliam H.

Goettf, fVo. 7; C C. Pendergast, Jr., fVo. 2 p.~5~1 s

-sJha Marcel J. Boulais, fVo. 2; James L. Diller, fVo. 6

. '.I-.-'AMP, I

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E EE Dwayne F. Dobson, J. B. 1Veely, fVo. B M 8. Brooks, Collier, fVo. 3 Jr., Blain K Fleming, Thayer fuy IUilson, Jr., Leui fl. Reed, fVo, 4 24

SALT RIVER PROJECT WATERSHED, IRRIGATEDAREA AND ELECTRICALSERVICE AREA

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~ SLACSVASS I ttllSC TT ~

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)3,000~ i

<,": Mti.f Coro nado Generating Station ~

Polo Verde Nucfear Generating Station ~

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RMOVSIAf jj airs T-"tttorurstrto OAM syktttANTul OAII CIIANIIS Rlt ~ ~

Q OAM>>ACNSssr Csbvl IsoolNcc scT MAIN LOSt SAIVCa itsor AArt sutstltotl stRINCtnvlLLe NAVOln Srtt tricot Service Arto Sorvod Sod usively by Soll River Prottct Slit Rwer Prottct Prov>>Os Full Power Rcuuvonnnte Of Arirona Pubic Scrtoco for Resole propxt Motel tstrcct sales lo Dttlemtto fOT AllMvttng loads Soll River Proptcl Provdcs Fuel Power Rcouvemente Of Antone Publ C Service for Resole Eatctl tref Sofvfco Aloes Not Served by Soft Rivor Prottct Soll River Prontct Irngoted Area Scale of Miles 10 tg

SALT RIVER PROJECT P.O. BOX 1980/PHOENIX, AZ. 85001/RETURN REQUESTED SULK RATE US. POSTAGE PAID PHOENIX, ARIZONA Permit No. 395