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| number = ML17303A548
| number = ML17303A548
| issue date = 12/31/1987
| issue date = 12/31/1987
| title = Salt River Project,1986-87 Annual Rept.
| title = Salt River Project,1986-87 Annual Rept
| author name = Boulais M, Lassen J, Pfister A
| author name = Boulais M, Lassen J, Pfister A
| author affiliation = SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT & POWER
| author affiliation = SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT & POWER
Line 17: Line 17:


=Text=
=Text=
{{#Wiki_filter:NOTdCE THE ATTACHED FILES ARE OFFICIAL RECORDS OF THE DIVISION OF DOCUMENT CONTROL. THEY HAVE BEEN CHARGED TO YOU FOR A LIMITED TIME PERIOD AND MUST Bf Rf TURNED TO THE RECORDS FACILITY BRANCH 016. PLEASE DO NOT SEND DOCUMENTS CHARGED OUT THROUGH THE MAIL. REMOVAL OF ANY PAGE{S) FROM DOCUMENT FOR REPRODUCTION MUST BE REFERRED TO FILE PERSONNEL.
{{#Wiki_filter:NOTdCE THE ATTACHED FILES ARE OFFICIAL RECORDS OF THE DIVISION OF DOCUMENT CONTROL.
DEADLINE RETURN DATE RECORDS FACILITYBRANCH S7O9X70iW 86~~~~~8 OMOOMB PDR ADOCK           I I
THEY HAVE BEEN CHARGED TO YOU FOR A LIMITED TIME PERIOD AND MUST Bf RfTURNED TO THE RECORDS FACILITY BRANCH 016.
PLEASE DO NOT SEND DOCUMENTS CHARGED OUT THROUGH THE MAIL. REMOVALOF ANY PAGE{S) FROM DOCUMENT FOR REPRODUCTION MUST BE REFERRED TO FILE PERSONNEL.
DEADLINE RETURN DATE RECORDS FACILITYBRANCH S7O9X70iW 86~~~~~8 PDR ADOCK OMOOMB I
I


===Background===
===
River Project is named S for   alt the major river which supplies water to the Phoenix metropolitan area. SRP plays a significant part in the growth of the Salt River Valley, providing water and power to residents through bw organizations the Salt River Valley Water (the Association) and Users'ssociation the       Salt     River     Project Agricultural Improvement and Purpose of Salt River Project:                                              Poiver District (the District).
Background===
The Association is a private Provide a reliable and adequate supply of water and                        Arizona corporation. It ad-electricity at the lowest reasonable cost                                  ministers water rights of SRP's 240,000-acre area and operates and maintains the irrigation transmission and distribution
Purpose of Salt River Project:
                                                                                  ~
Provide a reliable and adequate supply of water and electricity at the lowest reasonable cost
system which carries water to municipal, industrial, agricultural and residential users. In coopera-
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                                                          ~~<hvt~                        tion with the U.S. Forest Service, it participates in the management of the 13,000-square-mile water-sheds of the Salt and Verde SALTRIVER PROJECT                rivers.
SALTRIVERPROJECT PUIILISIIERSRP Communications i'ublic Affairs Department EDIIR Heather Cllsby DESICJI Larry i~tacLcan PHO?OGRIt PHV Chet Snellback, Ed
PUIILISIIER SRP Communications      The District is a public power i'ublic Affairs Department    utility and a political subdivision EDIIR Heather Cllsby DESICJI Larry i~tacLcan    of Arizona. It operates under PHO?OGRIt PHV Chet Snellback, Ed contracts with the United States
'tbllmr, Jere Grms and Joe Qulhuls COhtPUTER CRrlPHICS Jeff Stanley On the couer-Another beautiful Arizona sunset silhouettes part of SRP's Eyrene Receiving Station in 'ibmpe.
                                                            'tbllmr, Jere Grms and Joe    and provides electricity to Qulhuls                              commercial, in-residential, COhtPUTER CRrlPHICS Jeff Stanley dustrial and agricultural power users in a 2,900-square-mile ser-vice area in parts of Maricopa, Gila and Pinal counties.
S alt River Project is named for the major river which supplies water to the Phoenix metropolitan area. SRP plays a significant part in the growth of the Salt River Valley, providing water and power to residents through bw organizations the Salt River Valley Water Users'ssociation (the Association) and the Salt River Project Agricultural Improvement and Poiver District (the District).
In line with the long-standing reclamation principle, SRP uses a portion of its electric revenues to help support its water opera-tions. This practice helps keep waterdelivery charges to cities, farmers and homeowners at reasonable levels. At the same time, SRP maintains electric rates that are competitive with those of other utilities in the area.
The Association is a private Arizona corporation.
On the couer-Another beautiful Arizona sunset silhouettes part of SRP's Eyrene Receiving Station in 'ibmpe.
It ad-ministers water rights of SRP's 240,000-acre area and operates and maintains the irrigation transmission and distribution system which carries water to municipal, industrial, agricultural and residential users. In coopera-tion with the U.S. Forest Service, itparticipates in the management of the 13,000-square-mile water-sheds of the Salt and Verde rivers.
The District is a public power utilityand a political subdivision of Arizona. It operates under contracts with the United States and provides electricity to residential, commercial, in-dustrial and agricultural power users in a 2,900-square-mile ser-vice area in parts of Maricopa, Gila and Pinal counties.
In line with the long-standing reclamation principle, SRP uses a portion of its electric revenues to help support its water opera-tions. This practice helps keep waterdelivery charges to cities, farmers and homeowners at reasonable levels. At the same
: time, SRP maintains electric rates that are competitive with those ofother utilities in the area.


Contents Message from Management                       .......................                     2 P ower     o ~   o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o 4 Water      .......................................8 C ommumty
Contents Message from Management.......................
              ~ ~
2 ower o
                      ...................................12 F manctal....................                           ~ ~.............. 16 Combined Financial               Statements...................18 Notes to Combined Financial                   Statements............22 Statistical Review...               '...........................                         26 Board Members and Council                     Members..............28 Highlights REVENUES/EXPENSES                 (See Page 20)                                                 Fiscal 1987              Fiscal 1986 Total operating revenues ($ 000)                                                                     888,506            848,618 Total operating expenses ($ 000)                                                                     706,377            642,963 Net operating revenues ($ 000)                                                                   182,129            205,655 Financing costs (less AFUDC) ($ 000)                                                                 105,293              42,337 Other expenses, net ($ 000) .                                                                            2,075            5,002 Reinvested ($ 000)   .                                                                            74,761            158,316 POWER OPERATIONS                 (See Page 27)
~
Energy customers at year end .                                                                     487,321              457,489 Total kilowatt-hour sales (000).                                                               15,566,478            14,503,982 Average annual kWh usage per res. customer                                                             12,440            12,175 Avg. annual kWh revenue/res. customer (cents)                                                               7.54            7.56 WATER OPERATIONS               (See Page 26)                                                 Calendar 1986            Calendar 1985 Assessed water accounts       .............                                                         181,894            181,645 Water runoff (acre-feet)                                                                                               1,774,667 1,070,214',691,741 Water in storage, Dec. 31 (acre-feet)     .                                                                          1,671,535 Water deliveries (acre-feet) .                                                                     870,658            1,016,612 SELECTED OTHER DATA (See Page 26)                                                               Fiscal 1987              Fiscal 1986 Gross plant investment ($ 000) .                                                                 4,814,087            4,481,667 Long-term debt ($ 00(hSee Page 19) .                                                             2,986,737            2,880,407 Taxes 6 tax equivalents ($ 000) .                                                                   103,097              83,864 Electric-revenue contributions to support water operations ($ 000)                                                                   15,9?5            12,384 Employees at year end.                                                                                   5,735"            5,468"
o
'ased
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"      on V.S.G.S. provisional records and subject to adjustment.
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Does not include temporary employees.
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o 4 P
ater.......................................8 W
C
~~
ommumty...................................12 Fmanctal....................
~ ~..............
16 Combined Financial Statements...................18 Notes to Combined Financial Statements............22 Statistical Review... '...........................
26 Board Members and Council Members..............28 Highlights REVENUES/EXPENSES (See Page 20)
Total operating revenues
($000)
Total operating expenses
($000)
Net operating revenues
($000)
Financing costs (less AFUDC) ($000)
Other expenses, net ($000)
Reinvested
($000)
POWER OPERATIONS (See Page 27)
Energy customers at year end.
Total kilowatt-hour sales (000).
Average annual kWh usage per res. customer Avg. annual kWh revenue/res.
customer (cents)
WATER OPERATIONS (See Page 26)
Assessed water accounts.............
Water runoff (acre-feet)
Water in storage, Dec. 31 (acre-feet)
Water deliveries (acre-feet).
SELECTED OTHER DATA (See Page 26)
Gross plant investment ($000).
Long-term debt ($00(hSee Page
: 19).
Taxes 6 tax equivalents
($000).
Electric-revenue contributions to support water operations
($000)
Employees at year end.
'ased on V.S.G.S. provisional records and subject to adjustment.
" Does not include temporary employees.
Fiscal 1987 888,506 706,377 182,129 105,293 2,075 74,761 487,321 15,566,478 12,440 7.54 Calendar 1986 181,894 1,070,214',691,741 870,658 Fiscal 1987 4,814,087 2,986,737 103,097 15,9?5 5,735" Fiscal 1986 848,618 642,963 205,655 42,337 5,002 158,316 457,489 14,503,982 12,175 7.56 Calendar 1985 181,645 1,774,667 1,671,535 1,016,612 Fiscal 1986 4,481,667 2,880,407 83,864 12,384 5,468"


To Our Shareholders                                   and Bondholders:
To Our Shareholders and Bondholders:
a small amount of capital for in-T     his past year we witnessed our 50th anniversary as the Salt River Project Agricultural Im-headquarters will consist of five buildings on 40 acres est of the present headquarters. The first quality and institute practices to ensure that SRP water meets all applicable standards. We initiated vestment.
T his past year we witnessed our 50th anniversary as the Salt River Project Agricultural Im-provement and Power District.
After the end of the fiscal year, provement and Power District.          component,        the Information      meetings with all cities we serve to    approximately $ 22.3 million in We'e seen a lot of changes in the      Systems Building, is scheduled for    seek solutions to mutual water          mini-bonds were sold. Some were past 50 years. Through it all we'e    completion in late 1988. In addi-      problems. As population increases,     interest-bearing mini-bonds for continued to supply a reliable        tion to the corporate headquarters,   the cities will be faced with an in-   $ 500 each and, for the first time, source of energy and water at the      484 surrounding acres of SRP-          creasing demand for water. By          we sold capital appreciation bonds lowest reasonable cost.              .owned land will be available for      working with the cities, we can        for $ 200 each. These bonds vvill lease and development by others        share information and avoid cost-Research shows our custom-                                                                                      pay $ 488.05 if held to maturity in and will be called Papago Park        ly duplication of efforts.              2002.
We'e seen a lot of changes in the past 50 years. Through it all we'e continued to supply a reliable source of energy and water at the lowest reasonable cost.
ers are happy with our service. One Center. Income from this develop-           Under the Safety of Dams Act, of last year's goals was to achieve                                                                                      Our employees were the ment will be used to supplement        preliminary engineering and ex-an overall quality of service rating                                                                                  strength of this year's corporate electric revenues, offset operating    cavation work began on Theodore of 90 percent from our customers.                                                                                     theme, "The People Behind the expenses and hold down electric        Roosevelt Dam and Stewart Moun-We received a 97 percent rating.                                                                                     Spirit." Their commitment to ex-bills.                                tain Dam. During 1986, we entered Customers saw a small decrease                                                                                  cellence was shown in their work Water supplies were sufficient    into agreements with the U.S.           and in their many volunteer ac-in their electric bills as we passed                                          Bureau of Reclamation to add and remarkably well managed.                                                   tivities in their communities.
Research shows our custom-ers are happy with our service. One of last year's goals was to achieve an overall quality ofservice rating of90 percent from our customers.
on a decrease in fuel costs. For                                              several maintenance items to residential customers, the average    Although inflows from the Salt and Verde rivers were only 87 percent     necessary dam safety modifications          Their efforts are, in large cost per kilowatt-hour (kWh) was                                                                                      measure, the reason this past year of average, heavy summer rains         scheduled at Stewart Mountain 7.54 cents compared to 7.56 cents                                                                                    was successful for Salt River Pro-kept reservoirs fuller than normal. Dam. The proposed changes will per kWh in the previous year.                                                enhance operating and main-            ject. Through      our Storage at the end of 1986 totaled                                                                       employees'alents, During the year, we added        1,691,741 acre-feet (a0 or 84 per-     tenance facilities at the dam.                   expertise and dedication, 29,832 new electric customers for      cent of capacity. This was 139 per-                                            we expect to be able to meet the Financially, it vvas another good  challenges of the coming year.
We received a 97 percent rating.
a total of 487,321 customers in all    cent of normal.                       year for SRP. Careful management classes. The new customers con-                                                                                          Challenges will include meeting tributed to a new system peak of            For the third time in four years, of SRP resources, healthy financ-plenty of water in storage reduced    ing opportunities and a strong          financial capital requirements 2,785 megawatts (MW) on August                                                                                        caused by new construction. These groundwater pumping to less than      local economy contributed to the
Customers saw a small decrease in their electric bills as we passed on a decrease in fuel costs.
: 20.                                                                                                                   capital requirements are expected 7 percent of deliveries. Project      success. Our debt service coverage However, plenty of power is      groundwater pumping totaled on-        increased from 1.85 to 2.0, aided      to cause our debt ratio to rise.
For residential customers, the average cost per kilowatt-hour (kWh) was 7.54 cents compared to 7.56 cents per kWh in the previous year.
available. The first two units of the  ly 65,538 af, aiding our efforts to    by a 4.7 percent increase in gross          However, through all of the Palo Verde Nuclear Generating Sta-     conserve this essential resource.      revenues. Hot weather and the          year's activities i~e'll be working tion have begun commercial opera-                                             almost 30,000 new customers             closely with Valley communities
During the
                                            'Ibtal water deliveries hit a tion, providing SRP with 444 MW                                              helped to build an increase in gross    and all levels of government, con-10-year low of only 870,658 af, of generating      capacity. Future                                          revenues to $ 888.5 million, up        tinuing to be a strong presence in compared to 1,016,612 in 1985.
: year, we added 29,832 new electric customers for a total of 487,321 customers in all classes. The new customers con-tributed to a new system peak of 2,785 megawatts (MW)on August 20.
power supplies are being deeloped                                            from the previous year's revenues      the Valley we serve. We'l be here, Agricultural use was less than nor-at St. Johns, where the third 350                                            of $ 848.6 million.                    providing a reliable supply of water mal due to land sales and govem-MW unit of the coal-fired Cor-                                                                      totaled $ 74.8  and electricity for our customers, ment set-aside programs which              Net revenues onado Generating Station is under                                                                                    for another 50 years to come.
However, plenty of power is available. The first two units ofthe Palo Verde Nuclear Generating Sta-tion have begun commercial opera-tion, providing SRP with 444 MW of generating capacity.
reduced the quantity of crops        million during fiscal year 198M7.
Future power supplies are being deeloped at St. Johns, where the third 350 MW unit of the coal-fired Cor-onado Generating Station is under contruction.
contruction.
On a per-customer basis, our operations and maintenance costs dropped to $1,422. That is $114 less than our Project goal of
grown. Municipal use was less due    As a public power utility, our net On a per-customer basis, our      to summer rains which curtailed      revenues are reinvested to replace operations and maintenance costs      the usual amount of lawn watering. equipment and to help finance dropped to $ 1,422. That is $ 114                                            construction of new facilities.
$1,536.
Land and vvater use continued less than our Project goal of to shift. A total of 7,165 acres was      Maintaining a healthy financial
As the number ofcustomers in-
$ 1,536.
: creased, many located near the outer edges of the SRP service area.
                                                                                                                                            ~
To better accommodate customers on the east and est sides of the Valley, we opened the Tolleson Service Center and broke ground for the Mesa Service Center.
converted from agricultural use to    status resulted in our bonds con-As the number of customers in-    urban use. By year's end, 68.6 per-   tinuing to receive high investment.                           John R. Lassen creased, many located near the         cent of the 238,170 acres in SRP     grade ratings of AA and Aa by the outer edges of the SRP service          was urbanized, while 31.4 percent     nation's leading rating services. We area. To better accommodate customers on the east and est sides of the Valley, we opened the remained in agriculture.
Regional service centers enhance operations by reducing travel time and expense ofreaching the customer.
SRP's Water Group faced a ma-jor reorganization. Reid W. lteples have sold investment-grade bonds for more than 20 years.
In an effort to eliminate use of leased office space and to con-solidate administrative functions, we broke ground for a new corpo-rate headquarters.
For the first time in ffive years,
Eventually, the headquarters will consist of five buildings on 40 acres est of the present headquarters.
                                                                                                                      &i~g.               Marcel J. Boulais Tolleson Service Center and broke      retired as head of the Water Group    we sold bonds on a competitive bid ground for the Mesa Service            after 39 years with SRP. He was       basis. In October 1986, SRP sold Center. Regional service centers      succeeded    by D.S. Wilson, Jr. A    $ 100 million in tax-free electric enhance operations by reducing        reorganization of three depart-      system revenue bonds. The bonds travel time and expense of reaching    ments was completed to increase      were sold in $ 5,000 denominations the customer.                          eficiency and to provide better ser-  at an effective interest rate of 7.34                        A.J. Pfister vice to customers.                    percent.
The first component, the Information Systems Building, is scheduled for completion in late 1988. In addi-tion to the corporate headquarters, 484 surrounding acres of SRP-
In an effort to eliminate use of leased office space and to con-              A new department was                  Mini-bonds retained          their solidate administrative functions,      formed, the Water Quality and        popularity. Mini-bonds are bonds we broke ground for a new corpo-        Geohydrology          Department. sold for $ 500 or less, which makes rate headquarters. Eventually, the      SRP staff will monitor water          them appealing to the investor with
.owned land will be available for lease and development by others and will be called Papago Park Center. Income from this develop-ment will be used to supplement electric revenues, offset operating expenses and hold down electric bills.
Water supplies were sufficient and remarkably well managed.
Although inflows from the Salt and Verde rivers were only 87 percent of average, heavy summer rains kept reservoirs fullerthan normal.
Storage at the end of 1986 totaled 1,691,741 acre-feet (a0 or 84 per-cent ofcapacity. This was 139 per-cent of normal.
For the third time in four years, plenty ofwater in storage reduced groundwater pumping to less than 7 percent of deliveries.
Project groundwater pumping totaled on-ly 65,538 af, aiding our efforts to conserve this essential resource.
'Ibtal water deliveries hit a 10-year low of only 870,658 af, compared to 1,016,612 in 1985.
Agricultural use was less than nor-mal due to land sales and govem-ment set-aside programs which reduced the quantity of crops grown. Municipal use was less due to summer rains which curtailed the usual amount oflawn watering.
Land and vvater use continued to shift. A total of 7,165 acres was converted from agricultural use to urban use. By year's end, 68.6 per-cent of the 238,170 acres in SRP was urbanized, while 31.4 percent remained in agriculture.
SRP's Water Group faced a ma-jor reorganization. Reid W. lteples retired as head ofthe Water Group after 39 years with SRP. He was succeeded by D.S. Wilson, Jr. A reorganization of three depart-ments was completed to increase eficiency and to provide better ser-vice to customers.
A new department was formed, the Water Quality and Geohydrology Department.
SRP staff will monitor water quality and institute practices to ensure that SRP water meets all applicable standards.
We initiated meetings with all cities we serve to seek solutions to mutual water problems. As population increases, the cities willbe faced with an in-creasing demand for water.
By working with the cities, we can share information and avoid cost-ly duplication of efforts.
Under the Safety of Dams Act, preliminary engineering and ex-cavation work began on Theodore Roosevelt Dam and Stewart Moun-tain Dam. During 1986, we entered into agreements with the U.S.
Bureau of Reclamation to add several maintenance items to necessary dam safety modifications scheduled at Stewart Mountain Dam. The proposed changes will enhance operating and main-tenance facilities at the dam.
Financially, itvvas another good year for SRP. Careful management of SRP resources, healthy financ-ing opportunities and a strong local economy contributed to the success. Our debt service coverage increased from 1.85 to 2.0, aided by a 4.7 percent increase in gross revenues.
Hot weather and the almost 30,000 new customers helped to build an increase in gross revenues to $888.5 million, up from the previous year's revenues of $848.6 million.
Net revenues totaled
$74.8 millionduring fiscal year 198M7.
As a public power utility, our net revenues are reinvested to replace equipment and to help finance construction of new facilities.
Maintaining a healthy financial status resulted in our bonds con-tinuing to receive high investment.
grade ratings ofAAand Aa by the nation's leading rating services. We have sold investment-grade bonds for more than 20 years.
For the first time in ffive years, we sold bonds on a competitive bid basis. In October 1986, SRP sold
$100 million in tax-free electric system revenue bonds. The bonds were sold in $5,000 denominations at an effective interest rate of 7.34 percent.
Mini-bonds retained their popularity. Mini-bonds are bonds sold for $500 or less, which makes them appealing to the investor with a small amount of capital for in-vestment.
After the end of the fiscal year, approximately
$22.3 million in mini-bonds were sold. Some were interest-bearing mini-bonds for
$500 each and, for the first time, we sold capital appreciation bonds for $200 each. These bonds vvill pay $488.05 ifheld to maturity in 2002.
Our employees were the strength of this year's corporate theme, "The People Behind the Spirit." Their commitment to ex-cellence was shown in their work and in their many volunteer ac-tivities in their communities.
Their efforts
: are, in large measure, the reason this past year was successful for Salt River Pro-ject.
Through our employees'alents, expertise and dedication, we expect to be able to meet the challenges of the coming year.
Challenges willinclude meeting financial capital requirements caused by new construction. These capital requirements are expected to cause our debt ratio to rise.
: However, through all of the year's activities i~e'll be working closely with Valley communities and all levels of government, con-tinuing to be a strong presence in the Valley we serve. We'l be here, providing a reliable supply ofwater and electricity for our customers, for another 50 years to come.
John R. Lassen
&i~g.~
Marcel J. Boulais A.J. Pfister


(From left) Salt River Project General Manager A.J. Pfister, President John R. Lassen and VIce President Marcel J. Boulais.
(From left) Salt River Project General Manager A.J. Pfister, President John R. Lassen and VIce President Marcel J. Boulais.
Officers Elected Officers John R. Lassen President                       Don G. Parlett Associate General hlanager,     Stanley  E. Hancock Assistant General Marcel J. Boulais Vice President              Corporate Services Croup                       h1anager, Communications  & Public Affairs Paul G. Ahler Assistant Ceneral h1anager,   D. Michael Rappoport Assistant Ceneral Principal Officers and Other Executives            Human Resources                             h1anager, Government Affairs AJ. Pfister General h1anager                      James L. Swartz Assistant General h1anager, Richard H. Silverman Assistant General John R. NcNamara Associate Ceneral                Operations Services                         h1anager, Law & Land h1anager, Corporate Engineering and Ibiver      Carroll N. Perkins Associate Ceneral          C.A. Howlett Assistant Ceneral Nanager, Group                                          Nanager, Customer, Financial &Information     Special Rejects Robert J. Conlon Assistant General Nanager,  Services Group                                 Paul D. Rice Corporate Secretary Corporate Engineering                          John D. Jacobs Assistant General Manager, Trent O. Neacham Assistant General              Information S>stems h1anager, lbwer Construction &Naintenance      Oren D. Thompson         Assistant General John O. Rich Assistant General hlanager,      hlanager, Customer Services Power Operations                                Mark B. Bonsall Corporate 71easurer, D.S. Wilson, Jr. Associate General Nanager,     Financial Services                          Consultants IVater Croup                                  Leroy Michael Jr. Associate Ceneralh1anager,     LegalAdvisers Jennings, Strouss 4 Salmon Richard Juet ten Assistant General Nanager,  Planning & Resources                            Auditors Arthur Andersen 6 Co.
Officers Elected Officers John R. Lassen President Marcel J. Boulais Vice President Principal Officers and Other Executives AJ. Pfister General h1anager John R.
IVater Resources & Services                    Arnold L. Schwalb Director, Corporate          Bond Counsel Nudge Rose Guthrie Robert W. Mason Director, Water Croup          Planning                                      Alexander 4 Ferdon Nanagement Staff                              Darrell E. Smith Director, Resource Planning  Financial Consultant Lazard Freres 6 Co.
NcNamara Associate Ceneral
: h1anager, Corporate Engineering and Ibiver Group Robert J. Conlon Assistant General Nanager, Corporate Engineering Trent O.
Neacham Assistant General h1anager, lbwer Construction &Naintenance John O. Rich Assistant General hlanager, Power Operations D.S. Wilson, Jr.
Associate General Nanager, IVater Croup Richard Juet ten Assistant General Nanager, IVater Resources & Services Robert W. Mason Director, Water Croup Nanagement Staff Don G. Parlett Associate General hlanager, Corporate Services Croup Paul G. Ahler Assistant Ceneral h1anager, Human Resources James L. Swartz Assistant General h1anager, Operations Services Carroll N.
Perkins Associate Ceneral Nanager, Customer, Financial &Information Services Group John D. Jacobs Assistant General Manager, Information S>stems Oren D. Thompson Assistant General
: hlanager, Customer Services Mark B.
Bonsall Corporate 71easurer, Financial Services Leroy Michael Jr. Associate Ceneralh1anager, Planning &Resources Arnold L. Schwalb
: Director, Corporate Planning Darrell E. Smith Director, Resource Planning Stanley E.
Hancock Assistant General
: h1anager, Communications & Public Affairs D. Michael Rappoport Assistant Ceneral
: h1anager, Government Affairs Richard H. Silverman Assistant General h1anager, Law &Land C.A. Howlett Assistant Ceneral
: Nanager, Special Rejects Paul D. Rice Corporate Secretary Consultants LegalAdvisers Jennings, Strouss 4 Salmon Auditors Arthur Andersen 6 Co.
Bond Counsel Nudge Rose Guthrie Alexander 4 Ferdon Financial Consultant Lazard Freres 6 Co.
3
3


SRP linemen continually upgrade and repair SRP's power lines, such as this high voltage line between H'yrene and Silver King receiving stations.
SRP linemen continually upgrade and repair SRP's power lines, such as this high voltage line between H'yrene and Silver King receiving stations.


Electric customers benefit from decreased fuel costs, increased power i   t was a golden year SRP's Power District.
Electric customers benefit from decreased fuel costs, increased power i
for In the 50th year since the for-customers in each of the past four years including a record 34,715 customers in fiscal year rates contain a basic amount for fuel, but fuel costs can change on a daily basis. Fluctuations be-Transmission system completed under budget SRP's work on the Palo Verde mation of the Salt River Project      1985-86. Because of continuing      tween the amount paid for fuel Nuclear      Generating Station's Agricultural Improvement and           growth, the number of customers     and the amount collected from transmission system was com-Power District, the District:          by the end of the next fiscal year   customers are refunded or is expected to easily surpass the                                                 pleted ahead of schedule and $ 3 recovered on bills through
t was a golden year for SRP's Power District.
      ~                                500,000 mark.
In the 50th year since the for-mation of the Salt River Project Agricultural Improvement and Power District, the District:
million under budget.          The Added nearly 30,000 new                                              periodic fuel cost adjustments.
~ Added nearly 30,000 new electric customers, including several major industrial customers
13-year project was completed in electric customers, including              Of the increase in last year'           SRP starts receiving                  October 1986, at a cost of $ 95 several      major    industrial    customers, 27,153 were residen-             low cost power from                    million.
~ Passed on a slight decrease in fuel costs to customers, reduc-ing their cost of electricity
customers                            tial and 2,245 were commercial             Unit 2 of Palo Verde
~ Began receiving low-cost power from the second unit of Palo Verde Nuclear Generating Station
      ~ Passed                          and industrial. Other electric The high-voltage transmission on a slight decrease Some of the power re-                    system includes 165 miles of 500 in fuel costs to customers, reduc-    users, including municipal street quirements of customers were                  kilovolt (kV) power lines which ing their cost of electricity        light contracts and irrigation       met with electrici-
~ Completed the Palo Verde transmission system to the Phoenix Metropolitan area, on-time and under budget
      ~                                pumps, increased by 434.
~ Brought on-line a new com-puter, the Energy Management System, to control SRP's electric system
Began receiving low-cost                                            ty from the first power from the second unit of            Several     new     industrial   hvo units of Palo Palo Verde Nuclear Generating        customers,       including B.F.     Verde      Nuclear PROJECT ENERGY SOURCES Station                                Goodrich,       Hamilton-Avnet,     Generating Sta- Year Parker Hannifin and Hexcel, ac-     tion. Both began April  Ending                                                busc
~ And continued construc-tion ofthe third coal-fired unit of the Coronado Generating Station.
      ~  Completed the Palo Verde                                                                            30 Hpb'o Gas            Oil    Cnal    Nuclear Purch.
Further luster was added to the golden jubilee when SRP's District improved service to our customers by building a new regional service center; esta-blished a demand side implemen-tation program; and formulated a balanced strategy approach to resource planning.
counted for about 8,000 kilowatts   commercial opera-transmission system to the Phoenix Metropolitan area, on-        (kW) in new load, nearly 800,000     tion in calendar 1984                15.8      3.9    0.5    78.6      0      1.2 time and under budget                 square feet of manufacturing        year 1986, the first 1985             12.8       8.9   0.4   76.2       0     1.7 space and more than 1,000 new        unit on January 1986                11.0       103      0    683     1.0     9.4
SRP's service area remains a high-growth area The number of SRP customers continued to grow.
    ~ Brought on-line a new com-                                                                    1987        10.0        8.6      0  58.4     12.4     10.6 jobs in the area.                    30, 1986 and the 1992                63' puter, the Energy Management                                                                                                  1      0   67.6   21.0       0 Each new customer increased      second unit on $prnjeded)
Electric customers, totaled 487,321 at year's end, compared to 457,489 the year before. SRP has added about 30,000 customers in each of the past four years including a record 34,715 customers in fiscal year 1985-86. Because of continuing growth, the number ofcustomers by the end of the next fiscal year is expected to easily surpass the 500,000 mark.
System, to control SRP's electric                                          September        20, 'inc&As bybo purchases demand on the electric system.
Of the increase in last year' customers, 27,153 were residen-tial and 2,245 were commercial and industrial.
system                                                                      1986.                  bill numbers m prnraroprsl Electric customer use reached a
Other electric users, including municipal street light contracts and irrigation pumps, increased by 434.
    ~  And continued construc-        peak of 2,785 megawatts (MW)              SRP is one of tion of the third coal-fired unit of  on August 20, 1986. This peak        seven owners of the nuclear                   link Palo Verde Nuclear Gener-the Coronado Generating              demand surpassed the previous        powered station 50 miles west of ating Station with Phoenix and Station.                              high of 2,658 MW reached on          Phoenix. SRP owns 17.49 per-                 other moor cities and the elec-August 29, 1985. 'Ibtal kilowatt-    cent of Palo Verde's three 1,270             trical grid connecting the Further luster was added to      hour (kWh) sales to customers        MW units. With the commercial                 Western states.
Several new industrial customers, including B.F.
the golden jubilee when SRP's          during the year increased by          operation of the first two units, District improved service to our                                            SRP gained 444             MW of Meanwhile,       construction 1.06 billion kWh to 15.56 billion                                                began on the Papago Buttes-customers by building a new            kWh from 14.50 billion kWh the        generating capacity.                        Pinnacle Peak 230-kV transmis-regional service center; esta-        previous fiscal year.                                                              sion line. The line will strengthen blished a demand side implemen-                                                  The third unit of Palo Verde        . SRP's transmission system and tation program; and formulated            Electric bills drop slightly      Nuclear Generating Station is ex-            increase electric reliability to the a balanced strategy approach to            During the )mr, SRP was able    pected to be in commercial growing number of customers in resource planning.                    to pass on to customers a slight    operation by the end of 1987.                the Scottsdale and Tempe area.
: Goodrich, Hamilton-Avnet, Parker Hannifin and Hexcel, ac-counted for about 8,000 kilowatts (kW) in new load, nearly 800,000 square feet of manufacturing space and more than 1,000 new jobs in the area.
decrease in fuel costs, thereby      This unit will provide another SRP's service area                                                                                                The line is expected to be com-lowering the cost of electricity. 222 MW of capacity to SRP. The remains a high-growth area                                                                                              pleted in early 1989.
Each new customer increased demand on the electric system.
For residential customers, the  U.S. Nuclear Regulatory Commis-The number of SRP                  average cost per kWh was 7.54        sion issued an operating license                  During the fiscal year, SRP customers      continued to grow.      cents, compared to 7.56 cents per    for the unit in March 1987. That              added a total of 15 miles of 69 Electric customers, totaled            kWh the previous year. The          license allows plant operator                kV subtransmission line and 39 487,321 at year's end, compared        reduction was due to a decrease      Arizona Public Service Company                miles of overhead distribution to 457,489 the year before. SRP        in the fuel cost adjustment fac-    to load nuclear fuel and begin the          lines. SRP also installed 1,403 has added          about 30,000        tor applied to bills. SRP's electric prescribed testing process.                  miles of primary underground
Electric customer use reached a peak of 2,785 megawatts (MW) on August 20, 1986. This peak demand surpassed the previous high of 2,658 MW reached on August 29, 1985. 'Ibtal kilowatt-hour (kWh) sales to customers during the year increased by 1.06 billionkWh to 15.56 billion kWh from 14.50 billion kWh the previous fiscal year.
Electric bills drop slightly During the )mr, SRP was able to pass on to customers a slight decrease in fuel costs, thereby lowering the cost of electricity.
For residential customers, the average cost per kWh was 7.54 cents, compared to 7.56 cents per kWh the previous year.
The reduction was due to a decrease in the fuel cost adjustment fac-tor applied to bills. SRP's electric Transmission system completed under budget SRP's work on the Palo Verde Nuclear Generating Station's transmission system was com-pleted ahead ofschedule and $3 million under budget.
The 13-year project was completed in October 1986, at a cost of $95 million.
The high-voltage transmission system includes 165 miles of500 kilovolt (kV) power lines which Generating Sta-tion. Both began commercial opera-tion in calendar year 1986, the first unit on January 30, 1986 and the second unit on September 20, 1986.
SRP is one of Year Ending April 30 Hpb'o Gas 1984 15.8 3.9 1985 12.8 8.9 1986 11.0 103 1987 10.0 8.6 1992 63' 1
$prnjeded)
'inc&As bybo purchases bill numbers m prnraroprsl busc Oil Cnal Nuclear Purch.
0.5 78.6 0
1.2 0.4 76.2 0
1.7 0
683 1.0 9.4 0
58.4 12.4 10.6 0
67.6 21.0 0
seven owners of the nuclear powered station 50 miles west of Phoenix. SRP owns 17.49 per-cent of Palo Verde's three 1,270 MW units. With the commercial operation of the first two units, SRP gained 444 MW of generating capacity.
The third unit of Palo Verde.
Nuclear Generating Station is ex-pected to be in commercial operation by the end of 1987.
This unit will provide another 222 MWof capacity to SRP. The U.S. Nuclear Regulatory Commis-sion issued an operating license for the unit in March 1987. That license allows plant operator Arizona Public Service Company to load nuclear fuel and begin the prescribed testing process.
link Palo Verde Nuclear Gener-ating Station with Phoenix and other moor cities and the elec-trical grid connecting the Western states.
Meanwhile, construction began on the Papago Buttes-Pinnacle Peak 230-kV transmis-sion line. The line willstrengthen SRP's transmission system and increase electric reliability to the growing number of customers in the Scottsdale and Tempe area.
The line is expected to be com-pleted in early 1989.
During the fiscal year, SRP added a total of 15 miles of 69 kV subtransmission line and 39 miles of overhead distribution lines. SRP also installed 1,403 miles of primary underground rates contain a basic amount for fuel, but fuel costs can change on a daily basis.
Fluctuations be-tween the amount paid for fuel and the amount collected from customers are refunded or recovered on bills through periodic fuel cost adjustments.
SRP starts receiving low cost power from Unit 2 of Palo Verde Some of the power re-quirements of customers were met with electrici-ty from the first hvo units of Palo Verde Nuclear PROJECT ENERGY SOURCES


distribution lines and 513 miles       unit  is expected to begjn com-          Generating Station.                    areas are evaluating the potential of secondary underground distri-       mercial operation by 1991.                                                      benefits, including deferral of new SRP completed the first phase bution lines. Also, five new                                                                                             generating units, improved effi-SRP expects to spend about            of its statewide study of potential residential distribution substation                                                                                     ciency, enhanced reliability and
distribution lines and 513 miles ofsecondary underground distri-bution lines.
                                        $ 670 million in direct costs for        locations for a new coal-fired        better system coordination.
: Also, five new residential distribution substation sites were opened and 15 new substations were installed.
sites were opened and 15 new           the unit, about $ 50 million less        generating station. However, substations were installed.             than the 1985 estimate. SRP is            since current projections show Regional service centers one of a few U.S. utility compa-          that another large, coal-fired provide faster service Energy Management System               nies building a generating unit of        generating station won't be is installed                                                         needed until aiter the year 2000, to customers this size and is benefitting from SRP's ability to control its       competitive prices for equipment          and it takes about 10 years to              Regional service centers, new-power nebvork increased dramat-        and materials. Supervision of            plan and build a large coal-fired      ly opened or now under con-ically with the arrival and instal-lation of the Energy Management System (EMS), a new computer system installed in February                   SALT RIVER PROJECT ELECTRIC SERVICE AREA 1987. EMS is a power network control system with which dis-patchers monitor and direct the flow of power from generating fa-cilities to customers. Thus far, about 70 SRP substations are                                                                                                         fflfVf8 operated by the new system. All                                                                                               oP
Energy Management System is installed SRP's ability to control its power nebvork increased dramat-ically with the arrival and instal-lation ofthe Energy Management System (EMS), a new computer system installed in February 1987. EMS is a power network control system with which dis-patchers monitor and direct the flowofpower from generating fa-cilities to customers.
                                                                          ~A 170 substations in the SRP elec-tric system are projected to be on                                                     C APACHE J
Thus far, about 70 SRP substations are operated by the new system. All 170 substations in the SRP elec-tric system are projected to be on EMS by late 1987.
                                                                                      ~0 ~
The new system is far more advanced and efficient in every respect from the old control sys-tem, which SRP had outgrown.
EMS by late 1987.                                                           Phoenix E
In addition to features ofthe old
MIAMI ~  ~ GNBE
: system, the EMS has powerful statecf-the-art computer analysis capabilities designed to help pow-er dispatchers react faster to sys-tem disturbances and make better decisions regarding alloca-tion of generation resources.
                                                                                          ~ F The new system is far more                                                         ~G                      ~ SUPERIOR advanced and efficient in every                                                   8/vga      FNREIICE JCT.
Besides the ability to quickly identify, analyze and determine the cause ofpower outages, EMS'ther advantages include an in-creased ability to analyze the best time to buy and sell electricity, and to quickly analyze demand on the system. As a result, the new system increases SRP's relia-bility and cost effectiveness.
respect from the old control sys-tem, which SRP had outgrown.                                                                                             ~ H In addition to features of the old system, the EMS has powerful statecf-the-art computer analysis capabilities designed to help pow-er dispatchers react faster to sys-tem disturbances and make i
SRP sent nine engineers and their families to Minneapolis for three years to supervise the build-ing of the computer and its soft-ware. Including installation, the new system cost $28 million.
better decisions regarding alloca-tion of generation resources.
Construction continues on Coronado 3 In January 1986, construction resumed on the third 350 MW unit ofthe Coronado Generating Station at St. Johns, Arizona. By the end of May 1987, construc-tion was 8 percent complete. The 6
Besides the ability to quickly identify, analyze and determine the cause of power outages, advantages include an in-EMS'ther creased ability to analyze the best time to buy and sell electricity, and to quickly analyze demand O              Electric Service Area Served Exclusively by Salt River Project.
unit is expected to begjn com-mercial operation by 1991.
Salt River Project Provides Full Po>>vr Requirements of Arizona D
SRP expects to spend about
Public Service for Resale.
$670 million in direct costs for the unit, about $50 million less than the 1985 estimate. SRP is one of a few U.S. utility compa-nies building a generating unit of this size and is benefitting from competitive prices for equipment and materials.
on the system. As a result, the new system increases SRP's relia-                           Salt River Project Provides Full                        Electric Service Areas Not Semd by PoNer Requirements of Arizona                            Salt River Project bility and cost effectiveness.                             Public Service for Resale. Project Makes Direct Sales to Customers for SRP sent nine engineers and                           All Mining Loads.
Supervision of Generating Station.
their families to Minneapolis for three years to supervise the build-ing of the computer and its soft-ware. Including installation, the     contruction by SRP engineers              station, the study probably won'       struction, are bringing SRP new system cost $ 28 million.         also is keeping costs down.               be resumed until the early 1990s.       closer to its customers. Service SRP will continue to study sever-       centers in the western and Meanwhile, SRP is testing a Construction continues                                                      al options for meeting its cus-         eastern part of the Salt River Val-potential source of new coal for on Coronado 3                                                          tomers'lectric demand.                  ley enhance operations by reduc-Coronado Generating Station.
SRP completed the firstphase of its statewide study ofpotential locations for a new coal-fired generating station.
ing travel time and expenses.
: However, since current projections show that another
In January 1986, construction    SRP has acquired leases for coal-When customers need service, resumed on the third 350 MW            bearing properties in western                One option under study is a construction or repair, crews are unit of the Coronado Generating      New Mexico. lhsting of 100,000            high voltage transmission line to able to respond quickly because Station at St. Johns, Arizona. By      tons of coal will help SRP decide          connect the Desert Southwest they are closer to the work site.
: large, coal-fired generating station won't be needed until aiter the year 2000, and it takes about 10 years to plan and build a large coal-fired areas are evaluating the potential benefits, including deferral ofnew generating units, improved effi-ciency, enhanced reliability and better system coordination.
the end of May 1987, construc-        if that coal could be a future            and the Pacific Northwest. SRP tion was 8 percent complete. The      source of fuel for Coronado                and 26 other utilities in the bvo 6
Regional service centers provide faster service to customers Regional service centers, new-ly opened or now under con-
~A C
~ 0 ~ E Phoenix
~ F
~ G 8/vga APACHE J FNREIICE JCT.
fflfVf8 oP MIAMI~ ~ GNBE
~ SUPERIOR
~ H O
Electric Service Area Served Exclusively by Salt River Project.
D Salt River Project Provides Full PoNer Requirements of Arizona Public Service for Resale. Project Makes Direct Sales to Customers for All Mining Loads.
Salt River Project Provides Full Po>>vr Requirements of Arizona Public Service for Resale.i Electric Service Areas Not Semd by Salt River Project contruction by SRP engineers also is keeping costs down.
Meanwhile, SRP is testing a potential source of new coal for Coronado Generating Station.
SRP has acquired leases for coal-bearing properties in western New Mexico. lhsting of 100,000 tons ofcoal willhelp SRP decide if that coal could be a future source of fuel for Coronado station, the study probably won' be resumed until the early 1990s.
SRP willcontinue to study sever-al options for meeting its cus-tomers'lectric demand.
One option under study is a high voltage transmission line to connect the Desert Southwest and the Pacific Northwest. SRP and 26 other utilities in the bvo struction, are bringing SRP closer to its customers.
Service centers in the western and eastern part ofthe Salt River Val-ley enhance operations by reduc-ing travel time and expenses.
When customers need
: service, construction or repair, crews are able to respond quickly because they are closer to the work site.
SALT RIVER PROJECT ELECTRIC SERVICE AREA


The new Tolleson Service Center, opened in January 1987, is   headquarters     for 300 I,'/)
The new Tolleson Service Center, opened in January 1987, is headquarters for 300 employees who serve the growing west Valley. By 1995, SRP pro-jects that it will be serving 200,000 electric customers in that area.
employees who serve the growing west Valley. By 1995, SRP pro-jects that it will be serving 200,000 electric customers in that area.
SRP is building a similar regional service center in east Mesa to serve the growing east Valley.
SRP   is building a similar regional   service center in east Mesa to   serve the growing east t
About 350 SRP employees willwork at the center when it opens in 1988, with ap-proximately 150,000 electric customers expected to benefit.
                                                                                                            )
Customer service centers in Glendale and in the southeast Valley are also planned.
Valley.     About     350 SRP employees will work at the center when it opens in 1988, with ap-proximately 150,000 electric customers expected to benefit.
SRP opened its first service center in Tempe in September 1983.
Customer service centers in Glendale and in the southeast Valley are also planned. SRP opened its first service center in   New electric customers, such as Westcourt In the Buttes hotel manager (right), receive personal Tempe in September 1983.              assistance about the/r power needs from an SRP commercial customer representative.
SRP emphasizes demand-side planning SRP continually is looking for ways to reduce its costs and pass along its savings in the form of lower electric bills to its cus-tomers.
SRP emphasizes demand-side planning           allow customers to take greater          tioners or heat pumps with new      balanced strategy planning, to SRP continually is looking for   control over the cost of their elec-    high<fficiency air conditioners or  plan methods of meeting pro-ways to reduce its costs and pass     tricity.                                heat pumps. SRP offered cash in-    jected electric demand. This ap-along its savings in the form of         SRP's Board of Directors            centives of between $ 50 and        proach reflects SRP's least-cost lower electric bills to its cus-     voted in March 1987 to allow an        $ 100 a ton for the new              planning philosophy. Its goal is to tomers. 'Ib provide customers         additional 10,000 SRP customers        equipment.                          find the best combination of with more opportunities to             to participate in the time-of-day          SRP's Energy Efficient Home    demand-side load reductions and reduce their electric bills and to     program, increasing the number          (EEH) program achieved new          future power additions resulting bring about beneficial changes to     of potential customers in the pro-      heights in market penetration last  in the lowest possible cost, while the pattern of system demand,         gram from 3,000 to 13,000.              year. Currently, six out of 10 new  maintaining SRP's high level of SRP established the Demand-                                                   homes in SRP's service area are    customer service.
'Ib provide customers with more opportunities to reduce their electric bills and to bring about beneficial changes to the pattern of system demand, SRP established the Demand-Side Implementation Department last year.
Side Implementation Department Other demand-side programs include a cash incentive program built by contractors in the EEH        The balanced strategy plan last year.                                                                     program. The program requires      calls for commercial operation Demand-side programs can for businesses, schools, or chur-ches which install thermal energy builders to meet 12 building        of the third unit of Coronado moderate the rate of growth in                                                 specifications for a total-electric Generating Station by 1991, a storage systems, rather than con-peak demand and bring about a                                                 home.                              200 MW purchase and a sales ventional air conditioners. A more constant demand for elec-                                                     EEH homes are more energy      contract recapture, plus a reduc-thermal energy storage system tricity throughout the year. This                                             efficient and thus cost less to    tion in projected peak load up to uses electricity at night to form lower rate of growth means SRP                                               operate for the owner.              400 MW by the year 2006 ice or liquid which is used to cool does not have to build as many                                                                                     through demand-side programs the building during the day, in-            Resource planning aimed new generating plants, thus keep-                                                                                 This plan allows SRP to delay stead of a conventional refrigera-                at reducing cost ing down rising costs associated                                                                                   construction of additional un-tion system.
Demand-side programs can moderate the rate of growth in peak demand and bring about a more constant demand for elec-tricity throughout the year. This lower rate ofgrowth means SRP does not have to build as many new generating plants, thus keep-ing down rising costs associated with new construction.
with new construction. More                                                         During the fiscal year, SRP    committed coal units until after constant demand means SRP                 Customers who replaced gas          used a new approach, called          the turn of the century.
More constant demand means SRP can make more efficient use ofits existing generating system.
can make more efficient use of its    furnaces with high existing generating system.           efficiency      heat pumps      last year Last year the new department, received        $ 200    ELECTRIC CUSTOMERS in cooperation with other depart-     from SRP for the                (ALL CLASSES) ments, continued a program           switch. The $ 200 evaluating customers'esponses         incentive        was to the time-of-day program.           boosted from a Within the time-of-day program,       $ 100 incentive of-begun in March 1980, par-             fered when the ticipating customers pay lower       program began in            4oo,ooo rates during off-peak hours. Con-     March          1985.        2pp ppp versely, they pay higher rates dur-   Another incentive ing on-peak hours, when               offered was to electricity demand is great.         customers who Results from the study will help     replaced old, inef-                   1977           1982         1987        1992         1997       2001 SRP plan rate alternatives that      ficient air condi-
Last year the new department, in cooperation with other depart-
: ments, continued a
program evaluating customers'esponses to the time-of-day program.
Within the time-of-day program, begun in March
: 1980, par-ticipating customers pay lower rates during off-peak hours. Con-versely, they pay higher rates dur-ing on-peak
: hours, when electricity demand is great.
Results from the study will help SRP plan rate alternatives that tI,'/)
)
allow customers to take greater control over the cost oftheir elec-tricity.
SRP's Board of Directors voted in March 1987 to allow an additional 10,000 SRP customers to participate in the time-of-day program, increasing the number ofpotential customers in the pro-gram from 3,000 to 13,000.
Other demand-side programs include a cash incentive program for businesses, schools, or chur-ches which install thermal energy storage systems, rather than con-ventional air conditioners.
A thermal energy storage system uses electricity at night to form ice or liquid which is used to cool the building during the day, in-stead of a conventional refrigera-tion system.
Customers who replaced gas furnaces with high efficiency heat pumps last year received
$200 ELECTRI from SRP for the (ALL switch. The $200 incentive was boosted from a
$100 incentive of-fered when the program began in 4oo,ooo March 1985.
2pp ppp Another incentive offered was to customers who replaced old, inef-ficient air condi-tioners or heat pumps with new high<fficiency air conditioners or heat pumps. SRP offered cash in-centives of between
$50 and
$ 100 a
ton for the new equipment.
SRP's Energy Efficient Home (EEH) program achieved new heights in market penetration last year. Currently, six out of 10 new homes in SRP's service area are built by contractors in the EEH program. The program requires builders to meet 12 building specifications for a total-electric home.
EEH homes are more energy efficient and thus cost less to operate for the owner.
Resource planning aimed at reducing cost During the fiscal year, SRP used a
new
: approach, called C CUSTOMERS CLASSES) 1977 1987 1982 balanced strategy planning, to plan methods of meeting pro-jected electric demand. This ap-proach reflects SRP's least-cost planning philosophy. Its goal is to find the best combination of demand-side load reductions and future power additions resulting in the lowest possible cost, while maintaining SRP's high level of customer service.
The balanced strategy plan calls for commercial operation of the third unit of Coronado Generating Station by 1991, a 200 MW purchase and a sales contract recapture, plus a reduc-tion in projected peak load up to 400 MW by the year 2006 through demand-side programs This plan allows SRP to delay construction of additional un-committed coal units until after the turn of the century.
1992 1997 2001 New electric customers, such as Westcourt In the Buttes hotel manager (right), receive personal assistance about the/r power needs from an SRP commercial customer representative.


SRP demonstrates a vital interest in hydraulic engineering projects at Arizona State University's SRP Hydraulic Engineering Laboratory.
SRP demonstrates a vital interest in hydraulic engineering projects at Arizona State University's SRP Hydraulic Engineering Laboratory.
Water Group reorganization reflects changing needs of the Salt River Valley RP's Water Group under-S      went major changes last year to satisfy changes in laws, practices of industry, agriculture and municipalities.
 
determine the relative water rights of all lands within the Gila In response to the act and        River basin, including SRP community attitudes and the                                                                                     member lands, and the land on other laws and regulations needs of water customers.                                                                                      the watersheds of the Salt and relating to water quality, SRP formed its Water Quality and          Verde rivers.
Water Group reorganization reflects changing needs of the Salt River Valley S
RP's Water Group under-went major changes last year to satisfy changes in laws, community attitudes and the needs of water customers.
Last year, SRP's Water Group:
Last year, SRP's Water Group:
Geohydrology          Department.          One of SRP's primary duties
~ saw retirement of its top ex-ecutive
      ~ saw retirement of its top ex-                                     Members of the department will      is to ensure protection of water ecutive                                                                   monitor the quality of SRP's        rights for lands within the SRP
~ formed a new department and reorganized three others
      ~ formed a new department                                           water resources and institute        water service territory. Those and reorganized three others                                             practices to ensure water man-      rights were established under the
~ participated in several city and SRP long-range water plan-ning forums
      ~ participated in several city                                       aged by SRP meets all applicable    Kent Decree in 1910 and other and SRP long-range water plan-                         Reid  M %epics    standards.                          court actions. By protecting the ning forums                                                                   SRP's Water Group also          water rights, lands in the SRP
~ completed canal mainte-nance work to decrease water losses
      ~ completed canal mainte-                                           reorganized three departments to    water service area are assured a nance work to decrease water                                             provide better service related to   portion of the water in SRP Reid Teeples retires                                              reservoirs. As a result, the water losses                                                                    water rights administration and
~ and worked with Valley cities to build an intertie between SRP canals and the Central Arizona Project canal.
    ~                                    In January, Reid W. Teeples   water        construction        and  supply of lands within SRP and worked with Valley retired after 15 years as the head maintenance.                        boundaries is more secure than cities to build an intertie between SRP canals and the Central of the Project's Water Group.                                           the water supply for many other Tt.epics, who joined SRP in 1948,     Water rights administration is    portions of the Valley.
Urban land use increases in water service area The character of the area served by SRP continued to change during the past year. A total of7,165 acres was converted from agricultural use to urban use. By year's end, 68.6 percent of the 238,170 acres of SRP member lands was urbanized while 31.4 percent was used for agriculture.
Arizona Project canal.                                                  expected to be particularly im-was replaced by D.S. Wilson, Jr.
SRP estimates that essential-ly all acreage withinSRP bound-aries will be out of agricultural production by the >mr 2015.
portant during coming years as            The Project also was involved Urban land use increases                                              the Gila River Water Rights Ad-During his tenure, Teeples                                         in discussions over a potential in water service area                                              judication progresses through the coordinated the largest well-                                           joint groundwater storage and The character of the area        drilling program in SRP's history courts. The adjudication will        recovery project, meeting with served by SRP continued to            and established the Project's change during the past year. A        Groundwater Department. He total of 7,165 acres was converted    also was responsible for standar-     COMPONENTS OF SRP WATER DEMAND from agricultural use to urban        dizing many of SRP's practices use. By year's end, 68.6 percent      while heading the Civil Engineer-of the 238,170 acres of SRP            ing Department.                                 1986                    PLANNING CASE member lands was urbanized In addition to his work at                                                                         2005'RBAN while 31.4 percent was used for SRP, he served in various leader-                 IRRIGATION    ll'Yo              URBAV IRRIGATION agriculture.                                                                        111,000 ABYR                              97700 ABYR ship capacities with the Colorado 1244 SRP estimates that essential-    River Water Users'ssociation,               SYSTE>1 LOSSES      12%                  SYSTE'V LOSSES the National Water Reclamation               122.900 ABYR                              121~ AF/YR ly all acreage within SRP bound-aries will be out of agricultural      Association and various other                   OTHER                                      OTHER VALLEYCONTRACIS                          VALLEYCONTRACIS production by the >mr 2015.            groups.                                       184~ AF/YR                  2494          90900 AF/YR Wilson joined SRP in 1967.
Water deliveries also have reflected the changes in land use.
Water deliveries also have        He was manager of Water                     AGRICULTURE        29%
During the past year deliveries for urban uses totaled 395,158 acre-feet (ao while deliveries for agricultural purposes totaled 290,572 af. During the previous year, urban use totaled 396,228 af and agricultural use was 381,341 af.
AGRICULTURE 252,900 AF/YR reflected the changes in land use. Resource Operations for eight 290.800 AF/YR During the past year deliveries for    years before being named to suc-urban uses totaled 395,158 acre-      ceed 'keples.                                                             46%            0HMCIPAL feet (ao while deliveries for                                                                                                4  Bil)USTRIAL New department formed                       NlMCIPAL          29%                   470.000 AF/YR agricultural purposes totaled                                                      4 INDUSTRIAL 284200 AF/YR 290,572 af. During the previous          Arizona's    Environmental year, urban use totaled 396,228        Quality Act, passed last year,      TOTAL DE41AND 993,600 AFIYR             'IIALDEbfAND     1.033.000AFIYR af and agricultural use was            placed stringent water quality re-                                          AF (ACR&F0071 %$ 880 CALLOVS 381,341 af.                            quirements on the water use
Reid M %epics Reid Teeples retires In January, Reid W. Teeples retired after 15 years as the head of the Project's Water Group.
Tt.epics, who joined SRP in 1948, was replaced by D.S. Wilson, Jr.
During his
: tenure, Teeples coordinated the largest well-drillingprogram in SRP's history and established the Project's Groundwater Department.
He also was responsible for standar-dizing many of SRP's practices while heading the CivilEngineer-ing Department.
In addition to his work at SRP, he served in various leader-ship capacities with the Colorado River Water Users'ssociation, the National Water Reclamation Association and various other groups.
Wilson joined SRP in 1967.
He was manager of Water Resource Operations for eight years before being named to suc-ceed 'keples.
New department formed Arizona's Environmental Quality Act, passed last
: year, placed stringent water quality re-quirements on the water use practices ofindustry, agriculture and municipalities.
In response to the act and other laws and regulations relating to water quality, SRP formed its Water Quality and Geohydrology Department.
Members of the department will monitor the quality of SRP's water resources and institute practices to ensure water man-aged by SRP meets all applicable standards.
SRP's Water Group also reorganized three departments to provide better service related to water rights administration and water construction and maintenance.
Water rights administration is expected to be particularly im-portant during coming years as the Gila River Water Rights Ad-judication progresses through the courts.
The adjudication will determine the relative water rights ofall lands within the Gila River
: basin, including SRP member lands, and the land on the watersheds of the Salt and Verde rivers.
One of SRP's primary duties is to ensure protection of water rights for lands within the SRP water service territory. Those rights were established under the Kent Decree in 1910 and other court actions. By protecting the water rights, lands in the SRP water service area are assured a
portion of the water in SRP reservoirs. As a result, the water supply of lands within SRP boundaries is more secure than the water supply for many other portions of the Valley.
The Project also was involved in discussions over a potential joint groundwater storage and recovery project, meeting with 1986 PLANNING CASE 2005'RBAN IRRIGATION 111,000 ABYR SYSTE>1 LOSSES 122.900 ABYR ll'Yo 12%
1244 URBAVIRRIGATION 97700 ABYR SYSTE'V LOSSES 121~ AF/YR OTHER VALLEYCONTRACIS 184~ AF/YR AGRICULTURE 290.800 AF/YR 29%
2494 OTHER VALLEYCONTRACIS 90900 AF/YR AGRICULTURE 252,900 AF/YR NlMCIPAL 4 INDUSTRIAL 284200 AF/YR 29%
46%
0HMCIPAL 4 Bil)USTRIAL 470.000 AF/YR TOTAL DE41AND 993,600 AFIYR
'IIALDEbfAND 1.033.000AFIYR AF (ACR&F0071 %$ 880 CALLOVS COMPONENTS OF SRP WATER DEMAND


the City of Mesa and the Arizona   of adequate supplies now and in          years, an abundance    of surface        Tbtal water deliveries to the Municipal Water Users Associa-     the future throughout the Valley.        water allowed SRP to keep            cities during the year totaled tion (AMWUA).SRP is consider-      Also, the cities and other pro-          groundwater pumping to less          284,192 af, an increase of slight-ing groundwater storage to         viders will find it easier to            than 7 percent of deliveries. lbtal  ly less than one percent from recharge Salt and Verde river       comply with the conservation            Project groundwater use was          1985's total of 281,464 af.
the CityofMesa and the Arizona Municipal Water Users Associa-tion (AMWUA).SRP is consider-ing groundwater storage to recharge Salt and Verde river waters during above-normal runoff years. The underground stored water would then be recovered for use during below-normal runoff years.
waters during above-normal           requirements      of Arizona's          65,538 af.
SRP increases efforts to assist cities with water planning As the number of people living in the Valley continues to grow, the cities here are faced with an increasing demand for water. During the past year, SRP continued its meetings with the City of Phoenix and expanded those meetings to include other cities in its water service area to seek solu-tions to mutual problems.
runoff years. The underground       Groundwater Management Act.                                                          SRP coordinates stored water would then be                                                       Combined      surface    and        construction with cities recovered for use during below-         During the year SRP organ-         groundwater produced for Pro-             As more and more streets and normal runoff years.               ized a regional water planning         ject use totaled 993,591 af, which   freeways are built, the rights of forum with the cities it serves,      was 90 percent of the median for     way often conflict with those of SRP increases efforts to assist      to identify and address long-            the last 10 years. Depending on     SRP wateiways. In 1986 SRP met cities with water planning        range water planning issues. Four      surface water supplies, ground-       with Valley cities, the Arizona As the number of people          water planning groups were              water historically has satisfied     Department of itansportation, living in the Valley continues to    established, each led by an SRP          between 5 percent and 40 per-       and the Maricopa County grow, the cities here are faced      facilitator, to inform each other      cent of SRP customers'nnual           Highway Department to discuss with an increasing demand for       about the cities'nd SRP's needs        water demand, or 55,000 af to         ongoing design and construction water. During the past year, SRP     and limitations and to avoid            440,000 af each year. Reduced        projects. More than 30 meetings continued its meetings with the      duplication of efforts.                pumping helps eliminate over-        were held resulting in improved City of Phoenix                                                                                                    coordination behveen SRP and and      expanded                                                                                                the agencies on irrigation-related those meetings to                                                                                                  projects where facilifles of bvo or include other cities                                                                                              more entities are involved.
By working ivith the cities, individually and as a group, all involved can share information and avoid costly duplication of ef-forts in planning ways to meet water demand.
in its water service Interagency   coordination area to seek solu-saved time and money by reduc-tions to mutual ing the impact of residential and problems.        By                                                                                              freeway construction on SRP's working ivith the                                                                                                  ability to supply water to homes, cities, individually businesses, municipalities and and as a group, all farms.
Among the ef-forts worked on by of adequate supplies now and in the future throughout the Valley.
involved can share information and                                                                                                        SRP continued its commit-avoid        costly                                                                                              ment to water conservation by duplication of ef-                                                                                                lining 7.4 miles of canals and in-forts in planning                                                                                                  stalling 98 lateral structures last ways to meet water                                                                                                year. Lining canals decreases demand.                                                                                                            water system losses for a savings of thousands of acre-feet of water Among the ef-                                                                                                  each year.
Also, the cities and other pro-viders will find it easier to comply with the conservation requirements of Arizona's Groundwater Management Act.
forts worked on by SRP was institu-                                                                                                      SRP also completed a tion of a Valley-                                                                                                  beautification project along part wide water conser-      SRP Is a recognized world authority on water systems. These Egyptians were                of the Arizona Canal which in-vation effort. SRP,    among nearly 600 visitors from 58 countries who toured SRP facilities In                  cluded improving the appearance 1986, During SRP visits, Egyptian participants received handswn training In              of the canal by extensive brush along with other      the operations, maintenance and management of the Project's irrigation system.
During the year SRP organ-ized a regional water planning forum with the cities it serves, to identify and address long-range water planning issues. Four water planning groups were established, each led by an SRP facilitator, to inform each other about the cities'nd SRP's needs and limitations and to avoid duplication of efforts.
members          of                                                                                              and tree removal, and tree trim-AMWUA encour-                                                                                                      ming. Similar projects are aged the cooperation of local        Water storage above normal              drafting supplies. The Arizona        planned for other canals.
years, an abundance of surface water allowed SRP to keep groundwater pumping to less than 7 percent ofdeliveries. lbtal Project groundwater use was 65,538 af.
broadcasters, under the leader-          SRP began the year with Groundwater Management Act ship of KPHO 'klevision, on an                                              calls for pumping to be limited to            Congress funds 1,671,535 af of water in storage.
Combined surface and groundwater produced for Pro-ject use totaled 993,591 af, which was 90 percent ofthe median for the last 10 years. Depending on surface water supplies, ground-water historically has satisfied between 5 percent and 40 per-cent of SRP customers'nnual water demand, or 55,000 af to 440,000 af each year. Reduced pumping helps eliminate over-SRP was institu-tion of a Valley-wide water conser-vation effort. SRP, along with other members of AMWUA encour-aged the cooperation of local broadcasters, under the leader-ship of KPHO 'klevision, on an extensive campaign called Water Wise." Each month a water con-servation tip is communicated through public service an-nouncements carried by local television and radio stations. A printed version of the tip is distributed through ABCO Markets Inc., Bashas and Lucky grocery stores.
extensive campaign called Water                                              the    quantity recharged by                dam improvements Inflows from the 13,000-square-Wise." Each month a water con-      mile watershed to the SRP reser-        January  1, 2025.                        Under the Safety of Dams Act, servation tip is communicated        voirs totaled 1,070,214 af during                                            Congress appropriated $ 3 1 through public service an- the year, which was 87.0 percent                      Tbtai water deliveries hit a million for safety improvements nouncements carried by local of average. Inflows during 1985                10-year low. Deliveries totaled at Theodore Roosevelt Dam and television and radio stations. A totaled 1,7?4,667 af. Unusually            870,658 af compared to                $ 3.9 million for work at Stewart printed version of the tip is heavy summer rainfall on the Salt 1,016,612 af in 1985 and 881,009                  Mountain Dam.
drafting supplies.
distributed through ABCO and Verde watersheds contri- in 1984. Agricultural use was less Markets Inc., Bashas and Lucky buted to runoff that kept reser-              than usual due to government              Shortly after the end of the grocery stores.                                                              set-aside  programs which re-        fiscal year, Arizona's congres-voirs fuller than normal. Storage        duced the quantity of crops          sional delegation negotiated an at year-end totaled 1,691,741 af grown. Summertime municipal                  agreement with environmental By working together toward      or  84 percent of capacity. This        use declined because of greater      groups concerning Plan 6. Under the common goal of conserving              was 139 percent of normal.  'otal than normal summer rainfall          the agreement, CliffDam will not water, customers can be assured          For the third time in four which reduced laivn irrigation.                be built. In return, environmen-10
The Arizona Groundwater Management Act calls for pumping to be limited to the quantity recharged by January 1, 2025.
Water storage above normal SRP began the year with 1,671,535 af of water in storage.
Inflows from the 13,000-square-mile watershed to the SRP reser-voirs totaled 1,070,214 af during the year, which was 87.0 percent of average.
Inflows during 1985 totaled 1,7?4,667 af. Unusually heavy summer rainfall on the Salt and Verde watersheds contri-buted to runoff that kept reser-voirs fuller than normal. Storage at year-end totaled 1,691,741 af or 84 percent of capacity. This
'otal was 139 percent of normal.
For the third time in four Tbtai water deliveries hit a 10-year low. Deliveries totaled 870,658 af compared to 1,016,612 af in 1985 and 881,009 in 1984. Agricultural use was less than usual due to government set-aside programs which re-duced the quantity of crops grown. Summertime municipal use declined because of greater than normal summer rainfall which reduced laivn irrigation.
By working together toward the common goal of conserving water, customers can be assured 10 SRP Is a recognized world authority on water systems. These Egyptians were among nearly 600 visitors from 58 countries who toured SRP facilities In 1986, During SRP visits, Egyptian participants received handswn training In the operations, maintenance and management of the Project's irrigation system.
Tbtal water deliveries to the cities during the year totaled 284,192 af, an increase ofslight-ly less than one percent from 1985's total of 281,464 af.
SRP coordinates construction with cities As more and more streets and freeways are built, the rights of way often conflict with those of SRP wateiways. In 1986 SRP met with Valley cities, the Arizona Department of itansportation, and the Maricopa County Highway Department to discuss ongoing design and construction projects. More than 30 meetings were held resulting in improved coordination behveen SRP and the agencies on irrigation-related projects where facilifles of bvo or more entities are involved.
Interagency coordination saved time and money by reduc-ing the impact ofresidential and freeway construction on SRP's ability to supply water to homes, businesses, municipalities and farms.
SRP continued its commit-ment to water conservation by lining 7.4 miles of canals and in-stalling 98 lateral structures last year.
Lining canals decreases water system losses for a savings of thousands of acre-feet ofwater each year.
SRP also completed a
beautification project along part of the Arizona Canal which in-cluded improving the appearance of the canal by extensive brush and tree removal, and tree trim-ming.
Similar projects are planned for other canals.
Congress funds dam improvements Under the Safety of Dams Act, Congress appropriated
$3 1 million for safety improvements at Theodore Roosevelt Dam and
$3.9 millionfor work at Stewart Mountain Dam.
Shortly after the end of the fiscal
: year, Arizona's congres-sional delegation negotiated an agreement with environmental groups concerning Plan 6. Under the agreement, CliffDam willnot be built. In return, environmen-


tal groups agreed not to oppose       baffic from the to    SALT RIVER PRO JECT IRRIGATED AREA the remaining elements of             of the dam.
tal groups agreed not to oppose the remaining elements of Plan 6.
Plan 6.
The plan willprovide Central Arizona Project water storage and regional flood control and dam-safety modifications. Other elements are an enlarged Theo-dore Roosevelt Dam and modifi-cations to Stewart Mountain Dam on the Salt River. Construction outside the SRP reservoir system included New Waddell Dam on the Agua Fria River.
Intertie will link The plan will provide Central SRP canals and CAP Arizona Project water storage                                                                     @+LE and regional flood control and           Locally, SRP dam-safety modifications. Other       worked with six                                            ecoOl elements are an enlarged Theo-        Valley cities to ob-dore Roosevelt Dam and modifi-         tain agreement on cations to Stewart Mountain Dam on the Salt River. Construction a plan to build a
During 1986 SRP entered into agreements with the U.S.
                                        $ 3.1 million struc-                                                                          Ql outside the SRP reservoir system included New Waddell Dam on ture that would link SRP's canal                                                                              Imk the Agua Fria River.                   system    with the Central Arizona During 1986 SRP entered           Project                                                                                          Q~~~o&
Bureau of Reclamation to add several maintenance items to necessary dam safety modifica-tions scheduled at Stewart Moun-tain Dam. The proposed changes will enhance operating and maintenance facilities at the dam.
(CAP) into agreements with the U.S.
For 1987 SRP contributed about
aqueduct. The in-Bureau of Reclamation to add tertie, which will several maintenance items to carry up to 800 necessary dam safety modifica-cubic-feet-per-tions scheduled at Stewart Moun-second of water, tain Dam. The proposed changes       will transport water will enhance     operating and       from the        CAP maintenance facilities at the dam.
$1.5 million in safety modifications. SRP is prepared to contribute an additional
aqueduct        near For 1987 SRP contributed         Granite Reef Diver-about $ 1.5 million in safety modifications. SRP is prepared to contribute an additional $ 5 million to the U.S. Treasury in fiscal 1988. The Project's involve-ment is through a local cost-share sion Dam to SRP's main canals for delivery to CAP users.
$5 million to the U.S. Treasury in fiscal 1988. The Project's involve-ment is through a local cost-share agreement for completion of Plan 6.
Salt Riwr Project Irrigated Area O               13,000 Sq. &tile Project Watershed The Central Arizona Project agreement for completion of          is a water-delivery system being Plan 6.                                                                          DOMESTIC WATER DELIVERIES constructed by the Bureau of The federal government has      Reclamation to deliver water                                               1986              1985          change Chandler                      7,936            6,700      + 10.39%
The federal government has accepted
accepted $ 371 million in local      from Lake Havasu on Arizona's Gilbert                      4,357            3,125      + 39.44%
$371 million in local funds in exchange for a federal commitment to complete all elements of Plan 6 by 1997. SRP pledged $52 million of the local funds as its share of dam-safety modifications.
funds in exchange for a federal      western border to Maricopa,                 Glendale                    25,222            23,982          5.17%
The federal government is responsible for the balance.
commitment to complete all            Pinal, and Pima counties in cen-             Mesa tral and southern Arizona. Cur-44,391            41,476      +  7.03%
Work to be performed on Theodore Roosevelt Dam in-cludes raising the overall height of the dam by 77 feet. The modifications to the dam will enable itto provide flood control, dam safety and additional water conservation storage on the Salt River.
elements of Plan 6 by 1997. SRP                                                    Peoria                        4,028            4,351      + 7.47%
Modifications to Theodore Roosevelt and Stewart Mountain dams are included in the Plan 6 agreement.
pledged $ 52 million of the local    rently, construction is complete             Phoenix                    156,412          160,876            2.77%
The Arizona Department of Transportation will begin con-structing a
funds as its share of dam-safety      to just north of 'Ittcson.                 Scottsdale                    3,478            3,843          9.50%
bridge on the upstream side of Roosevelt dam in 1987 to be finished by 1990.
modifications.      The federal            Although SRP hasn't con-               Tempe                        38,367            37,172      + 3.38%
The bridge will remove the Ql Imk Q~~~o&
government is responsible for the    tracted for CAP water, SRP may               Total                    284,192          281,464          + 1.00%
O 13,000 Sq. &tile Project Watershed The Central Arizona Project is a water-delivery system being constructed by the Bureau of Reclamation to deliver water from Lake Havasu on Arizona's western border to
balance.                              need the intertie to receive CAP             ilit numtpers are in acre feet, crcept percents  of change Work to be performed on        water for use when Roosevelt Theodore Roosevelt Dam in-            Lake is drawn down for construc-cludes raising the overall height    tion of the federally mandated       of Engineering and Applied                        Through efforts coordinated of the dam by 77 feet. The            safety modifications.                 Science exemplifies the business-             by the office, SRP helped install modifications to the dam will              CAP received record levels of education         partnership         SRP     four radial gate structures in enable it to provide flood control,  funding from the 99th Congress, strives to maintain. The new                   Egypt. The installation was part dam safety and additional water      despite the pressure of the          equipment in the laboratory will               of the ongoing Professional conservation storage on the Salt      Gramm-Rudman deficit reduc-          be used by students to study the               Employee Exchange Program River.                                tion law. For fiscal year 1987,      mechanics and engineering pro-                 (PEEP) with Egypt's Ministry of blems associated with water and                Irrigation. Also, a seminar on Modifications to Theodore        CAP received $ 202.8 million.
: Maricopa, Pinal, and Pima counties in cen-tral and southern Arizona. Cur-rently, construction is complete to just north of 'Ittcson.
other fluids.                                  telemetry was presented to the Roosevelt and Stewart Mountain                  ASU dedicates                                                            Ministry of Irrigation by SRP dams are included in the Plan 6                                                Work with representatives student laboratory          from countries around the world                personnel.
Although SRP hasn't con-tracted for CAP water, SRP may need the intertie to receive CAP water for use when Roosevelt Lake is drawn down for construc-tion of the federally mandated safety modifications.
agreement.
CAP received record levels of funding from the 99th Congress, despite the pressure of the Gramm-Rudman deficit reduc-tion law. For fiscal year
Continuing its longtime tradi- was continued through SRP's                        Also under PEEP, tm Cairo The Arizona Department of        tion of supporting higher educa-    Office of International Affairs.                University students completed a Transportation will begin con-        tion, SRP provided grants to        The office hosted nearly 600                    15-week summer study program.
: 1987, CAP received $202.8 million.
structing a bridge on the            Arizona State University's SRP      visitors from 58 countries, held                One student worked in SRP's upstream side of Roosevelt dam        Hydraulic Engineering Labor-        20 on- the-job training programs                Civil Engineering Department in 1987 to be finished by 1990.      atory. The joint endeavor            and conducted seminars for 160                  and the other in Water Resources The bridge will remove the           between SRP and ASU's College        representatives      of 15 nations.          and Services'ydrology Division.
ASU dedicates student laboratory Continuing its longtime tradi-tion ofsupporting higher educa-tion, SRP provided grants to Arizona State University's SRP Hydraulic Engineering Labor-atory.
The joint endeavor between SRP and ASU's College DOMESTIC WATER DELIVERIES Chandler Gilbert Glendale Mesa Peoria Phoenix Scottsdale Tempe Total ilit numtpers are 1986 1985 7,936 6,700 4,357 3,125 25,222 23,982 44,391 41,476 4,028 4,351 156,412 160,876 3,478 3,843 38,367 37,172 284,192 281,464 in acre feet, crcept percents of change change
+ 10.39%
+ 39.44%
5.17%
+
7.03%
+
7.47%
2.77%
9.50%
+
3.38%
+ 1.00%
of Engineering and Applied Science exemplifies the business-education partnership SRP strives to maintain.
The new equipment in the laboratory will be used by students to study the mechanics and engineering pro-blems associated with water and other fluids.
Work with representatives from countries around the world was continued through SRP's Office of International Affairs.
The office hosted nearly 600 visitors from 58 countries, held 20 on-the-job training programs and conducted seminars for 160 representatives of 15 nations.
Through efforts coordinated by the office, SRP helped install four radial gate structures in Egypt. The installation was part of the ongoing Professional Employee Exchange Program (PEEP) with Egypt's Ministry of Irrigation. Also, a seminar on telemetry was presented to the Ministry of Irrigation by SRP personnel.
Also under PEEP, tm Cairo University students completed a 15-week summer study program.
One student worked in SRP's Civil Engineering Department and the other in Water Resources and Services'ydrology Division.
baffic from the to SALT RIVER PRO JECT IRRIGATED AREA of the dam.
Intertie willlink SRP canals and CAP
@+LE
: Locally, SRP worked with six ecoOl Valley cities to ob-tain agreement on a plan to build a
$3.1 million struc-ture that would link SRP's canal system with the Central Arizona Project (CAP) aqueduct. The in-
: tertie, which will carry up to 800 cubic-feet-per-second of water, willtransport water from the CAP aqueduct near Granite Reef Diver-sion Dam to SRP's main canals for Salt Riwr Project delivery to CAP Irrigated Area users.


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Salt River Project's service extends beyond water and power S Behind putthe 'TheSpirit' RP employees to People their customers forts of SRP employees, Valley teenagers last year learned more attracted 440 participants and resulted in a donation of $ 1,640 donations and in-kind services.
Salt River Project's service extends beyond water and power S
Employees also hold key posi-
RP employees
                                  'ontinued about the free-enterprise system    to the St. Johns Senior Citizens    tions on the foundation board.
'The People Behind the Spirit'
and their communities first. And             through SRP-sponsored Junior       Association.
'ontinued to put their customers and their communities first. And it showed.
it showed.                                                                                                              SRP recognizes the value of Achievement companies.
In fiscal year 1986-87:
The annual Page Attacks        excellence in education. Last In fiscal year 1986-87:                                                      'fhsh program received first        year, SRP honored 61 seniors Employees helped raise
~ 97 percent of customers rated SRP service as "good" or "excellent"
      ~  97 percent of customers              $ 106,000 during February 1987's   place in the statewide 'hke Pride  during its fifth annual Spotlight rated SRP service as "good" or              Junior Achievement Telephone       in America" competition spon-      on Excellence program. Honored "excellent"                                  Campaign. A total of 97             sored by the Commission on          students were graduating seniors
~ Volunteer work by SRP employees reached new heights
      ~ Volunteer work by SRP                  volunteers, representing 33 com-   Arizona's Environment and se-      from Maricopa County, Page and employees reached new heights                panies, called area businesses     cond place in the national com-    St. Johns    areas in which 8RP
~ Business offices were
      ~ Business                              requesting donations for Junior     petition sponsored by the U.S.      has electric facilities. Honorees .
: moved, improving customer service
offices were                                                Department of Interior. Each Achievement. SRP volunteers                                             were selected by their school moved, improving customer service                                      raised $ 12,242, the second         >m; the community effort has in-    principals for academic achieve-volved more than 75 percent of      ment and all-around excellence.
~ And SRP's Better Way and Quality Circle programs meant savings for SRP and its customers.
      ~ And SRP's Better Way and              highest amount of any business Page's 6,500 residents.
SRP receives high marks "The People Behind the Spirit" kept up SRP's tradition of giving first-rate customer service.
Quality Circle programs meant                during the telephone campaign.                                             For younger students, SRP savings for SRP and its                      The money went toward pro-             Page Attacks %ash started in    and APS co-sponsored the an-customers.                                    grams and operational support       1981 as a city-wide cleanup pro-  nual Ener@ Fair. The fair at-for the organization.             gram sponsored by SRP's Nava-      tracted 200 entries for "Energy SRP receives high marks                                                      jo Generating Station (NGS) and    Changes      and    Challenges."
Nearly all of SRP's electric and
In a joint effort, SRP and     the    Glen Canyon National        Kindergarten through 12th grade "The People Behind the                  Arizona Public Service Company     Recreational Area. The Page        students participated. Russell Spirit" kept up SRP's tradition of          (APS) raised more than $ 8,700     Kiwanis Club and Elks Lodge        Moreland of Willis Junior High giving first-rate customer service.          for needy citizens in the fourth   have helped to coordinate the      School, Chandler, made the win-Nearly all of SRP's electric and            annual     S.H.A.R.E. Affair   event in recent years with help    ning entry.
~ater customers polled last year were very satisfied with the quali-ty of service they received from the Project, according to monthly surveys.
~ater customers polled last year            10-kilometer run January 10. A     from NGS employees. Last year' were very satisfied with the quali-          record 835 people participated in                                           Ten outstanding employees participants collected 212 tons of  and one retiree were honored for ty of service they received from            the fund-raising event, which also trash.
SRP's goal was for 90 percent of its customers to rate overall quality ofservice good or excellent. The Project exceeded that goal with the 97 percent rating.
the Project, according to monthly            included a two-mile fun run and                                         their service to civic and com-surveys. SRP's goal was for 90              a five-mile walk.                       SRP's organizational and        munity organizations in Arizona percent of its customers to rate                                                monetary involvement in Page At-    with SRP's Karl F. Abel Volunteer Proceeds were donated to the                                       awards. Named for SRP's im-overall quality of service good or                                              tacks Thrash, along with other Salvation     Army, which ad-       anti-litter efforts, was honored by  mediate past president, these excellent. The Project exceeded ministers the Service to Help                                           awards are presented each year that goal with the 97 percent                                                  an award from Arizona Clean and Arizonans with Relief on Energy                                         to employees who devote their rating.                                                                        Beautiful, the state arm of the na-(S.H.A.R.E.). Formed by SRP         tional Keep America Beautiful      time and energy to their com-Employees'ommunity                      and APS in 1982, Project                                               munities.
Employees'ommunity involvement remains high SRP employees showed pride in their communities by donating their time, money and energy to community-related projects. Pro-ject employees pledged a total of
campaign. SRP was distin-involvement remains high                  S.H.A.R.E. provides         funds   guished as the most outstanding          Saundra Reedy, administrative through the Salvation Army for     business in the state with regard SRP employees showed pride                                                                                      assistant at Coronado Generating energy-related bills and home in their communities by donating                                                to its anti-litter efforts.        Station, was named St. John' repairs of needy families.
$326,772 to 52 non-profit agen-cies.
their time, money and energy to                                                                                      Outstanding Chamber of Com-SRP   customers donated           The Delta Gamma National      merce member in 1986. She was community-related projects. Pro-
And Project employees donated approximately 480 pints of blood last year to a statewide blood service.
                                            $ 114,313 to the S.H.A.R.E. pro-Foundation for the Blind            honored for her efforts in several ject employees pledged a total of honored SRP with an award          Chamber of Commerce activities
Thanks to the volunteer ef-forts of SRP employees, Valley teenagers last year learned more about the free-enterprise system through SRP-sponsored Junior Achievement companies.
$ 326,772 to 52 non-profit agen-            gram last year. Customers donate through their monthly electric     recognizing the Project's support  promoting the St. Johns area.
Employees helped raise
cies. And Project employees bills.                             of the Foundation for Blind donated approximately 480 pints                                                                                              SRP honored for Children. The award recognized of blood last year to a statewide                Meamvhile at St. Johns, the                                               two safety programs SRP as a long-time supporter of blood service.
$106,000 during February 1987's Junior Achievement Telephone Campaign.
seventh      annual    Coronado   the     organization        through      SRP received two moor safe-Thanks to the volunteer ef-            Generating Station benefit run      employee volunteering, financial    ty awards last year. They were 13
A total of 97 volunteers, representing 33 com-
: panies, called area businesses requesting donations for Junior Achievement.
SRP volunteers raised
$12,242, the second highest amount of any business during the telephone campaign.
The money went toward pro-grams and operational support for the organization.
In a joint effort, SRP and Arizona Public Service Company (APS) raised more than $8,700 for needy citizens in the fourth annual S.H.A.R.E.
Affair 10-kilometer run January
: 10. A record 835 people participated in the fund-raising event, which also included a two-mile fun run and a five-mile walk.
Proceeds were donated to the Salvation Army, which ad-ministers the Service to Help Arizonans with Relief on Energy (S.H.A.R.E.).
Formed by SRP and APS in
: 1982, Project S.H.A.R.E.
provides funds through the Salvation Army for energy-related bills and home repairs of needy families.
SRP customers donated
$114,313 to the S.H.A.R.E. pro-gram last year. Customers donate through their monthly electric bills.
Meamvhile at St. Johns, the seventh annual Coronado Generating Station benefit run attracted 440 participants and resulted in a donation of $1,640 to the St. Johns Senior Citizens Association.
The annual Page Attacks
'fhsh program received first place in the statewide 'hke Pride in America" competition spon-sored by the Commission on Arizona's Environment and se-cond place in the national com-petition sponsored by the U.S.
Department of Interior.
Each
>m; the community effort has in-volved more than 75 percent of Page's 6,500 residents.
Page Attacks %ash started in 1981 as a city-wide cleanup pro-gram sponsored by SRP's Nava-jo Generating Station (NGS) and the Glen Canyon National Recreational Area.
The Page Kiwanis Club and Elks Lodge have helped to coordinate the event in recent years with help from NGS employees. Last year' participants collected 212 tons of trash.
SRP's organizational and monetary involvement in Page At-tacks
: Thrash, along with other anti-litter efforts, was honored by an award from Arizona Clean and Beautiful, the state arm of the na-tional Keep America Beautiful campaign.
SRP was distin-guished as the most outstanding business in the state with regard to its anti-litter efforts.
The Delta Gamma National Foundation for the Blind honored SRP with an award recognizing the Project's support of the Foundation for Blind Children. The award recognized SRP as a long-time supporter of the organization through employee volunteering, financial donations and in-kind services.
Employees also hold key posi-tions on the foundation board.
SRP recognizes the value of excellence in education.
Last year, SRP honored 61 seniors during its fifth annual Spotlight on Excellence program. Honored students were graduating seniors from Maricopa County, Page and St. Johns areas in which 8RP has electric facilities. Honorees were selected by their school principals for academic achieve-ment and all-around excellence.
For younger students, SRP and APS co-sponsored the an-nual Ener@
Fair. The fair at-tracted 200 entries for "Energy Changes and Challenges."
Kindergarten through 12th grade students participated.
Russell Moreland of Willis Junior High School, Chandler, made the win-ning entry.
Ten outstanding employees and one retiree were honored for their service to civic and com-munity organizations in Arizona with SRP's Karl F. Abel Volunteer awards.
Named for SRP's im-mediate past president, these awards are presented each year to employees who devote their time and energy to their com-munities.
Saundra Reedy, administrative assistant at Coronado Generating
: Station, was named St. John' Outstanding Chamber of Com-merce member in 1986. She was honored for her efforts in several Chamber of Commerce activities promoting the St. Johns area.
SRP honored for two safety programs SRP received two moor safe-ty awards last year. They were 13


grams include SRP's where Speakers'ureau, employees volunteer to make presentations to organizations or groups.
Ittdta $I
                                                                                                                  'lbpics range from the early beginning of the Project through the most up-to4ate activities of the utility.
'd IO StttOO
During fiscal year 1986-87, Ittdta $I
> $ tt, ttttt
                                                'd IO StttOO SRP made about 2,300 presen-
~t i
                                                > $ tt, ttttt tlt tttl                          tations to audiences totaling
I tlt tttl IO n II I grams include SRP's Speakers'ureau, where employees volunteer to make presentations to organizations or groups.
                                    ~t                          i I
'lbpics range from the early beginning ofthe Project through the most up-to4ate activities of the utility.
IO n II I                        87,343 persons.
During fiscal year 1986-87, SRP made about 2,300 presen-tations to audiences totaling 87,343 persons.
SRP also conducted programs about microwave cooking, com-puter equipment safety, and energy conservation, SRP's Power Saver Store opened last year at Westridge Mall. Nothing is for sale. Instead, employs offered fire, expert ad-vice about the efficient use of water and power.
SRP also conducted programs about microwave cooking, com-puter equipment
: safety, and energy conservation, SRP's Power Saver Store opened last year at Westridge Mall. Nothing is for sale. Instead, employs offered fire, expert ad-vice about the efficient use of water and power.
third place in the American Public Power Association's (APPA) Electric Safety Award contest and the Arizona Safety Association's Howaid Pyle Award.
APPA is a national organiza-tion representing more than 1,750 publicly owned electric utilities. APPA conducts the an-nual safety contest to draw atten-tion to the importance of safe working habits in the electric utilityindustry, and to recognize excellence in that area.
The Arizona Safety Associa-tion is a chapter ofthe National Safety Council. The Howanl Pyle Award recognizes safety promo-OOO~
O IM$$$ICr tion in the community. SRP is the first utility to receive this honor.
SRP's public safety programs extend to construction workers, school children, professional law enforcement officers, firefighters and others.
Additional public service pro-Customer service representative Elaine Spencer is one of several SRP employees who volunteer their time to needy organizations throughout the state.
//
An SRP employee shows the tools of his trade to his son during an open house at the new 'Iblleson Regional Service Center. The regional service center Is designed to speed servIce to customers.
Customer business offices moved for greater convenience
Customer business offices moved for greater convenience
                                                                                                                        'le customer business offices An SRP employee shows the tools of his trade to his son during an open house at the new 'Iblleson                  were moved for greater speed and Regional Service Center. The regional service center Is designed to speed servIce to customers.                    more ease in helping customers.
'le customer business offices were moved forgreater speed and more ease in helping customers.
The Mesa Business office was third place in the American          nual safety contest to draw atten-        tion in the community. SRP is        moved in May to a larger facility, Public Power Association's          tion to the importance of safe            the first utility to receive this    and customers in the Fountain (APPA) Electric Safety Award        working habits in the electric            honor.                                Hills area found it more con-contest and the Arizona Safety      utility industry, and to recognize              SRP's public safety programs  venient to receive help at the Association's Howaid Pyle Award. excellence in that area.                  extend to construction workers,      Fountain Hills office's new school children, professional law    location.
The Mesa Business office was moved in May to a larger facility, and customers in the Fountain Hills area found it more con-venient to receive help at the Fountain Hills office's new location.
APPA is a national organiza-        The Arizona Safety Associa-enforcement officers, firefighters      Courteous, helpful and quick tion representing more than          tion is a chapter of the National and others.                          replies to customer inquiries are 1,750 publicly owned electric        Safety Council. The Howanl Pyle Award recognizes safety promo-                Additional public service pro-  goals at SRP. Tb increase the utilities. APPA conducts the an-OOO~                                              number of calls handled, SRP's O IM$$ $ ICr                                      phone center began opening at 7:00 a.m. instead of 7:30 a.m.
Courteous, helpful and quick replies to customer inquiries are goals at SRP.
The phone center was remod-Customer service representative Elaine Spencer is one of                                                                                eled and expanded to provide several SRP employees who                                                                                12 additional work positions. By volunteer their time to                                                                                  rescheduling existing personnel needy organizations throughout                                                                          to work during peak periods, an the state.                                                                                              additional 90,437 calls were answered without hiring addi-tional people. Last year Project employees received more than 1.2 million calls.
Tb increase the number of calls handled, SRP's phone center began opening at 7:00 a.m. instead of 7:30 a.m.
A major billing system change was implemented       in February 1987 to bill accounts by route in-stead of by billing districts.
The phone center was remod-eled and expanded to provide 12 additional work positions. By rescheduling existing personnel to work during peak periods, an additional 90,437 calls were answered without hiring addi-tional people. Last year Project employees received more than 1.2 million calls.
Regionalized billing has leveled the flow of customer traffic into the business offices, reducing customer lines and thereby pro-
A major billingsystem change was implemented in February 1987 to billaccounts by route in-stead of by billing districts.
                                                              //                                                    viding faster service. Reduced travel time to customers'eters also has resulted in increased
Regionalized billing has leveled the flow of customer traffic into the business
: offices, reducing customer lines and thereby pro-viding faster service.
Reduced travel time to customers'eters also has resulted in increased


SRP's newly remodeled History Center appeals to all ages. Through displays and vIdeos, the Center depicts the development             of water usage In the Phoenix area from prehlstorlc times to the present.
SRP's newly remodeled History Center appeals to all ages. Through displays and vIdeos, the Center depicts the development of water usage In the Phoenix area from prehlstorlc times to the present.
productivity and reduction of cur-      Under special legislation          ly unlimited through the Better    million in research activity, involv-rent and future costs.               passed    in 1963, SRP, as a          Way program. As long as SRP        ing dozens of SRP employees Continuation of that excellent   political subdivision of the state,    employees continue to think        went toward 29 major research customer service was enhanced       makes voluntary contributions in        creatively and submit sugges-      and development products. Pro-last year when SRP and Local         lieu of property taxes to school      tions, the Project will continue to jects included studies of thermal Union 266 of the International       districts, cities, special districts,  realize greater savings and          energy storage and solar Brotherhood         of Electrical   counties and the state.                employees will be rewarded for      resources, which could help Workers signed a three->mr labor           Employee programs                their creativity.                    customers save on their electric agreement. This longer-term con-                  save money                                                      bills. Projects also included im-tract enables management to                                                     SRP's Quality Circle program    proved precipitation forecasting, more accurately predict future            Sixty-seven ideas from entre-     uses a group approach to pro-        which could help assure ade-labor costs, provides employees      preneurial employees saved the       blem solving. Employee groups        quate water supplies and reduce with greater stability in wages and  Project $ 423,000 in first-year sav- develop consensus and report to     potential for floods.
productivity and reduction ofcur-rent and future costs.
benefits, and provides SRP            ings through the Better Way pro-     management. Since 1983, SRP's gram. The Better Way program                                                  A program at Arizona State customers with reduced exposure                                            Quality Circle program has           University has meant multiple to a work stoppage.                  uses employee suggestions that        saved $ 3 million and improved deliver real dollar savings to SRP.                                       benefits for SRP and the com-service to customers. Also, the      munity. SRP sponsors the Elec-Counties get monetary            Once a dollar savings is esta-        program helps develop problem-blished, a percentage of the sav-                                          tric Pope Research Laboratory boost from SRP                                                    solving skills and an enhanced ings is paid to the employee who                                          (EPRL), which is in its third year SRP contributed $ 35.8                                                  sense of value for individual submitted the idea. Last year                                              at ASU. SRP contributes million of in-lieu property taxes                                          employees.                          $ 100,000 per year to EPRL to employees received $ 34,000 in to seven Arizona counties during      awards.                                    Research and development        fund research for power genera-fiscal year 198687. In effect, SRP                                          projects at SRP provide technical    tion projects conducted by ASU is the state's third-largest property    The potential for savings to      information that could benefit      students, professors and SRP taxpayer.                            SRP and its customers is virtual-    SRP's customers. More than $ 3      engineers.
Continuation ofthat excellent customer service was enhanced last year when SRP and Local Union 266 of the International Brotherhood of Electrical Workers signed a three->mr labor agreement. This longer-term con-tract enables management to more accurately predict future labor costs, provides employees with greater stability in wages and
: benefits, and provides SRP customers with reduced exposure to a work stoppage.
Counties get monetary boost from SRP SRP contributed
$35.8 million of in-lieu property taxes to seven Arizona counties during fiscal year 198687. In effect, SRP is the state's third-largest property taxpayer.
Under special legislation passed in
: 1963, SRP, as a
political subdivision of the state, makes voluntary contributions in lieu of property taxes to school districts, cities, special districts, counties and the state.
Employee programs save money Sixty-seven ideas from entre-preneurial employees saved the Project $423,000 in first-year sav-ings through the Better Way pro-gram. The Better Way program uses employee suggestions that deliver real dollar savings to SRP.
Once a dollar savings is esta-blished, a percentage ofthe sav-ings is paid to the employee who submitted the idea.
Last year employees received
$34,000 in awards.
The potential for savings to SRP and its customers is virtual-ly unlimited through the Better Way program. As long as SRP employees continue to think creatively and submit sugges-tions, the Project willcontinue to realize greater savings and employees will be rewarded for their creativity.
SRP's Quality Circle program uses a group approach to pro-blem solving. Employee groups develop consensus and report to management.
Since 1983, SRP's Quality Circle program has saved
$3 million and improved service to customers.
Also, the program helps develop problem-solving skills and an enhanced sense of value for individual employees.
Research and development projects at SRP provide technical information that could benefit SRP's customers. More than $3 millionin research activity, involv-ing dozens of SRP employees went toward 29 major research and development products. Pro-jects included studies ofthermal energy storage and solar resources, which could help customers save on their electric bills. Projects also included im-proved precipitation forecasting, which could help assure ade-quate water supplies and reduce potential for floods.
A program at Arizona State University has meant multiple benefits for SRP and the com-munity. SRP sponsors the Elec-tric Pope Research Laboratory (EPRL), which is in its third year at ASU.
SRP contributes
$100,000 per year to EPRL to fund research for power genera-tion projects conducted by ASU
: students, professors and SRP engineers.
15
15


SRP mini.bonds are proving to be popular investments. Some bonds can be purchased for only S200.
SRP mini.bonds are proving to be popular investments.
Management, economy combine to produce strong financial position
Some bonds can be purchased for only S200.
                                    ~ SRP   bonds     maintained   1986-87 raised SRP's debt ser-       allows SRP bonds to continue to areful management of Salt                                        vice coverage to 2.00. That com-     be rated highly by the nation's River Project resources, their AA and Aa ratings pares with last year's ratio of 1.85. leading rating agencies. SRP first healthy financing opportunities
Management, economy combine to produce strong financial position areful management of Salt River Project resources, healthy financing opportunities and a strong local economy con-tributed to another good finan-cial year for SRP.
                                    ~  Gross revenues increased; The debt service coverage ratio       issued Electric System Revenue and a strong local economy con-  but net revenues fell reflecting ac-measures the number of times         Bonds in 1973. The bonds have tributed to another good finan-  counting transactions related to the sum of principal and interest    been rated investment grade-cial year for SRP.               the start-up of Palo Verde due on outstanding debt during       those suitable for purchase by Nuclear Generating Station.
During fiscal year 1986-87:
the year is covered by revenues       prudent investors    ever since.
~ The debt service coverage ratio increased from 1.85 to 2.00
During fiscal year 1986-87:    Debt service coverage rises        available after payment of           Currently, the bonds are rated operating expenses.                   AA by Standard 6 Poor's and Aa
~ SRP bonds maintained their AA and Aa ratings
    ~ The debt service coverage      A 4.70 percent increase in by Moody's Investor Services, Inc.
~ Gross revenues increased; but net revenues fell reflecting ac-counting transactions related to the start-up of Palo Verde Nuclear Generating Station.
ratio increased from 1.85 to 2.00 gross revenues in fiscal year            Keeping healthy financially
Debt service coverage rises A 4.70 percent increase in gross revenues in fiscal year 1986-87 raised SRP's debt ser-vice coverage to 2.00. That com-pares with last year's ratio of 1.85.
The debt service coverage ratio measures the number of times the sum ofprincipal and interest due on outstanding debt during the year is covered by revenues available after payment of operating expenses.
Keeping healthy financially allows SRP bonds to continue to be rated highly by the nation's leading rating agencies. SRP first issued Electric System Revenue Bonds in 1973. The bonds have been rated investment grade-those suitable for purchase by prudent investors ever since.
Currently, the bonds are rated AAby Standard 6 Poor's and Aa by Moody's Investor Services, Inc.
 
Gross revenues increase Hot weather and nearly 30,000 new customers increased enerib sales, helping to build a 4.7 percent increase in gross revenues to $888.5 million, up from the previous year's revenues of $848.6 million. Average an-nual use for residential customers increased from 12,175 kilowatt-hours (kWh) to 12,440 kWh.
Although gross revenues in-creased, so did the cost ofdoing business. Operating expenses in-creased 9.9 percent to $706.4 million from $643.0 million the previous year.
SRP produced $74.8 million in net revenues during fiscal year 1986-87. That was a substantial decrease from the $158.3 million in fiscal year 198546.
The decrease resulted from account-ing transactions related to the start-up, of the Palo Verde Nuclear Generating Station.
Specifically, when the firstunit of the Palo Verde Nuclear Generating Station began com-mercial operation in January 1986, SRP stopped making en-tries to record the allowance for funds used during construction.
Instead, these finance costs were listed as expenses.
At the same
: time, SRP began recording depreciation, operating and maintenance expenses for the unit. System sales did not in-crease commensurate with the commercial operation ofthe first unit, resulting in a decrease in net revenues.
Palo Verde's second unit was treated the same way when it began commercial operation.
The same format will follow for the third unit when it goes into commercial operation.
Commercial operation of the first Palo Verde unit also trig-gered an exchange of capacity with the Ias Angeles Deparbnent ofWater and Power (LADWP). In 1977, LADWPpurchased 30 per-cent of SRP's Coronado Generating Station near St.
Johns, Arizona. LADWP agreed to trade its share of the station for 5.70 percent of Palo Verde Nuclear Generating Station when its first unit went into commer-cial operation.
With commercial operation of the firstunit in January 1986, the, trade took place. SRP reduced its share ofPalo Verde to 17.49 per-cent and regained 100 percent ownership of Coronado Gener-ating Station.
At that
: time, LADWP also paid SRP a partial payment of $90.65 million in recognition ofthe greater cost of Palo Verde. A second payment of
$74.75 million (including in-terest) was received during fiscal 198647.
Despite the decline in net revenues, SRP's debt ratio dipped slightly from 68.06 percent in the previous fiscal year to 67.67 percent.
The time was right for a com-petitive sale because interest rates were relatively low and stable and the then<urrent sup-ply of municipal bonds was limited. Salomon Brothers, Inc.,
of New York placed the winning bid. Three other groups also of-fered bids.
SRP, as a special-purpose im-provement
: district, sells tax-exempt revenue bonds to finance new construction and im-provements to its electric system.
Tax-exempt financing and SRP's solid credit ratings help keep financing costs relatively low.
This, in turn, can help delay rate increases.
Low financing costs could also minimize rate in-creases.
DEBT SERVICE COVERAGE RATIO As a public power utility,SRP does not issue stock or pay dividends.
Net revenues are reinvested in SRP to help replace equipment and finance construc-tion of new facilities.
Such reinvestment reduces the need to issue bonds, thus keeping rates Iow.
Bonds sold on competitive basis For the first time since 1981, SRP sold bonds on a competitive bid basis. For the past five years, SRP has used negotiated sales.
In October 1986, SRP sold $100 million in tax-free electric system revenue bonds. The bonds were sold in $5,000 denominations at an effective interest rate of 7.34 percent.
SRP sold approximately
$18.70 million in interest-bearing mini-bonds for $500 each and
$3.60 million in capital apprecia-tion bonds. The capital apprecia-tion bonds were purchased for
$200 per bond and will pay
$488.05 if held 'to maturity in 2002. The sale closed May 15, 1987.
Construction begins on corporate headquarters In January 1987, SRP began construction on the firstbuilding of a planned five-building cor-porate headquarters in north Tt.mpe.
The corporate head-
: quarters, on 40
: acres, is ex-pected to be completed by 2010.
SRP expects to invest about 984==85 1986-87
=1983 84==2:=={)9M988 86==-2:=00


Gross revenues increase            its first unit went into commer-          The time was right for a com-    $ 290 million by 1992 on the                   first Hot weather      and    nearly    cial operation.                        petitive sale because interest      two of the five buildings. The 30,000 new customers increased              With commercial operation of      rates were relatively low and        corporate headquarters will be enerib sales, helping to build a        the first unit in January 1986, the,  stable and the then<urrent sup-      the focal point of Papago Park 4.7 percent increase in gross          trade took place. SRP reduced its      ply of municipal bonds was          Center, a business park on the revenues to $ 888.5 million, up        share of Palo Verde to 17.49 per-      limited. Salomon Brothers, Inc.,    adjacent 484 acres. SRP will from the previous year's revenues      cent and regained 100 percent          of New York placed the winning      coordinate development of the of $ 848.6 million. Average an-        ownership of Coronado Gener-            bid. Three other groups also of-    center which will be opened to nual use for residential customers    ating Station. At that time,            fered bids.                          private and commercial develop-increased from 12,175 kilowatt-        LADWP also paid SRP a partial              SRP, as a special-purpose im-    ment. Revenues from the sale or hours (kWh) to 12,440 kWh.            payment of $ 90.65 million in          provement district, sells tax-      lease of facilities in the center will recognition of the greater cost of      exempt revenue bonds to finance      help offset the costs of providing Although gross revenues in-        Palo Verde. A second payment of        new construction and im-            electricity to SRP customers.
==92:=
creased, so did the cost of doing    $ 74.75 million (including in-          provements to its electric system.        In May, SRP estimated savings business. Operating expenses in-      terest) was received during fiscal      Tax-exempt financing and SRP's      of $ 30 million over a 20-year creased 9.9 percent to $ 706.4        198647.                                solid credit ratings help keep million from $ 643.0 million the                                                                                  period due to the operating effi-Despite the decline in net        financing costs relatively low.      ciencies gained through central-previous year.
=1===.85==
revenues, SRP's debt ratio dipped      This, in turn, can help delay rate izing administrative operations.
==1:==:.85::=
SRP produced $ 74.8 million        slightly from 68.06 percent in the      increases. Low financing costs in net revenues during fiscal year    previous fiscal year to 67.67          could also minimize rate in-1986-87. That was a substantial        percent.                                creases.
$290 millionby 1992 on the first two of the five buildings. The corporate headquarters will be the focal point of Papago Park Center, a business park on the adjacent 484 acres.
Compensation funds set aside decrease from the $ 158.3 million                                                                                          for APS customers in fiscal year 198546. The SRP set aside $ 3 milhon last decrease resulted from account-        DEBT SERVICE COVERAGE RATIO                                                  year to compensate certain ing transactions related to the                                                                                      Arizona Public Service Company start-up, of the Palo Verde                                                984==85 1986-87            (APS) electric customers who are Nuclear Generating Station.
SRP will coordinate development of the center which will be opened to private and commercial develop-ment. Revenues from the sale or lease offacilities in the center will help offset the costs ofproviding electricity to SRP customers.
                                                              =1983 84==2:=={) 9M988 86==-2:=                      SRP shareholders. Qualified SRP Specifically, when the first unit              ==92:= =1===.85= =          ==1:==:.85::=
In May, SRP estimated savings of $30 million over a 20-year period due to the operating effi-ciencies gained through central-izing administrative operations.
00            shareholders are those in-of the Palo Verde Nuclear                                                                                            dividuals who own and live on Generating Station began com-                                                                                        land within the boundaries of the mercial operation in January                                                                                        Salt River Valley Water 1986, SRP stopped making en-                                                                                                        Some receive elec-Users'ssociation.
Compensation funds set aside for APS customers SRP set aside $3 milhon last year to compensate certain Arizona Public Service Company (APS) electric customers who are SRP shareholders.
tries to record the allowance for                                                                                    tricity from APS.
Qualified SRP shareholders are those in-dividuals who own and live on land within the boundaries ofthe Salt River Valley Water Users'ssociation.
funds used during construction.                                                                                          A comparison of 1986 electric Instead, these finance costs were                                                                                    bills from SRP and APS in-listed as expenses. At the same                                                                                    dicated that some SRP time, SRP began recording                                                                                          shareholders paid APS at least 15 depreciation, operating and                                                                                        percent more than they would maintenance expenses for the                                                                                        have paid SRP for the same unit. System sales did not in-                                                                                      amount of electricity.
Some receive elec-tricity from APS.
crease commensurate with the                                                                                            SRP's obligation to make commercial operation of the first          As a public power utility, SRP        SRP sold approximately          payments to some APS cus-unit, resulting in a decrease in      does not issue stock or pay            $ 18.70 million in interest-bearing tomers is the result of a 1928 net revenues.                          dividends. Net revenues are            mini-bonds for $ 500 each and      SRP bylaw which protects Palo Verde's second unit was      reinvested in SRP to help replace      $ 3.60 million in capital apprecia- residential landowners residing treated the same way when it            equipment and finance construc-        tion bonds. The capital apprecia-  within SRP boundaries, but began commercial operation.            tion of new facilities. Such            tion bonds were purchased for      served by APS, from paying sub-The same format will follow for        reinvestment reduces the need to        $ 200 per bond and will pay        stantially more for electricity than the third unit when it goes into        issue bonds, thus keeping rates        $ 488.05 if held 'to maturity in    if they were served by SRP. In commercial operation.                  Iow.                                    2002. The sale closed May 15,      1967, the courts defined substan-Bonds sold on                1987.                              tial as 15 percent or more.
A comparison of 1986 electric bills from SRP and APS in-dicated that some SRP shareholders paid APS at least 15 percent more than they would have paid SRP for the same amount of electricity.
Commercial operation of the first Palo Verde unit also trig-                competitive basis                  Construction begins on              SRP shareholders in 1984 gered an exchange of capacity                For the first time since 1981,        corporate headquarters          voted to grandfather the right to with the Ias Angeles Deparbnent        SRP sold bonds on a competitive            In January 1987, SRP began      compensation to those share-of Water and Power (LADWP). In          bid basis. For the past five years,    construction on the first building  holders who received electric ser-1977, LADWP purchased 30 per-          SRP has used negotiated sales.                                              vice on or before Dec. 31, 1984, of a planned five-building cor-cent      of SRP's Coronado            In October 1986, SRP sold $100                                              and also voted to end the com-porate headquarters in north Generating Station near St.            million in tax-free electric system                                        pensation program in 1994.
SRP's obligation to make payments to some APS cus-tomers is the result of a 1928 SRP bylaw which protects residential landowners residing within SRP boundaries, but served by APS, from paying sub-stantially more for electricity than if they were served by SRP. In 1967, the courts defined substan-tial as 15 percent or more.
Tt.mpe. The corporate head-Johns, Arizona. LADWP agreed            revenue bonds. The bonds were          quarters, on 40 acres, is ex-to trade its share of the station      sold in $ 5,000 denominations at        pected to be completed by 2010.
SRP shareholders in 1984 voted to grandfather the right to compensation to those share-holders who received electric ser-vice on or before Dec. 31, 1984, and also voted to end the com-pensation program in 1994.
for 5.70 percent of Palo Verde          an effective interest rate of 7.34 Nuclear Generating Station when        percent.                                  SRP expects to invest about 17
17


Salt River Project Agricultural Improvement and Power District and its agent, Salt River Valley Water Users'ssociation Combined Balance Sheets As of April 30,     l987 and 1986 Assets                                                                                                         ($ 000) 1987                  1986 UTILITYPLANT,           at historical cost (bootes 1, 2, 3 and 4):
Salt River Project Agricultural Improvement and Power District and its agent, Salt River Valley Water Users'ssociation Combined Balance Sheets As of April 30, l987 and 1986 Assets UTILITYPLANT, at historical cost (bootes 1, 2, 3 and 4):
Plant in service-Electric                                                                               $ 3,721,898           $ 3,132,867 Irrigation                                                                                    92;127                87,503 General                                                                                    166,559              143,021 3,980,584            3,363,391 Less - Accumulated depreciation on plant in service                                              861,043              738,283 3,119,541            2,625,108 Construction work in progress .                                                                  740,767            1,025,680 Nuclear fuel, net of amortization    (&#xb9;te  1)                                                    92,736                92,596 3,953,044            3,743,384 SEGREGATED FUNDS, consisting of cash and                   U.S.
Plant in service-Electric Irrigation General Less - Accumulated depreciation on plant in service Construction work in progress Nuclear fuel, net of amortization (&#xb9;te 1) 1987
$3,721,898 92;127 166,559 3,980,584 861,043 3,119,541 740,767 92,736 3,953,044
($000) 1986
$3,132,867 87,503 143,021 3,363,391 738,283 2,625,108 1,025,680 92,596 3,743,384 SEGREGATED FUNDS, consisting of cash and U.S.
Government obligations set aside in accordance with resolutions of bond issues:
Government obligations set aside in accordance with resolutions of bond issues:
Debt service funds, excluding $ 61,916,000 in 1987 and $ 51,032,000 in 1986 for payment 94,769 of accrued interest (&#xb9;te 5) .                                                                 99,318 Construction fund.                                                                            49,652               23,000 148,970              117,769 CURRENTASSETS:
Debt service funds, excluding $61,916,000 in 1987 and $51,032,000 in 1986 for payment of accrued interest (&#xb9;te 5).
Cash and temporary investments, at cost                                                           111,412              108,967 Deposit in debt service fund for payment of accrued interest on bonds     .                                                                61,916                51,032 Trade and other accounts receivable, less reserves of $ 1,207,000 in l987 and
Construction fund.
        $ 1,120,000 in 1986 for doubtful accounts...                                                     46,754                61,071 Note receivable (Arote 4)                                                                         28,969                90,653 Fuel stocks, at last-in, firstwut cost                                                           81,144                55,522 Materials and supplies, at average cost                                                           69,297              4?,095 Prepayments, interest receivable and other .                                                       13,433                 8,119 412,925              422,459 DEFERRED CHARGES AND OTHER ASSETS
99,318 49,652 148,970 94,769 23,000 117,769 CURRENTASSETS:
(&#xb9;tes   1 and 57                                                                               l86,181               169,60?
Cash and temporary investments, at cost Deposit in debt service fund for payment of accrued interest on bonds Trade and other accounts receivable, less reserves of $1,207,000 in l987 and
                                                                                                    $ 4,701,120           $ 4,453,219 The accompanying notes are an inlegrai part   of these combined balance sheets.
$1,120,000 in 1986 for doubtful accounts...
Note receivable (Arote 4)
Fuel stocks, at last-in, firstwut cost Materials and supplies, at average cost Prepayments, interest receivable and other.
111,412 61,916 46,754 28,969 81,144 69,297 13,433 412,925 108,967 51,032 61,071 90,653 55,522 4?,095 8,119 422,459 DEFERRED CHARGES AND OTHER ASSETS
(&#xb9;tes 1 and 57 l86,181
$4,701,120 169,60?
$4,453,219 The accompanying notes are an inlegrai part of these combined balance sheets.
18
18


Capitalization and Liabilities                                                   ($ 000) 1987                1986 LONGTERM DEBT             (Pote g:
Capitalization and Liabilities LONGTERM DEBT (Pote g:
Electric system revenue bonds                                   $ 2,626,709          $ 2,541,383 Commercial paper and other (h'ote 8)                                 360,028             339,024 2,986,737           2,880,407 ACCUMULATED NET REVENUES:
Electric system revenue bonds Commercial paper and other (h'ote 8) 1987
Balance, beginning of year                                         1,351,904            1,193,588 Net revenues for the year                                             74,761              156,316 Balance, end of year                                               1,426,665            1,351,904 4,413,402           4,232,311 CURRENT LIABILITIES,excluding               $ 26,140,000 in 1987 and
$2,626,709 360,028 2,986,737
$ 17,775,000 in 1986, representing current portion of long-term debt which is to be paid from segregated funds:
($000) 1986
Accounts payable....                                                   85,428              66,657 Accrued taxes and tax equivalents                                     41,434              36,142 Accrued interest ..                                                   63,761               52,628 Customers'eposits                                                      21,462              '17,619 Other liabilities.                                                    24,881              24,223 236,966              197,269 DEFERRED CREDITS AND RESERVES                         (&#xc3;ote 7).           50,752               23,639 COMMITMENTS AND CONTINGENCIES (Notes 3, 5 and   7j
$2,541,383 339,024 2,880,407 ACCUMULATEDNET REVENUES:
                                                                    $ 4,701,120         $ 4,453,219
Balance, beginning of year Net revenues for the year Balance, end of year 1,351,904 74,761 1,426,665 4,413,402 1,193,588 156,316 1,351,904 4,232,311 CURRENT LIABILITIES,excluding $26,140,000 in 1987 and
$17,775,000 in 1986, representing current portion of long-term debt which is to be paid from segregated funds:
Accounts payable....
Accrued taxes and tax equivalents Accrued interest..
Customers'eposits Other liabilities.
85,428 41,434 63,761 21,462 24,881 236,966 66,657 36,142 52,628
'17,619 24,223 197,269 DEFERRED CREDITS AND RESERVES (&#xc3;ote 7).
50,752 23,639 COMMITMENTSAND CONTINGENCIES (Notes 3, 5 and 7j
$4,701,120
$4,453,219


Salt River Project Agricultural Improvement and Power District and its agent, Salt River Valley Water Users'ssociation Combined Statements of Net Revenues For the Years Ended April 30, 1987 and 1986
Salt River Project Agricultural Improvement and Power District and its agent, Salt River Valley Water Users'ssociation Combined Statements of Net Revenues For the Years Ended April 30, 1987 and 1986 1987
($ 000) 1987                  1986 OPERATING REVENUES                   (Note 2):
($000) 1986 OPERATING REVENUES (Note 2):
Electric                                                                                                           $  881,340          $  841,936 Water and irrigation                                                                                                     7,166                  6,682 Total operating revenues     ..                                                                                 888,506               848,618 OPERATING EXPENSES:
Electric Water and irrigation Total operating revenues..
Purchased power .                                                                                                     49,086 181,331 49,151 216,083 Fuel used in efectric generation     .
881,340 7,166 888,506 841,936 6,682 848,618 OPERATING EXPENSES:
Other operating expenses ~       ...........                                                                         151,308              122,304 Maintenance....   ,                                                                                                 88,231 133,324 80,985 90,576 Depreciation and amortization (Note 1)           .
Purchased power.
Taxes and tax equivalents.                                                                                           103,097                  83,864 Total operating expenses...                                                                                       706,377              642,963 Net: operating revenues     .,                                                                                   182,129               205,655 FINANCING COFIS:
Fuel used in efectric generation Other operating expenses
Interest on bonds.                                                                                                   179,109                179,928 Amortization of bond discount, issue and refinancing expenses (Note 1)                         ....., ...........       6,089                  2,387 Interest on other obligations...                                                                                       16,081                17,864 Interest earned on investments, deposits and other.                                                                   (36,08()              (37,681)
~...........
Net financing cos(s                                                                                             165,195                162,498 Less - Allowance for funds used during construction ir                                                              (59,902)            (120,161)
Maintenance....,
(AFUDC) state 1)     ~ 6 v ~ ~ ~ ~ ~ ~ e ~ ~ ~ ~   w ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 6 ~ ~ ~ ~ w ~
Depreciation and amortization (Note 1).
Financing costs less AFUDC         ..............           .....                                               105,293                 42,337 OTHER EXPENSES, net                                                                                                       2,075                 5,002 NET REVENUES                                                                                                           $ 74,761             $    158,316 The accompanying notes ar)e an integral   part'f these   combined statements 20
Taxes and tax equivalents.
Total operating expenses...
Net: operating revenues.,
49,086 181,331 151,308 88,231 133,324 103,097 706,377 182,129 49,151 216,083 122,304 80,985 90,576 83,864 642,963 205,655 FINANCING COFIS:
Interest on bonds.
Amortization of bond discount, issue and refinancing expenses (Note 1).....,...........
Interest on other obligations...
Interest earned on investments, deposits and other.
Net financing cos(s Less - Allowance for funds used during construction (AFUDC) state 1)
~
6 v
~ ~
~
~
~
~ e
~ ~
~
~ i r w
~
~
~
~
~
~
~
~
~
~
~ 6
~ ~
~
~ w ~
Financing costs less AFUDC...................
179,109 6,089 16,081 (36,08()
165,195 (59,902) 105,293 179,928 2,387 17,864 (37,681) 162,498 (120,161) 42,337 OTHER EXPENSES, net 2,075 5,002 NET REVENUES 74,761 158,316 The accompanying notes ar)e an integral part'f these combined statements 20


Salt River Project Agricultural Improvement and Power District and its agent, Salt River Valley Water Users'ssociation Combined Statements of Cash Flows For the Years Ended April 30, 1987 and 1986
Salt River Project Agricultural Improvement and Power District and its agent, Salt River Valley Water Users'ssociation Combined Statements of Cash Flows For the Years Ended April 30, 1987 and 1986 1987
($ 000) 1987                      1986 NET CASH FLOWS FROM OPERATING ACTIVITIES:
($000) 1986 NET CASH FLOWS FROM OPERATING ACTIVITIES:
Net revenues .                                                                              $    74,761              $  158,316 Noncash items included in income:
Net revenues Noncash items included in income:
Depreciation and amortization.                                                             133,324                      90,576 Amortization of bond related expenses.                                                           6,089                    2,38?
Depreciation and amortization.
Increase in fuel stocks and materials and supplies                                           (47,824)                  (14,234}
Amortization of bond related expenses.
Increase in other assets, net                                                                   (8,897)                (21,967)
Increase in fuel stocks and materials and supplies Increase in other assets, net Increase (decrease) in accounts payable Increase in accrued taxes and tax equivalents Increase (decrease) in accrued interest Increase in other liabilities, net
Increase (decrease) in accounts payable .                                                      18,771                        (67)
~.
Increase in accrued taxes and tax equivalents                                                   5,292                    1,781 Increase (decrease) in accrued interest                                                       ll;133                    (9,587)
Gain on sale of property Net cash provided from operating activities NET CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in other liabilities, net .
Gross additions to utility plant, net of AFUDC.
                                          ~
Allowance for funds usia during construction Gross additions to nonutility plant Proceeds from sale of plant Decrease (increase) in note receivable Contributions in aid of construction Net cash used by investing activities.
9,317                    6,375 Gain on sale of property                                                                           (96)                  (4,268)
Net cash provided from operating activities                                                     201,870                  209,312 NET CASH FLOWS FROM INVESTING ACTIVITIES:
Gross additions to utility plant, net of AFUDC     .                                         (309,356)                (352,993)
Allowance for funds usia during construction .                                                  (59,902)                (120,161)
Gross additions to nonutility plant                                                             (10,812)                      (658)
Proceeds from sale of plant                                                                           972                194,192 Decrease (increase) in note receivable .                                                          61,684                  (90,653)
Contributions in aid of construction                                                             25,395                    19,181 Net cash used by investing activities.                                                         (292,016)                (351,092)
NET CASH FLOWS FROM FINANCING ACTIVITIES:
NET CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of bond issues                                                                         120,814                  596,143 Other long-term borrowings, net of repayment .                                                    21,845                    30,318 Repayment of principal on bonds and U.S. debt.                                                   (18,867)                  (18,917)
Proceeds of bond issues Other long-term borrowings, net of repayment Repayment of principal on bonds and U.S. debt.
Defeasance of revenue bonds                                                                                               (472,692)
Defeasance of revenue bonds Deferred loss on defeasance of bonds Net cash provided by financing activities........
Deferred loss on defeasance of bonds                                                                                       (81,168)
NET INCREASE (DECREASE) IN CASH AND TEMPORARY INVESTMENTS AND SEGREGATED FUNDS......
Net cash provided by financing     activities........                                         123,792                      53,684 NET INCREASE (DECREASE) IN CASH AND TEMPORARY INVESTMENTS AND SEGREGATED FUNDS......                                                           33,646                    (88,096)
BALANCE AT BEGINNING OF YEAR IN CASH AND TEMPORARY INVESTMENTS AND SEGREGATED FUNDS.... ~........
BALANCE AT BEGINNING OF YEAR IN CASH AND TEMPORARY INVESTMENTS AND SEGREGATED FUNDS....                                   ~........               226,736                  314,832 BALANCE AT END OF YEAR IN CASH AND TEMPORARY INVESTMENTS AND SEGREGATED FUNDS.......                                                     $ 260,382               $  226,736 The accompanying notes are an integrai part of these combined stalemenls.
BALANCEAT END OF YEAR IN CASH AND TEMPORARY INVESTMENTS AND SEGREGATED FUNDS.......
74,761 133,324 6,089 (47,824)
(8,897) 18,771 5,292 ll;133 9,317 (96) 201,870 (309,356)
(59,902)
(10,812) 972 61,684 25,395 (292,016) 120,814 21,845 (18,867) 123,792 33,646 226,736 260,382 158,316 90,576 2,38?
(14,234}
(21,967)
(67) 1,781 (9,587) 6,375 (4,268) 209,312 (352,993)
(120,161)
(658) 194,192 (90,653) 19,181 (351,092) 596,143 30,318 (18,917)
(472,692)
(81,168) 53,684 (88,096) 314,832 226,736 The accompanying notes are an integrai part of these combined stalemenls.
21
21


Salt River Project Agricultural Improvement       6 Power District and its agent, Salt River Valley Water Users'ssociation Notes to Combined Financial Statements For The Years Ended April 30, 1987 and 1986 Summary of Significant Accounting                                 are adjusted periodically for changes in costs of fuel and (1)                                                                        purchased power. Revenues from water and irrigation operations Policies:                                                                 are recorded when earned.
Salt River Project Agricultural Improvement 6 Power District and its agent, Salt River Valley Water Users'ssociation Notes to Combined Financial Statements For The Years Ended April 30, 1987 and 1986 (1) Summary of Significant Accounting Policies:
(a) Principles of Combination The combined financial statements include the accounts of           (I) Electric Rates the Salt River Project Agricultural Improvement and Power                       Under Arizona laiv, the District's Board of Directors has the District (the District) and the accounts of its agent, the Salt           exclusive authority to establish electric rates. The District is River Valley Water Users'ssociation (the Association) and a               required to follow certain procedures, including certain public wholly-owned subsidiary, Salt River Generating Company,                   notice requirements and holding a special Board meeting, before together referred to as the Salt River Project (the Project). All         implementing any changes in the standard electric rate significant intercompany transactions have been eliminated. The           schedules. The District is currently studying the need for an Project follows the accounting principles promulgated by the             additional rate increase to be effective in October 1987. Such Financial Accounting Standards Board.                                    increase is anticipated to be approximately 6e/o. The current rates have been in place since October 1985.
(a) Principles of Combination The combined financial statements include the accounts of the Salt River Project Agricultural Improvement and Power District (the District) and the accounts of its agent, the Salt River Valley Water Users'ssociation (the Association) and a wholly-owned subsidiary, Salt River Generating Company, together referred to as the Salt River Project (the Project). All significant intercompany transactions have been eliminated. The Project follows the accounting principles promulgated by the Financial Accounting Standards Board.
(b) Regulatory Agency The District's Board of Directors serves as its regulatory           (g) Nuclear Fuel The District amortizes nuclear fuel to fuel    expense on a unit agency.
(b) Regulatory Agency The District's Board of Directors serves as its regulatory agency.
of production method.
(c) UtilityPlant, Depreciation and Maintenance The accounting records of the Project are maintained substantially in accordance with the Uniform System of Accounts prescribed for electric utilities by the Federal Energy Regulatory Commission. Utilityplant 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.
Utility Plant, Depreciation and Maintenance                             Under the provisions of the Nuclear Waste      Act of 1982, the (c)
An allowance for funds used to finance construction work in progress (AFUDC) is capitalized as a part of the electric and general plant. This allowance is deducted from net financing costs in the combined statements of net revenues and added to utility plant. Capitalization rates of 10.7/o and 9.7/o were used in 1987 and 1986, respectively.
The accounting records of the Project are maintained                 District is charged one mill per kilowatt-hour      (kWh) on its share substantially in accordance with the Uniform System of Accounts           of electricity produced by Palo Verde Nuclear      Generating Station prescribed for electric utilities by the Federal Energy Regulatory       (PVNGS) Units 1 and 2. The District records        this charge as a Commission. Utility plant is stated at the historical cost of           current year expense.
Depreciation expense is computed on the straight-line basis over estimated useful liam of the various classes of plant. Rates in erect resulted in provisions approximating 3.37'/o and 3.31/e for 1987 and 1986, respectively, on the average cost of depreciable electric plant, and 1.42'/o and 1.39/o for 1987 and 1986, respectively, 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 utility plant account, and such cost, together with removal costs less salvage, is charged to accumulated depreciation.
construction. Construction costs include labor, materials, services     (h) Decommissioning purchased under contract, and allocations of indirect charges for         The District began reserving for the cost of decommissioning engineering, supervision, transportation, and administrative             PVNGS Units 1 and 2 commencing with their dates of expenses.                                                               commercial operation. The estimate to decommission the An allowance for funds used to finance construction work in         District's share of PVNGS Units 1 and 2 of $108 million is progress (AFUDC) is capitalized as a part of the electric and           based upon an outside engineer's study. The estimated costs will general plant. This allowance is deducted from net financing             be reviewed and adjusted periodically. Decommissioning funds costs in the combined statements of net revenues and added to           collected from the ratepayers will be deposited in a separate utility plant. Capitalization rates of 10.7/o and 9.7/o were used       bank account which is classified as part of the general fund.
The Project charges to maintenance expense the cost of labor, materials, and other expenses incurred in the repair and replacement of minor items of property.
in 1987 and 1986, respectively.
(d) Bond Expense Bond discount, issue and refinancing expenses are being amortized over the terms of the related bond issues.
Depreciation expense is computed on the straight-line basis         (i) Income ihxes over estimated useful liam of the various classes of plant. Rates             The District is exempt from federd and state income taxes.
(e) Revenues Meters for residential, commercial and small industrial customers are read cyclically and sales recorded only when billed. This system of billing results in estimated earned but unbilled revenues which amounted to $20,273,000 and
in erect resulted in provisions approximating 3.37'/o and 3.31/e (j) Reclassifications for 1987 and 1986, respectively, on the average cost of                       Certain 1986 amounts have been reclassified to conform to depreciable electric plant, and 1.42'/o and 1.39/o for 1987 and         the current year presentation.
$22,100,000 at April 30, 1987 and 1986, respectively. For large industrial customers, meters are read near month-end and billings recorded on the accrual basis. Electric revenue billings 22 are adjusted periodically for changes in costs of fuel and purchased power. Revenues from water and irrigation operations are recorded when earned.
1986, respectively, for depreciable irrigation plant. When property representing a retirement unit is replaced, removed, or abandoned, the cost of such property is credited to the                   (2) Possession and use of utility plant:
(I) Electric Rates Under Arizona laiv, the District's Board of Directors has the exclusive authority to establish electric rates. The District is required to follow certain procedures, including certain public notice requirements and holding a special Board meeting, before implementing any changes in the standard electric rate schedules.
appropriate utility plant account, and such cost, together with               The United States of America retains a paramount right or removal costs less salvage, is charged to accumulated                     claim in the Project which arises from the original construction depreciation.                                                             and operation of the Project's facilities as a Federal Reclamation The Project charges to maintenance expense the cost of               Project. The Project's right to the possession and use of, and to labor, materials, and other expenses incurred in the repair and         all revenues produced by, these facilities is evidenced by replacement of minor items of property.                                  contractual arrangements with the United States.
The District is currently studying the need for an additional rate increase to be effective in October 1987. Such increase is anticipated to be approximately 6e/o. The current rates have been in place since October 1985.
(d) Bond Expense Bond discount, issue and refinancing expenses are being             (3) Construction program:
(g) Nuclear Fuel The District amortizes nuclear fuel to fuel expense on a unit of production method.
amortized over the terms of the related bond issues.                         Balances shown for construction work in progress (CWIP) represent expenditures for new facilities required to service (e) Revenues                                                             anticipated customer needs, and consist of:
Under the provisions of the Nuclear Waste Act of 1982, the District is charged one mill per kilowatt-hour (kWh) on its share of electricity produced by Palo Verde Nuclear Generating Station (PVNGS) Units 1 and 2. The District records this charge as a current year expense.
Meters for residential, commercial and small industrial                                                                   Plillions) customers are read cyclically and sales recorded only when                                                                 1987          1986 billed. This system of billing results in estimated earned but unbilled revenues which amounted to $ 20,273,000 and                     Electric generating facilities ............., ..    $ 529        $ 873
(h) Decommissioning The District began reserving for the cost of decommissioning PVNGS Units 1 and 2 commencing with their dates of commercial operation. The estimate to decommission the District's share of PVNGS Units 1 and 2 of $108 million is based upon an outside engineer's study. The estimated costs will be reviewed and adjusted periodically. Decommissioning funds collected from the ratepayers will be deposited in a separate bank account which is classified as part of the general fund.
  $ 22,100,000 at April 30, 1987 and 1986, respectively. For large Transmission and distribution Irrigation plant 124 16 80 12 industrial customers, meters are read near month-end and                 Other construction .                                  72          61 billings recorded on the accrual basis. Electric revenue billings             Total                                         S741       S1,026 22
(i) Income ihxes The District is exempt from federd and state income taxes.
(j) Reclassifications Certain 1986 amounts have been reclassified to conform to the current year presentation.
Electric generating facilities.............,..
Transmission and distribution..
Irrigation plant......,...,.......>......>
Other construction Total
$529
$873 124 80 16 12 72 61 S741 S1,026 (2) Possession and use of utility plant:
The United States of America retains a paramount right or claim in the 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.
(3) Construction program:
Balances shown for construction work in progress (CWIP) represent expenditures for new facilities required to service anticipated customer needs, and consist of:
Plillions) 1987 1986


Construction expenditures planned for fiscal years 1988                   On January 29, 1986 the District exchanged 5.7% interest in through 1992 are shown below.                                             PVNGS for the Los Angeles Department of Water and Power's (LADWP) 30% share of the Coronado Generating Station Units (hlilllons)                      1 and 2. Of the net cash settlement, $ 162.4 million has been Construction                 AFUDC              Total    received by the District. The remaining due from LADWP of
Construction expenditures planned for fiscal years 1988 through 1992 are shown below.
                                                                              $ 28.9 million (including accrued interest) has been withheld.
1988 1989 1990 1991 1992 Construction
1988                $ 404                      $ 47             $ 451 1989                  629 LADWP claims that the amount of AFUDC charged to PVNGS 34                663 1990                491                        39                530     construction is excessive. It is the opinion of management and 1991                360                        39              399     legal counsel that the AFUDC amount is in agreement with the 1992                296                        14              310     contract exchange agreement, Federal Energy Regulatory Regulations and past and current practices. At this time These expenditures will be financed primarily by funds               negotiations are continuing; however, legal action may be currently on hand, future net revenues and the sale of revenue           required to settle the matter.
$404 629 491 360 296 (hlilllons)
bonds.                                                                        The District acts as the operating agent for the participants Construction of PVNGS Unit 3 is proceeding on a schedule             in the Navajo Project. As operating agent, the District utilizes for commercial operation in late 1987. PVNGS Units 1 and 2               advanced billings to the participants, based on ownership were placed into commercial operation in January and Sept-               percentage, to pay the cost of operations. A separate operating ember of 1986, respectively.                                             fund is maintained by the District to process Navajo Construction of Coronado Unit 3, a planned 350,000 kw                 transactions.
AFUDC
coal-fired unit is proceeding on a schedule for commercial                   The District's share of direct. expenses of the jointl~wned operation in the spring of 1991. The total estimated                     plants is included in operating expenses in the combined construction costs for Unit 3, including AFUDC, is approx-               statements of net revenues.
$47 34 39 39 14 Total
imately $ 790 million.
$451 663 530 399 310 These expenditures will be financed primarily by funds currently on hand, future net revenues and the sale of revenue bonds.
Projected construction expenditures include contingency allowances to reflect potential cost increases.                           (5) Long-term debt:
Construction of PVNGS Unit 3 is proceeding on a schedule for commercial operation in late 1987. PVNGS Units 1 and 2 were placed into commercial operation in January and Sept-ember of 1986, respectively.
At April 30, 1987, commitments had been entered into for                                                                           (Millions) delivery of materials and services on construction projects. In                                     Interest Rate                            1987          1986      Maturitles
Construction of Coronado Unit 3, a planned 350,000 kw coal-fired unit is proceeding on a schedule for commercial operation in the spring of 1991. The total estimated construction costs for Unit 3, including AFUDC, is approx-imately $790 million.
~
Projected construction expenditures include contingency allowances to reflect potential cost increases.
addition, various firm commitments exist under coal and fuel oil supply contracts.                                                         Electric System The Project had committed to spend approximately $ 50                 Revenue  Bonds..... 4.7-11.5%                      $ 2,716      $ 2,633        1988-2025 Unamortized Bond million over the next eight years for its share of a project to           Discount  ...,......                                        (89)          (92) build or modify dams on the Salt, Verde and Agua Fria rivers Total Revenue for flood control, to ensure dam safety and provide water                 Bonds Outstanding                                        2,627        2,541 storage associated with the Central Arizona Project. Recent               U.S. Government actions by legislators will result in significant changes to the         Non Interest Bearing Debt.......                                            8              9      1987-2004 project. Management has not yet been able to determine the               Commercial Paper...                                          350          325 impact upon the construction program, however it is not                                           6.5-7.7%
At April 30, 1987, commitments had been entered into for delivery of materials and services on construction projects. In
~ addition, various firm commitments exist under coal and fuel oil supply contracts.
The Project had committed to spend approximately $50 million over the next eight years for its share of a project to build or modify dams on the Salt, Verde and Agua Fria rivers for flood control, to ensure dam safety and provide water storage associated with the Central Arizona Project. Recent actions by legislators will result in significant changes to the project. Management has not yet been able to determine the impact upon the construction program, however it is not believed the previously committed amount will increase significantly.
(5) Long-term debt:
Interest Rate Electric System Revenue Bonds.....
4.7-11.5%
Unamortized Bond Discount...,......
(Millions) 1987 1986
$2,716
$2,633 (89)
(92)
Maturitles 1988-2025 Total Revenue Bonds Outstanding U.S. Government Non Interest Bearing Debt.......
Commercial Paper...
3.44.9'ther,............
3.44.9'ther,............
2              5     1988-1989 believed the previously committed amount will increase Total Long-Term significantly.                                                            Debt...........                                         $ 2,987       $ 2,880 (4) Interests in jointly-owned electric                                       Electric system revenue bonds are secured by a pledge of, utility plants:                                                          and a lien on, the revenues of the electric system after The District has entered into various agreements with other          deducting operating expenses, as defined by the bond electric utilities for the joint ownership of electric generating        resolution, subject to amounts due the United States of and transmission facilities. Each participating owner in these            $ 7,768,532.
6.5-7.7%
facilities must provide for the cost of its ownership share. The              The debt service coverage ratio, as defined in the bond following schedule reflects the District's ownership interest (at        resolution is used by bond rating agencies to help determine the cost) in jointly-owned electric utility plants at April 30, 1987:        financial health of the District and other bond issuers. For the years ended April 30, 198?, and 1986, debt service coverage was (Millions)          as follows:
Total Long-Term Debt...........
Ownership     Plant Share       In      Accumulated Plant Name                 Percent Service        Depreciation                                                                              (Millions, except for ratios)
2,627 8
Four Corners                                                                                                                                         1987          1986 (New Mexico) ...........10.00Yo     $    81                $ 16    $  4 Mohave (Nevada) ........10.00             43                  16      1 Revenues Available for Debt Service.......:                                $ 399      $ 365 Navaio (Arizona) ........21.?0           212                  77        7 Total Debt Seince Requirements                                                200          197 Hasten (Colorado).......50.00             67                  24 Craig (Colorado) ........29.00           225                  50          Debt Service Coverage Ratio                      ~.....                    2.00          1.85 Palo Verde (Arizona) .. ..17.49
350 2
                          ~            1,106                 42    414
$2,987 2,541 9
                                      $ 1,734               $ 225   $ 426 23
325 5
$2,880 1987-2004 1988-1989 On January 29, 1986 the District exchanged 5.7% interest in PVNGS for the Los Angeles Department of Water and Power's (LADWP) 30% share of the Coronado Generating Station Units 1 and 2. Of the net cash settlement,
$162.4 million has been received by the District. The remaining due from LADWP of
$28.9 million (including accrued interest) has been withheld.
LADWP claims that the amount of AFUDC charged to PVNGS construction is excessive. It is the opinion of management and legal counsel that the AFUDC amount is in agreement with the contract exchange agreement, Federal Energy Regulatory Regulations and past and current practices. At this time negotiations are continuing; however, legal action may be required to settle the matter.
The District acts as the operating agent for the participants in the Navajo Project. As operating agent, the District utilizes advanced billings to the participants, based on ownership percentage, to pay the cost of operations. A separate operating fund is maintained by the District to process Navajo transactions.
The District's share of direct. expenses of the jointl~wned plants is included in operating expenses in the combined statements of net revenues.
(4) Interests in jointly-owned electric utility plants:
The District has entered into various agreements with other electric utilities for the joint ownership of electric generating and transmission facilities. Each participating owner in these facilities must provide for the cost of its ownership share. The following schedule reflects the District's ownership interest (at cost) in jointly-owned electric utility plants at April 30, 1987:
(Millions)
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 by the bond resolution, subject to amounts due the United States of
$7,768,532.
The debt service coverage ratio, as defined in the bond resolution is used by bond rating agencies to help determine the financial health of the District and other bond issuers. For the years ended April 30, 198?, and 1986, debt service coverage was as follows:
Ownership Share Plant Name Percent Four Corners (New Mexico)...........10.00Yo Mohave (Nevada)........10.00 Navaio (Arizona)........21.?0 Hasten (Colorado).......50.00 Craig (Colorado)........29.00 Palo Verde (Arizona)..
~..17.49 Plant In Service 81 43 212 67 225 1,106
$ 1,734 Accumulated Depreciation
$ 16 16 77 24 50 42
$225 4
1 7
414
$426 Revenues Available for Debt Service.......:
Total Debt Seince Requirements Debt Service Coverage Ratio ~.....
(Millions, except for ratios) 1987 1986
$399
$ 365 200 197 2.00 1.85 23


The annual maturities of long-term debt (excluding                 The discount rate used in determining the actuarial present commercial paper) as of April 30, 1987, due in the fiscal years   value of the projected benefit obligation was 9.0%. The rate of ending April 30, are as follows:                                  increase in future compensation levels used varies from 9.0% to 5.5%, on a graded scale, based on the age of the participant (Millions)          The expected long-term rate of return on assets is 9.75%.
The annual maturities of long-term debt (excluding commercial paper) as of April 30, 1987, due in the fiscal years ending April 30, are as follows:
1988                  $    26                The following schedule reconciles the funded status of the 1989                      29            Plan with amounts reported in the Project's combined financial 1990                      32            statements as of April 30, 1987:
1988 1989 1990 1991 1992 Thereafter (Millions) 26 29 32 31 37 2,571 82,726 Interest and amortization of discount on the various issues results in an effective rate of approximately 7.18% over the remaining terms of the bonds.
1991                      31 1992                      37 (Millions)
At April 30, 1987, The Project has authority to issue additional electric system revenue bonds totaling $131,426,260 principal amount and electric system refunding revenue bonds totaling $806,840,000 principal amount.
Thereafter                2,571 82,726              Plan assets at fair value                                             $ 259 Actuarial present value of projected benefit obligation:
On April 1, 1986, the District defeased
Vested bendit obligation.                                         (111)
$486,150,000 of electric system revenue bonds, resulting in lower future debt service requirements as well as a loss of $81,168,089. The District's Board of Directors determined that such loss should be recovered from the ratepayers during the period of reduced debt service requirements.
Interest and amortization of discount on the various issues        Nomested benefit obligation ..                                     (12) results in an effective rate of approximately 7.18% over the            Accumulated benefit obligation.......,............               (123) remaining terms of the bonds.                                          Excess of projected benefit obligation At April 30, 1987, The Project has authority to issue              over accumulated benefit obligation,............., .                (45) additional electric system revenue bonds totaling $ 131,426,260        Projected benefit obligation .                                   068) principal amount and electric system refunding revenue bonds Plan assets in excess of projected totaling $ 806,840,000 principal amount.                                benefit obligation                                                   91 On April 1, 1986, the District defeased $ 486,150,000 of      Unrecognized net assets .                                                (65)
Accordingly, under the provisions of Statement of Financial Accounting Standards (SFAS) No. 71, the loss is being amortized on a monthly basis over the life of the Electric System Refunding Revenue Bond Issue, 1986 Series C.
Unrecognized net gain                                                     (21) electric system revenue bonds, resulting in lower future debt      Prior service cost not )et recognized service requirements as well as a loss of $ 81,168,089. The            in net periodic pension cost.
On February 9, 1984, the District refunded its then outstanding General Obligation Bonds. Although the refunding constituted a legal defeasance of the prior lien on revenues which secured said bonds, the General Obligation Bonds continue to be general obligations of the District, secured by a lien upon the real property included in the District, a guarantee by the Salt River Valley Water Users'ssociation, and by the District's taxing authority. As of April 30, 1987 the amount of defeased general obligation bonds outstanding was $129,705,000.
District's Board of Directors determined that such loss should be s        6 recovered from the ratepayers during the period of reduced debt    Prepaid Pension Cost .
The discount rate used in determining the actuarial present value of the projected benefit obligation was 9.0%. The rate of increase in future compensation levels used varies from 9.0% to 5.5%, on a graded scale, based on the age of the participant The expected long-term rate of return on assets is 9.75%.
service requirements. Accordingly, under the provisions of Statement of Financial Accounting Standards (SFAS) No. 71, the loss is being amortized on a monthly basis over the life of the        In addition to providing pension benefits, the Project provides Electric System Refunding Revenue Bond Issue, 1986 Series C.      certain health care and life insurance bendits for retired On February 9, 1984, the District refunded its then            persons. Substantially all of the Project's employees may become outstanding General Obligation Bonds. Although the refunding      eligible for those benefits if they reach normal retirement age constituted a legal defeasance of the prior lien on revenues        while working for the Project, retire from the Project, are which secured said bonds, the General Obligation Bonds              eligible for pension benefits, and have completed a minimum of continue to be general obligations of the District, secured by a  5 years regular employment. The cost of retiree health care and lien upon the real property included in the District, a guarantee  life insurance benefits is recognized as expense as the premiums by the Salt River Valley Water Users'ssociation, and by the        and/or deposits to the mustee are paid. For 1987 and 1986, District's taxing authority. As of April 30, 1987 the amount of    those costs totaled $ 1,361,170 and $ 1,172,077, respectively.
The following schedule reconciles the funded status of the Plan with amounts reported in the Project's combined financial statements as of April 30, 1987:
defeased general obligation bonds outstanding was $ 129,705,000.
Plan assets at fair value Actuarial present value of projected benefit obligation:
Vested bendit obligation.
Nomested benefit obligation..
Accumulated benefit obligation.......,............
Excess of projected benefit obligation over accumulated benefit obligation,.............,
Projected benefit obligation.
Plan assets in excess of projected benefit obligation Unrecognized net assets Unrecognized net gain Prior service cost not )et recognized in net periodic pension cost.
Prepaid Pension Cost.
(Millions)
$ 259 (111)
(12)
(123)
(45) 068) 91 (65)
(21) s 6
In addition to providing pension benefits, the Project provides certain health care and life insurance bendits for retired persons.
Substantially all of the Project's employees may become eligible for those benefits ifthey reach normal retirement age while working for the Project, retire from the Project, are eligible for pension benefits, and have completed a minimum of 5 years regular employment. The cost of retiree health care and life insurance benefits is recognized as expense as the premiums and/or deposits to the mustee are paid. For 1987 and 1986, those costs totaled $1,361,170 and $1,172,077, respectively.
(6) Employees'etirement Plan The Project has a retirement plan covering substantially all employees.
The Plan is funded entirely from Project contributions and the income earned on invested assets.
Contributions to the Plan were $2,181,799 and $9,515,491 in fiscal years 1987 and 1986, respectively. The Project recorded income of $4,098,777 for fiscal year 1987 and expense of
$6,264,699 for 1986 related to the Plan. Plan assets consist primarily of common stocks, U.S. obligations and corporate bonds.
In '1987, the Project adopted Statement of Financial Accounting Standards No. 87, Employers'ccounting for Pensions. Net periodic pension cost under that statement is made up of the components listed below as determined using the projected unit credit actuarial cost method. (No comparable analysis is required to be made for 1986):
(Millions)
Service cost.....,....................
8 Interest cost...,............,...,.....
13 Actual return on assets...
~ ~.....
~..
(45)
Net amortization and deferral.......,.
20 Net periodic pension income.........
S (4)
(7) Litigation and other contingencies:
(7) Litigation and other contingencies:
(6) Employees'etirement                            Plan          Environmental:
Environmental:
The Project has a retirement plan covering substantially all      Various pending litigation or administrative proceedings employees. The Plan is funded entirely from Project                involving environmental matters could affect the Project and its contributions and the income earned on invested assets.            present and proposed generating facilities. In general, these Contributions to the Plan were $ 2,181,799 and $ 9,515,491 in      lawsuits seek to impose higher air quality standards for fiscal years 1987 and 1986, respectively. The Project recorded    generating plants. If ultimately decided adversely to the interest income of $ 4,098,777 for fiscal year 1987 and expense of          of the Project, the lawsuits could result in increased
Various pending litigation or administrative proceedings involving environmental matters could affect the Project and its present and proposed generating facilities. In general, these lawsuits seek to impose higher air quality standards for generating plants. If ultimately decided adversely to the interest of the Project, the lawsuits could result in increased construction costs, increased future operating costs or possible loss in the operational reliability of certain generating plants.
$ 6,264,699 for 1986 related to the Plan. Plan assets consist      construction costs, increased future operating costs or possible primarily of common stocks, U.S. obligations and corporate        loss in the operational reliability of certain generating plants.
Such increased costs would be passed on to customers through increased electric rates.
bonds.                                                            Such increased costs would be passed on to customers through In '1987, the Project adopted Statement of Financial          increased electric rates.
Other Litigation:
Accounting Standards No. 87, Employers'ccounting for Pensions. Net periodic pension cost under that statement is        Other Litigation:
In the normal course of business, the Project is a defendant in various litigation matters. In management's opinion, the ultimate resolution of these matters will not have a significant adverse effect on the Project's financial position or results of operations.
In the normal course of business, the Project         is a defendant made up of the components listed below as determined using the projected unit credit actuarial cost method. (No comparable    in various   litigation   matters. In management's   opinion, the analysis is required to be made for 1986):                        ultimate resolution of these matters will not have a significant adverse effect on the Project's financial position or results of (Millions)  operations.
Payments to Certain Property Owners in the Association's Service Areas Now Provided Electric Power by Others:
Service cost .....,....................            $  8 Payments to Certain Property Owners in the Association's Interest cost...,............,...,.....              13 Actual return on assets... ~ ~..... ~ . .          (45)  Service Areas Now Provided Electric Power by Others:
The Articles of Incorporation of the Association provide for the indemnification of certain property owners in the Association's service areas now provided electric power by others 24
Net amortization and deferral  .... ...,.            20        The Articles of Incorporation of the Association provide for the indemnification of certain property owners in the Net periodic pension  income.........            S  (4)
Association's service areas now provided electric power by others 24


4 if they are required to pay substantially more for power than     liquidity support for the Promissory Notes. Under the terms of they would if they were furnished electric power by the            the Agreement, the District may borrow up to $ 350,000,000 Association. A reserve for these payments has been established      until October 14, 1988. If the agreement is not: renewed prior which, in the opinion of management, adequately covers the          to,October 15, 1987, the District may continue to borrow but Project's liability as of April 30, 1987.                          must reduce its outstanding borrowings to not more than Navajo taxes;                                                      $ 250,000,000 by October 14, 1988 and to not more than In 1977 and 1978 the Nav@o Thbal Council promulgated            $ 150,000,000 by October 14, 1989. Following October 14, 1989, three tax resolutions affecting electric generating stations, in    the District may not make additional borrowings and must repay which the District has an interest. The District and other          all outstanding borrowings by October 15, 1990. As of April 30, participants in the affected generating stations filed lawsuits    1987, the District had no borrowings outstanding under the challenging the resolutions on grounds the 1Nbal Council had        Agreement.
4 if they are required to pay substantially more for power than they would if they were furnished electric power by the Association. A reserve for these payments has been established which, in the opinion of management, adequately covers the Project's liability as of April 30, 1987.
previously approved generating station leases containing                The indebtedness of the District evidenced by the Promissory covenants not to tax. In 1981 the lawsuits were mooted by the        Notes and/or borrowings under the Agreement is an unsecured enactment of a Thbal Council Advisory Committee resolution          obligation of the District payable from the general funds of the reaffirming the convenant not to tax.                                District lawfully available therefore, subject in all respects to the In the fall of 1984 the Navajo Ve Commission notified the      prior lien of the United States, the Revenue Bonds, and other District of its enactment of amended tax resolutions, which        indebtedness of the District secured by revenues or assets of the contained provisions purporting to repeal any prior waiver of the  District. The Promissory Notes and borrowings under the power to tax. The District responded by reminding the              Agreement are not payable from taxes, Commission of the prior resolution, reaffirming its tax covenants.      The District's Board has limited the total amount of The District has recently received a ruling by'he              indebtedness evidenced by the borrowings under the Agreement Commission, denying the contractual claim of immunity from          and Promissory Notes to an aggregate of $ 350,000,000.
Navajo taxes; In 1977 and 1978 the Nav@o Thbal Council promulgated three tax resolutions affecting electric generating stations, in which the District has an interest. The District and other participants in the affected generating stations filed lawsuits challenging the resolutions on grounds the 1Nbal Council had previously approved generating station leases containing covenants not to tax. In 1981 the lawsuits were mooted by the enactment of a Thbal Council Advisory Committee resolution reaffirming the convenant not to tax.
taxation under the covenant not to tax contained in the Navajo Generating Station Lease. The District is unable to predict the ultimate outcome of this action. However, management believes      (9) Irrigation and water operations:
In the fall of 1984 the Navajo Ve Commission notified the District of its enactment of amended tax resolutions, which contained provisions purporting to repeal any prior waiver of the power to tax. The District responded by reminding the Commission of the prior resolution, reaffirming its tax covenants.
that the District has a valid immunity from such taxation and if        Irrigation and water operations expenses, including necessary will challenge the Nav@o Tax Commission ruling. In        depreciation, exceeded the assessments, delivery fees, and other addition, the Board of Directors of the District has approved an    revenues therefrom by approximately $ 15,975,000 for 1987 and action allowing it to recover from its customers the amounts of      $ 12,384,000 for 1986. These amounts do not include such taxes if the payment thereof is ultimately required.            expenditures for additions and improvements to irrigation plant and for repayment of long-term debt.
The District has recently received a ruling by'he Commission, denying the contractual claim of immunity from taxation under the covenant not to tax contained in the Navajo Generating Station Lease. The District is unable to predict the ultimate outcome of this action. However, management believes that the District has a valid immunity from such taxation and if necessary will challenge the Nav@o Tax Commission ruling. In addition, the Board of Directors of the District has approved an action allowing it to recover from its customers the amounts of such taxes if the payment thereof is ultimately required.
(8) Revolving credit agreement/commercial paper program:                                                       (10) Subsequent events:
liquidity support for the Promissory Notes. Under the terms of the Agreement, the District may borrow up to $350,000,000 until October 14, 1988. Ifthe agreement is not: renewed prior to,October 15, 1987, the District may continue to borrow but must reduce its outstanding borrowings to not more than
On May 26, 1987, the District entered into a revolving credit The District's Board has authorized the issuance of up to agreement with Fuji Bank, Limited to provide support for the
$250,000,000 by October 14, 1988 and to not more than
$ 350,000,000 of short-tenn promissory notes (the Promissory District's mini-bond program. Under the terms of the agreement, Notes), which are sold in the tax-exempt commercial paper the District may borrow up to $ 30,000,000 at the Federal Funds market. The Promissory Notes will mature in no more than 270 Rate plus one-quarter to one-half percent, based on length of days from the date of issuance and in no event after October time outstanding. The agreement expires November 15, 1988.
$150,000,000 by October 14, 1989. Following October 14, 1989, the District may not make additional borrowings and must repay all outstanding borrowings by October 15, 1990. As of April 30, 1987, the District had no borrowings outstanding under the Agreement.
15, 1990. As of April 30, 1987, the District had $ 350,000,000 On May 15, 1987, the District sold approximately of the Promissory Notes outstanding at an average interest rate
The indebtedness of the District evidenced by the Promissory Notes and/or borrowings under the Agreement is an unsecured obligation of the District payable from the general funds of the District lawfully available therefore, subject in all respects to the prior lien of the United States, the Revenue Bonds, and other indebtedness of the District secured by revenues or assets of the District. The Promissory Notes and borrowings under the Agreement are not payable from taxes, The District's Board has limited the total amount of indebtedness evidenced by the borrowings under the Agreement and Promissory Notes to an aggregate of $350,000,000.
                                                                    $ 22,300,000 of 1987 Series A and B Mini-Bonds. The proceeds to the District of 4.30/0.
(9) Irrigation and water operations:
were used to refund the costs of construction pursuant to the The District maintains a revolving credit agreement (the District's capital improvement program and to pay financing Agreement) with a consortium of bventy-two banks to provide expenses.
Irrigation and water operations
: expenses, including depreciation, exceeded the assessments, delivery fees, and other revenues therefrom by approximately $15,975,000 for 1987 and
$12,384,000 for 1986. These amounts do not include expenditures for additions and improvements to irrigation plant and for repayment of long-term debt.
(8) Revolving credit agreement/commercial paper program:
The District's Board has authorized the issuance of up to
$350,000,000 of short-tenn promissory notes (the Promissory Notes), which are sold in the tax-exempt commercial paper market. The Promissory Notes will mature in no more than 270 days from the date of issuance and in no event after October 15, 1990. As of April 30, 1987, the District had $350,000,000 of the Promissory Notes outstanding at an average interest rate to the District of 4.30/0.
The District maintains a revolving credit agreement (the Agreement) with a consortium of bventy-two banks to provide (10) Subsequent events:
On May 26, 1987, the District entered into a revolving credit agreement with Fuji Bank, Limited to provide support for the District's mini-bond program. Under the terms of the agreement, the District may borrow up to $30,000,000 at the Federal Funds Rate plus one-quarter to one-half percent, based on length of time outstanding. The agreement expires November 15, 1988.
On May 15, 1987, the District sold approximately
$22,300,000 of 1987 Series A and B Mini-Bonds. The proceeds were used to refund the costs of construction pursuant to the District's capital improvement program and to pay financing expenses.
To the Board of Directors, Salt River Project Agricultural Improvement and Power District, and Board of Governors, Salt River Valley Water Users'ssociation:
To the Board of Directors, Salt River Project Agricultural Improvement and Power District, and Board of Governors, Salt River Valley Water Users'ssociation:
We have examined the combined balance sheets of SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT (a political subdivision of the State of Arizona) and its agent, SALT RIVER VALLEY WATER together referred to as the SALT RIVER PROJECT, as of April 30, 1987 and 1986 and the related           USERS'SSOCIATION, combined statements of net revenues and cash flows for the years then ended. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
We have examined the combined balance sheets of SALT RIVER PROJECT AGRICULTURALIMPROVEMENT AND POWER DISTRICT (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 April 30, 1987 and 1986 and the related combined statements of net revenues and cash flows for the years then ended. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the financial statements referred to above present fairly the financial position of the Salt River Project as of April 30, 1987 and 1986 and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.
In our opinion, the financial statements referred to above present fairly the financial position of the Salt River Project as of April 30, 1987 and 1986 and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.
Arthur Andersen k,       Co, Phoenix, Arizona, June 26, 1987.
Arthur Andersen k, Co, Phoenix, Arizona, June 26, 1987.
25
25


Statistical Review
Statistical Review PROJECT GENERAL Operating revenues Electric Water and irrigation.
($ 000)
Operating expenses Net financing costs less capitalized interest.....,..
PROJECT GENERAL                                                                                                         12 Nonths Ended December 31 12 Months Ended    April 30 1987                1986                                    1976
Other deductions (revenues), net...,.............
                                                              $  888,506          $  848,618            $  539,669      $    225,268 Operating revenues .
Net revenues Gross additions to plant, excluding allowances for funds used during construction Utilityplant, gross Contributions of electric revenues to support water operations...
881,340            841,936                534,357          220,961 Electric 7,166              6,682                  5,312            4,307 Water and irrigation.
Taxes and tax equivalents Employees at )mr-end.
706,3?7            642,963                400,323          182,662 Operating expenses interest....., ..           105,293              42,337                  47,460            31,060 Net financing costs less capitalized Other deductions (revenues),   net...,.............                 2,075                5,002                (1,644)                259 11,287 Net revenues                                                       74,761              158,316                  93,530 Gross additions to plant, excluding allowances for funds used during construction Utility plant, gross .
309,356 4,814,087 5,468'981 352,993 4,481,667 302,702 2,843,247 234,012 1,229,617 Contributions of electric revenues to support water operations.   ..                                 15,975              12,384                  4,8?0 58,134 7,341 30,869 Taxes and tax equivalents                                         103,097              83,864 Employees at )mr-end.                                               5 735                                      4,580              3,325
'Does not include temporary employees.
'Does not include temporary employees.
KATER*
1987 888,506 881,340 7,166 706,3?7 105,293 2,075 74,761 309,356 4,814,087 15,975 103,097 5 735
1986                1985                  1981              1976 Total storage and pumping capacity (acre-feet)                   2,889,725          2,863,769              2,891,177        2,841,818 Storage capacity   (six reservoirs).................         2,019,102          2,019,102              2,063,948        2,072,050 Installed pumping capacity                                       870,623            844,667                815,229          769,768 Water in storage Jan. 1 (acre-feet) .................           1,671,535          1,781,671              1,480,332        1,040,000 Project storage only                                           1,445,710          1,543,5?1              1,227,055          771,440 Runoff (acre-feet)                                               1,070,214"        1,774,667                566,245            817,419 Water in storage Dec. 31 (acre-feet)................             1,691,741          1,671,535              1,116,338        9?6,725 Project storage only                                         1,464,978          1,445,710                895,118          711,353 Sources of water for deliveriers (acre-feet)...........             993,591          1,136,429              1,222,376        1,190,720 Gravity supply .                                               928,053"        1,072,373                870,262          848,734 Groundwater supply (pumping by SRP)...........                   50,482            46,593                337,424        335,988 Groundwater supply (pumping by others)     .........             15,056              17,463                14,690              5,998 Use of water (acre-feet) .                                          870,658          1,016,612              896,802        1,190,720 Agricultural                                                   290,572            381,341              440,047          451,377 Urban .                                                        395,158            396,228                381,457          295,123 City domestic                                                 284,192            281,464              265,002            187,044 Subdivision irrigation.                                         60,877            60,263                62,908            56,753 Other non-agricultural irrigation (schools, parks, churches, etc.)................               50,089              54,501                53,547            51,326 Decreed deliveries......                                         47,963              52,410                64,431            58,464 Contract deliveries                                             136,965            186,634              108,358            82,467 Seepage and evapotranspiration     ................             122,933            119,817              240,326          315,632 Canals, total (miles)                                                     133                133                    131                131 Lined ..                                                             91 892 87 890 70 884 59 878 Laterals, total (miles) .
($000) 12 Months Ended April 30 1986 848,618 841,936 6,682 642,963 42,337 5,002 158,316 352,993 4,481,667 12,384 83,864 5,468'981 539,669 534,357 5,312 400,323 47,460 (1,644) 93,530 302,702 2,843,247 4,8?0 58,134 4,580 12 Nonths Ended December 31 1976 225,268 220,961 4,307 182,662 31,060 259 11,287 234,012 1,229,617 7,341 30,869 3,325 KATER*
Lined and piped                                                       792                783                    758                715 Drainage and waste ditches   (miles).................                   240                240                    243                251 Lined and piped                                                       82                78                    63                52 Assessed area (acres) .                                              238,170            238,170                238,221          238,266 Number of assessed accounts     ...                                 181,894            181,645                178,796          166,048 Number of times water delivered to water users     ......           471,845           468,144               456,129         500,607
Total storage and pumping capacity (acre-feet)
" Water on Based statistics are computed on a calendar year basis.
Storage capacity (six reservoirs).................
V.S.G.S. provisonal records and are subject to adjustment.
Installed pumping capacity Water in storage Jan.
1 (acre-feet).................
Project storage only Runoff (acre-feet)
Water in storage Dec. 31 (acre-feet)................
Project storage only Sources of water for deliveriers (acre-feet)...........
Gravity supply.
Groundwater supply (pumping by SRP)...........
Groundwater supply (pumping by others).........
Use of water (acre-feet)
Agricultural Urban City domestic Subdivision irrigation.
Other non-agricultural irrigation (schools, parks, churches, etc.)................
Decreed deliveries......
Contract deliveries Seepage and evapotranspiration................
Canals, total (miles)
Lined..
Laterals, total (miles).
Lined and piped Drainage and waste ditches (miles).................
Lined and piped Assessed area (acres)
Number of assessed accounts...
Number of times water delivered to water users......
1986 2,889,725 2,019,102 870,623 1,671,535 1,445,710 1,070,214" 1,691,741 1,464,978 993,591 928,053" 50,482 15,056 870,658 290,572 395,158 284,192 60,877 50,089 47,963 136,965 122,933 133 91 892 792 240 82 238,170 181,894 471,845 1985 2,863,769 2,019,102 844,667 1,781,671 1,543,5?1 1,774,667 1,671,535 1,445,710 1,136,429 1,072,373 46,593 17,463 1,016,612 381,341 396,228 281,464 60,263 54,501 52,410 186,634 119,817 133 87 890 783 240 78 238,170 181,645 468,144 1981 2,891,177 2,063,948 815,229 1,480,332 1,227,055 566,245 1,116,338 895,118 1,222,376 870,262 337,424 14,690 896,802 440,047 381,457 265,002 62,908 53,547 64,431 108,358 240,326 131 70 884 758 243 63 238,221 178,796 456,129 1976 2,841,818 2,072,050 769,768 1,040,000 771,440 817,419 9?6,725 711,353 1,190,720 848,734 335,988 5,998 1,190,720 451,377 295,123 187,044 56,753 51,326 58,464 82,467 315,632 131 59 878 715 251 52 238,266 166,048 500,607 Water statistics are computed on a calendar year basis.
" Based on V.S.G.S. provisonal records and are subject to adjustment.
26
26


PolVER                                                                                                                                                                                           12 Nonths Ended 12 Nonths Ended     April 30                    December 31 1987                  1986                  1981                1976 Energy Sources (kWh)
PolVER 1987 12 Nonths Ended April 30 1986 1981 12 Nonths Ended December 31 1976 Energy Sources (kWh)
Net nuclear generation                                                                                                           1,955,479,000          149,186,614                                  i0 Net steam                                                                                                                       9,667,574,000      10,957,903,000          10,385,225 F000      5,637,595,000 generation'et gas turbine generation...,                                                                                       ~....         2,287,000          45,396,000              62,336,000          93,811,000 Net combined cycle generation                                                                           ......,...,......         991,739,000        813,684,000                  4,110,000      459,155,000 Net run of river generation .                                                                                                      410,679,000        451,783,000              468,174,000        243,951,000 Pumped storage                                         generation,.......,...,,......                                             211 F088,000        236,545,000              118,324,000          89,536,000 1btal net                                                                                                                   13,238,846,000      12,654,497,614            11,038,169,000      6,524,048,000 generation'urchased......,...........,............                                           .. 3,586,056,028
Net nuclear generation Net steam generation'et gas turbine generation...,
                                                                                                                              ~                          3,207,390,046            2,098,800,868      2,561,076,900 Interchange receimd...                                                                                                             105,3 87'00        106,666,000              145,837,000        162,016,000 Wheeling received                                                                                                                   15,091,962          11,912,340                9,793,314          13,389,100 Total energy                                                                                                               16,945,380,990      15,980,466,200            12,292,600,000      9,260,530,000 sources'nergy disposition (kWh)"
....... ~....
                                                                                                'esidential 5,333,601,362      4,889,987,668            3,674,758,035      2,931,444,260 Commercial R Industrial                                                                               .                        6,252,344,184        5,931,148,985            4,430,656,608      3,594,531,963 Irrigation pumping,                                                         .. ~...............,.......                           233,684,815        248,577,084              243,257,760        282,916,839 Street Ei highway                                             lighting............,.........                                         98,746,120          88,327,881              43,203,039          36,456,046 Public authorities .                                                                                                              270,239,264          257,127,813            351,055,276          288,417,414 Interdepartmental .                                                                                                                  82,902,577          72,022,538                80,008,412        186,729,026 Sales for resale
Net combined cycle generation......,...,......
      'Ibtal sales.
Net run of river generation Pumped storage generation,.......,...,,......
                                                            ...                                                                    3,294,959,549      3,016,789,686            3,205,534,954        818,405,306 15,566,477,871      14,503,981,655            12,028,474,084      8,138,900,854 Interchange                           delimred.........................                                                           104,549,000          93,'772,000            245,224,000        384,440,000 Wheeling delivered,                                                                                                                 13,887,031          10,891,950                9,024,579          12,643,696 Energy losses                                                                                                                     958,912,088      1,033,899,395              840,845,337        598,785,450    .
1btal net generation'urchased......,...........,............
Energy for pumped storage operation............                                                                                   301,555,000          337I921,000              169,032,000        125,760,000
~..
      'Ibtal disposition of energy                                                                                               16,945,380,990      15,980,466,000          13,292,600,000      9c260i530i000 Peak omrall power system (kW)                                                                                                           3,264,000            2,9?1,000                2,386,000          2,089,000 Date and time (MST)                                                           ........,......,......,.                        Aug. 20, 5 p.m.      July 9, 5 p.m.          Aug. 11, 6 p.m.      July 7, 6 p.m.
Interchange receimd...
Peak Project customers (klV).                                                                                                           2,785,000          2,658,000                2,057,000          1,732,000 Date and time (MST)                                                                                                           Aug. 20, 5 p.m. Aug. 29, 5 p.m.          July 28, 5 p.m.      July 7, 6 p.m.
Wheeling received Total energy sources'nergy disposition (kWh)"
Generating capability                                             (kW)"
'esidential Commercial R Industrial Irrigation pumping,.. ~...............,.......
Street Ei highway lighting............,.........
Public authorities Interdepartmental Sales for resale...
'Ibtal sales.
Interchange delimred.........................
Wheeling delivered, Energy losses Energy for pumped storage operation............
'Ibtal disposition of energy Peak omrall power system (kW)
Date and time (MST)........,......,......,.
Peak Project customers (klV).
Date and time (MST)
Generating capability (kW)"
Nuclear Steam',
Nuclear Steam',
213,730 2,411,115 0.
Gas turbines Combined cycle................,
2,201,115"  "                                                                                                                                                                                                          1,919,250
Hydroelectric conventional H>droelectric pumped storage.....
                                                                                                                                                                                                                .0.
Total operating capability'.
1,548,250 Gas turbines .                                                                                                                         393,000            393,000                  393,000            378,000 Combined                    cycle................,                                                                                     288,000             288,000                   288,000             288,000 Hydroelectric conventional .                                                                                                              96,400              96,400                    95,000             94,000 H>droelectric pumped storage.....                                                                                                       137,000             137,000                   137,000           140,000 Total operating capability'.                                                                                                        3,539,245          3,329,245                2,832,000           2,448,250 Contract purchase at                                                        peak...,...                                               605,547              410,547                 329,547            325,563 lbtal                                                                                                                              4,144,792          3,739,792                3,'161,797          2,773,813 resources'lectric customers->ear end' Residential                                                                                                                            441,293              414,140                  305,870            238,989 Commercial                      R Industrial                                                    ........,                               37,218              34,973                    22,771             17,591 Other.......,...., ..                                                                                                                      8,810              8,376                      1,610              1,361
Contract purchase at peak...,...
      'Ibtal .                                                                                                                              487,321            457,489                  330,251            257,941 Average annual kWh                                            use"
lbtal resources'lectric customers->ear end' Residential Commercial R Industrial........,
                                  .......,,.                                              ~.
Other.......,....,..
                                                                                    'esidential 12,440              12,175                    12,310            12,597 Average annual klVh revenue"'esidential (cents/kWh)                                                                                                    7.54                7.56                      5.78                3.51
'Ibtal.
'ncludes
Average annual kWh use"
" Unit          SRP participation in jointly owned projects capabilities during summer peak
'esidential
"'nergy
.......,,. ~.
""                          disposition kWh through total sales, electric customers pear end, average kWh use, and average annual revenue are, estimated figures.
Average annual klVh revenue"'esidential (cents/kWh) 1,955,479,000 9,667,574,000 2,287,000 991,739,000 410,679,000 211F088,000 13,238,846,000 3,586,056,028 105,3 87'00 15,091,962 16,945,380,990 5,333,601,362 6,252,344,184 233,684,815 98,746,120 270,239,264 82,902,577 3,294,959,549 15,566,477,871 104,549,000 13,887,031 958,912,088 301,555,000 16,945,380,990 3,264,000 Aug. 20, 5 p.m.
Decreased due to a rating change at Four Corners Units 4 and 5.
2,785,000 Aug. 20, 5 p.m.
213,730 2,411,115 393,000 288,000 96,400 137,000 3,539,245 605,547 4,144,792 441,293 37,218 8,810 487,321 12,440 7.54 149,186,614 10,957,903,000 45,396,000 813,684,000 451,783,000 236,545,000 12,654,497,614 3,207,390,046 106,666,000 11,912,340 15,980,466,200 4,889,987,668 5,931,148,985 248,577,084 88,327,881 257,127,813 72,022,538 3,016,789,686 14,503,981,655 93,'772,000 10,891,950 1,033,899,395 337I921,000 15,980,466,000 2,9?1,000 July 9, 5 p.m.
2,658,000 Aug. 29, 5 p.m.
0.
2,201,115" "
393,000 288,000 96,400 137,000 3,329,245 410,547 3,739,792 414,140 34,973 8,376 457,489 12,175 7.56 10,385,225 F000 62,336,000 4,110,000 468,174,000 118,324,000 11,038,169,000 2,098,800,868 145,837,000 9,793,314 12,292,600,000 3,674,758,035 4,430,656,608 243,257,760 43,203,039 351,055,276 80,008,412 3,205,534,954 12,028,474,084 245,224,000 9,024,579 840,845,337 169,032,000 13,292,600,000 2,386,000 Aug. 11, 6 p.m.
2,057,000 July 28, 5 p.m. 1,919,250 393,000 288,000 95,000 137,000 2,832,000 329,547 3,'161,797 305,870 22,771 1,610 330,251 12,310 5.78 i0 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 9c260i530i000 2,089,000 July 7, 6 p.m.
1,732,000 July 7, 6 p.m.
.0.
1,548,250 378,000 288,000 94,000 140,000 2,448,250 325,563 2,773,813 238,989 17,591 1,361 257,941 12,597 3.51
'ncludes SRP participation in jointly owned projects
" Unit capabilities during summer peak
"'nergy disposition kWh through total sales, electric customers pear end, average kWh use, and average annual revenue are, estimated figures.
"" Decreased due to a rating change at Four Corners Units 4 and 5.
27
27


Board Members B       oard members policies     for establish management and conduct of Salt the Improvement and Power District consists of 14 members who serve four-year terms. One River Project's business affairs. District boanl member is elected The 10 members of the Board    from each of the 10 SRP voting of Governors of the Salt River    divisions, and four members are Valley Water Users'ssociation      elected at-large.
Board Members B
are elected every tm years by the    'Iladitionally, members of the shareholders (property owners) of  Association board are elected to the Association.                  similar positions on the District The Board of Directors of the  board.
oard members establish policies for the management and conduct ofSalt River Project's business affairs.
Salt River Project Agricultural Pictured at right are SRP Board Members (lop row from left)
The 10 members ofthe Board of Governors of the Salt River Valley Water Users'ssociation are elected every tm years by the shareholders (property owners) of the Association.
The Board of Directors ofthe Salt River Project Agricultural Improvement and Power District consists of 14 members who serve four-year terms.
One District boanl member is elected from each of the 10 SRP voting divisions, and four members are elected at-large.
'Iladitionally, members of the Association board are elected to similar positions on the District board.
Pictured at right are SRP Board Members (lop row from left)
Joe Bob Neely, John L. Burton Jr., William W. Arnett, (bollom mw from lefl) Olen Sharp and John M. Williams Jr.
Joe Bob Neely, John L. Burton Jr., William W. Arnett, (bollom mw from lefl) Olen Sharp and John M. Williams Jr.
Pictured below are SRP Board Members (lefl lo right) Fred J.
Pictured below are SRP Board Members (lefl lo right) Fred J.
Line 415: Line 978:
Salt River Project Board Members shown above are Pelt lo right) Clarence C. Pendergast Jr., Stanford F. Hartman and Gilbert R. Rogers.
Salt River Project Board Members shown above are Pelt lo right) Clarence C. Pendergast Jr., Stanford F. Hartman and Gilbert R. Rogers.
Pictured at left are SRP Board Members aft lo right) William P. Schrader, Dwayne E. Dobson and Bruce B. Brooks.
Pictured at left are SRP Board Members aft lo right) William P. Schrader, Dwayne E. Dobson and Bruce B. Brooks.
District 1                     District 7 Rudolph Johnson                 william P. Schrader District 2                       District 8 Clarence C. Pendergast Jr.       Joe Bob Neely District 3                       District 9 Bruce B. Brooks                 Olen Sharp District 4                       District 10 Gilbert R. Rogers               Dwayne E. Dobson District 5                       At-large John M. Williams Jr.             lVilliam W. Arnett J    District 6                      Fred J. Ash Thomas P. Hurley                John L. Burton Jr.
District 1 Rudolph Johnson District 2 Clarence C. Pendergast Jr.
District 3 Bruce B. Brooks District 4 Gilbert R. Rogers District 5 John M. Williams Jr.
J District 6 Thomas P. Hurley District 7 william P. Schrader District 8 Joe Bob Neely District 9 Olen Sharp District 10 Dwayne E. Dobson At-large lVilliam W. Arnett Fred J. Ash John L. Burton Jr.
Stanford F. Hartman
Stanford F. Hartman


Council Members J V         iYQ T     he councils enact and amend bylaws relating to the management and conduct of Water Users'ssociation. Three council members are elected to staggered four-~mr terms in each SRP's business affairs, and they      of the 10 divisions of the Salt approve negotiated revenue bond        River Project           Agricultural sales.                                Improvement and Power District.
Council Members iYQ J V T
Three council members are                    '&aditionally, Association elected by SRP shareholders to        council members seek identical two-year terms in each of the 10      positions on the District council.
he councils enact and amend bylaws relating to the management and conduct of SRP's business affairs, and they approve negotiated revenue bond sales.
areas of the Salt River Valley SRP Council Members pictured at left are aft io righi) Roy W.
Three council members are elected by SRP shareholders to two-year terms in each ofthe 10 areas of the Salt River Valley Water Users'ssociation.
                    * )        ~t                                    Cheatham, John A. Vanderwey, Carl E. Weiler (Chairman),
Three council members are elected to staggered four-~mr terms in each of the 10 divisions of the Salt River Project Agricultural Improvement and Power District.
Jit                                    Wayne A. Hart, James L. Diller, George B. Willmoth, Robert E.
'&aditionally, Association council members seek identical positions on the District council.
)
~t Ji t
SRP Council Members pictured at left are aft io righi) Roy W.
Cheatham, John A. Vanderwey, Carl E. Weiler (Chairman),
Wayne A. Hart, James L. Diller, George B. Willmoth, Robert E.
Hurley and Levi H. Reed.
Hurley and Levi H. Reed.
SRP Council Members pictured below are (iop row fiom iefl)
SRP Council Members pictured below are (iop row fiom iefl)
Martin Kempton (Vice-chairman), Lester R. Nowry, Wayne A.
Martin Kempton (Vice-chairman), Lester R. Nowry, Wayne A.
Marietta, (botiom iow from left) Orland R. Hatch, C. Dale Willis, William P. Schrader Jr. and Larry D. Rovey.
Marietta, (botiom iow from left) Orland R. Hatch, C. Dale Willis, William P. Schrader Jr. and Larry D. Rovey.
V E
V
                          ))I fi I i
))I E
                                                                                                                        ~<<
fi I
                                                                                              .r/
.r/f',
f',
~<<
Q<<<<V'RP Council Members pictured above are (lop iow fiom lefi)
i Q<<<<V'RP Council Members pictured above are (lop iow fiom lefi)
Dean W. Lewis, James R. Marshall, Edmund Navarro, Michael K. Gantzel, Mark V. Pace, (bottom iow from left) W. Curtis Dana, Emil M. Rovey and Lee L. Tregaskes.                                                                     C 0
Dean W. Lewis, James R. Marshall, Edmund Navarro, Michael K. Gantzel, Mark V. Pace, (bottom iow from left) W. Curtis Dana, Emil M. Rovey and Lee L. Tregaskes.
E District 1             District 5            District 8 Robert L. Cook         Roy W. Cheatham        Michael K. Gantzel Howard W. L>dic         Edmund Navarro        Martin Kempton, Emil M. Rowy           Carl E. Weiler,                Vice-chairman District 2                       Chaiiman      Mark V. Pace Wayne A. Hart           District 6            District 9 Larry D. Rovey         James L. Diller       W. Curtis Dana John A. Vandemey        Dean W. Lewis          Robert E. Hurley District 3              James R. Marshall      Lee L. Iiegaskes James M. Accomazzo      District 7            District 10 John E. Anderson        EVayne A. Marietta    Orland R. Hatch Elvin E. Fleming        Lester Mowry          William P. Schrader Jr.
C 0
District 4              George B. Willmoth    C. Dale Willis Lloyd Lee Banning                                                    SRP Council Members pictured above are (left to righi) James Levi H. Reed N. Accomazzo, Elvin E. Fleming, John E. Anderson, Robert L.
E District 1 Robert L. Cook Howard W. L>dic Emil M. Rowy District 2 Wayne A. Hart Larry D. Rovey John A. Vandemey District 3 James M. Accomazzo John E. Anderson Elvin E. Fleming District 4 Lloyd Lee Banning Levi H. Reed Byron G. Williams District 5 Roy W. Cheatham Edmund Navarro Carl E. Weiler, Chaiiman District 6 James L. Diller Dean W. Lewis James R. Marshall District 7 EVayne A. Marietta Lester Mowry George B. Willmoth District 8 Michael K. Gantzel Martin Kempton, Vice-chairman Mark V. Pace District 9 W. Curtis Dana Robert E. Hurley Lee L. Iiegaskes District 10 Orland R. Hatch William P. Schrader Jr.
Cook, Byron IVilliams, Howard W. Lpllc and Lloyd Lee Byron G. Williams                                                    Banning.
C. Dale Willis SRP Council Members pictured above are (left to righi) James N. Accomazzo, Elvin E. Fleming, John E. Anderson, Robert L.
Cook, Byron IVilliams, Howard W. Lpllc and Lloyd Lee Banning.


SALT RIVER PROJECT                                                                                       BULK fA~~
SALT RIVER PROJECT Box 52025, Phoenix, AZ 85072-2025 Return requested BULK fA~~
Box 52025, Phoenix, AZ 85072-2025                                                                       U.S. POLI'AuE Return requested                                                                                              PAID PHOENIX, ARIZONA Permrt No. 395
U.S. POLI'AuE PAID PHOENIX, ARIZONA Permrt No. 395
                                    ~~EWTJ>           ~
~~EWTJ>~
SALT RIVER PROJECT AN EQUAL OPPORTUIVITY EMPLOYER As a special service, SRP is making this Annual Report Annual Report information available     do Salt River Project throru8r the Arizona State Library for   Communications 6'r Public Affairs the Blind and Physically llandicapped,   Box 52025 1030 N. 32nd St., Phoenix, AZ 85008     Phoenix, AZ 85072-2025 (602) 2554578.                          (602) 2368240}}
SALT RIVERPROJECT AN EQUAL OPPORTUIVITY EMPLOYER As a special service, SRP is making this Annual Report information available throru8r the Arizona State Library for the Blind and Physically llandicapped, 1030 N. 32nd St., Phoenix, AZ 85008 (602) 2554578.
Annual Report do Salt River Project Communications 6'r Public Affairs Box 52025 Phoenix, AZ 85072-2025 (602) 2368240}}

Latest revision as of 03:00, 8 January 2025

Salt River Project,1986-87 Annual Rept
ML17303A548
Person / Time
Site: Palo Verde  Arizona Public Service icon.png
Issue date: 12/31/1987
From: Boulais M, Lassen J, Pfister A
SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT & POWER
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NUDOCS 8709170199
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Text

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THEY HAVE BEEN CHARGED TO YOU FOR A LIMITED TIME PERIOD AND MUST Bf RfTURNED TO THE RECORDS FACILITY BRANCH 016.

PLEASE DO NOT SEND DOCUMENTS CHARGED OUT THROUGH THE MAIL. REMOVALOF ANY PAGE{S) FROM DOCUMENT FOR REPRODUCTION MUST BE REFERRED TO FILE PERSONNEL.

DEADLINE RETURN DATE RECORDS FACILITYBRANCH S7O9X70iW 86~~~~~8 PDR ADOCK OMOOMB I

I

=

Background===

Purpose of Salt River Project:

Provide a reliable and adequate supply of water and electricity at the lowest reasonable cost

~~<hvt~~

SALTRIVERPROJECT PUIILISIIERSRP Communications i'ublic Affairs Department EDIIR Heather Cllsby DESICJI Larry i~tacLcan PHO?OGRIt PHV Chet Snellback, Ed

'tbllmr, Jere Grms and Joe Qulhuls COhtPUTER CRrlPHICS Jeff Stanley On the couer-Another beautiful Arizona sunset silhouettes part of SRP's Eyrene Receiving Station in 'ibmpe.

S alt River Project is named for the major river which supplies water to the Phoenix metropolitan area. SRP plays a significant part in the growth of the Salt River Valley, providing water and power to residents through bw organizations the Salt River Valley Water Users'ssociation (the Association) and the Salt River Project Agricultural Improvement and Poiver District (the District).

The Association is a private Arizona corporation.

It ad-ministers water rights of SRP's 240,000-acre area and operates and maintains the irrigation transmission and distribution system which carries water to municipal, industrial, agricultural and residential users. In coopera-tion with the U.S. Forest Service, itparticipates in the management of the 13,000-square-mile water-sheds of the Salt and Verde rivers.

The District is a public power utilityand a political subdivision of Arizona. It operates under contracts with the United States and provides electricity to residential, commercial, in-dustrial and agricultural power users in a 2,900-square-mile ser-vice area in parts of Maricopa, Gila and Pinal counties.

In line with the long-standing reclamation principle, SRP uses a portion of its electric revenues to help support its water opera-tions. This practice helps keep waterdelivery charges to cities, farmers and homeowners at reasonable levels. At the same

time, SRP maintains electric rates that are competitive with those ofother utilities in the area.

Contents Message from Management.......................

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16 Combined Financial Statements...................18 Notes to Combined Financial Statements............22 Statistical Review... '...........................

26 Board Members and Council Members..............28 Highlights REVENUES/EXPENSES (See Page 20)

Total operating revenues

($000)

Total operating expenses

($000)

Net operating revenues

($000)

Financing costs (less AFUDC) ($000)

Other expenses, net ($000)

Reinvested

($000)

POWER OPERATIONS (See Page 27)

Energy customers at year end.

Total kilowatt-hour sales (000).

Average annual kWh usage per res. customer Avg. annual kWh revenue/res.

customer (cents)

WATER OPERATIONS (See Page 26)

Assessed water accounts.............

Water runoff (acre-feet)

Water in storage, Dec. 31 (acre-feet)

Water deliveries (acre-feet).

SELECTED OTHER DATA (See Page 26)

Gross plant investment ($000).

Long-term debt ($00(hSee Page

19).

Taxes 6 tax equivalents

($000).

Electric-revenue contributions to support water operations

($000)

Employees at year end.

'ased on V.S.G.S. provisional records and subject to adjustment.

" Does not include temporary employees.

Fiscal 1987 888,506 706,377 182,129 105,293 2,075 74,761 487,321 15,566,478 12,440 7.54 Calendar 1986 181,894 1,070,214',691,741 870,658 Fiscal 1987 4,814,087 2,986,737 103,097 15,9?5 5,735" Fiscal 1986 848,618 642,963 205,655 42,337 5,002 158,316 457,489 14,503,982 12,175 7.56 Calendar 1985 181,645 1,774,667 1,671,535 1,016,612 Fiscal 1986 4,481,667 2,880,407 83,864 12,384 5,468"

To Our Shareholders and Bondholders:

T his past year we witnessed our 50th anniversary as the Salt River Project Agricultural Im-provement and Power District.

We'e seen a lot of changes in the past 50 years. Through it all we'e continued to supply a reliable source of energy and water at the lowest reasonable cost.

Research shows our custom-ers are happy with our service. One of last year's goals was to achieve an overall quality ofservice rating of90 percent from our customers.

We received a 97 percent rating.

Customers saw a small decrease in their electric bills as we passed on a decrease in fuel costs.

For residential customers, the average cost per kilowatt-hour (kWh) was 7.54 cents compared to 7.56 cents per kWh in the previous year.

During the

year, we added 29,832 new electric customers for a total of 487,321 customers in all classes. The new customers con-tributed to a new system peak of 2,785 megawatts (MW)on August 20.

However, plenty of power is available. The first two units ofthe Palo Verde Nuclear Generating Sta-tion have begun commercial opera-tion, providing SRP with 444 MW of generating capacity.

Future power supplies are being deeloped at St. Johns, where the third 350 MW unit of the coal-fired Cor-onado Generating Station is under contruction.

On a per-customer basis, our operations and maintenance costs dropped to $1,422. That is $114 less than our Project goal of

$1,536.

As the number ofcustomers in-

creased, many located near the outer edges of the SRP service area.

To better accommodate customers on the east and est sides of the Valley, we opened the Tolleson Service Center and broke ground for the Mesa Service Center.

Regional service centers enhance operations by reducing travel time and expense ofreaching the customer.

In an effort to eliminate use of leased office space and to con-solidate administrative functions, we broke ground for a new corpo-rate headquarters.

Eventually, the headquarters will consist of five buildings on 40 acres est of the present headquarters.

The first component, the Information Systems Building, is scheduled for completion in late 1988. In addi-tion to the corporate headquarters, 484 surrounding acres of SRP-

.owned land will be available for lease and development by others and will be called Papago Park Center. Income from this develop-ment will be used to supplement electric revenues, offset operating expenses and hold down electric bills.

Water supplies were sufficient and remarkably well managed.

Although inflows from the Salt and Verde rivers were only 87 percent of average, heavy summer rains kept reservoirs fullerthan normal.

Storage at the end of 1986 totaled 1,691,741 acre-feet (a0 or 84 per-cent ofcapacity. This was 139 per-cent of normal.

For the third time in four years, plenty ofwater in storage reduced groundwater pumping to less than 7 percent of deliveries.

Project groundwater pumping totaled on-ly 65,538 af, aiding our efforts to conserve this essential resource.

'Ibtal water deliveries hit a 10-year low of only 870,658 af, compared to 1,016,612 in 1985.

Agricultural use was less than nor-mal due to land sales and govem-ment set-aside programs which reduced the quantity of crops grown. Municipal use was less due to summer rains which curtailed the usual amount oflawn watering.

Land and vvater use continued to shift. A total of 7,165 acres was converted from agricultural use to urban use. By year's end, 68.6 per-cent of the 238,170 acres in SRP was urbanized, while 31.4 percent remained in agriculture.

SRP's Water Group faced a ma-jor reorganization. Reid W. lteples retired as head ofthe Water Group after 39 years with SRP. He was succeeded by D.S. Wilson, Jr. A reorganization of three depart-ments was completed to increase eficiency and to provide better ser-vice to customers.

A new department was formed, the Water Quality and Geohydrology Department.

SRP staff will monitor water quality and institute practices to ensure that SRP water meets all applicable standards.

We initiated meetings with all cities we serve to seek solutions to mutual water problems. As population increases, the cities willbe faced with an in-creasing demand for water.

By working with the cities, we can share information and avoid cost-ly duplication of efforts.

Under the Safety of Dams Act, preliminary engineering and ex-cavation work began on Theodore Roosevelt Dam and Stewart Moun-tain Dam. During 1986, we entered into agreements with the U.S.

Bureau of Reclamation to add several maintenance items to necessary dam safety modifications scheduled at Stewart Mountain Dam. The proposed changes will enhance operating and main-tenance facilities at the dam.

Financially, itvvas another good year for SRP. Careful management of SRP resources, healthy financ-ing opportunities and a strong local economy contributed to the success. Our debt service coverage increased from 1.85 to 2.0, aided by a 4.7 percent increase in gross revenues.

Hot weather and the almost 30,000 new customers helped to build an increase in gross revenues to $888.5 million, up from the previous year's revenues of $848.6 million.

Net revenues totaled

$74.8 millionduring fiscal year 198M7.

As a public power utility, our net revenues are reinvested to replace equipment and to help finance construction of new facilities.

Maintaining a healthy financial status resulted in our bonds con-tinuing to receive high investment.

grade ratings ofAAand Aa by the nation's leading rating services. We have sold investment-grade bonds for more than 20 years.

For the first time in ffive years, we sold bonds on a competitive bid basis. In October 1986, SRP sold

$100 million in tax-free electric system revenue bonds. The bonds were sold in $5,000 denominations at an effective interest rate of 7.34 percent.

Mini-bonds retained their popularity. Mini-bonds are bonds sold for $500 or less, which makes them appealing to the investor with a small amount of capital for in-vestment.

After the end of the fiscal year, approximately

$22.3 million in mini-bonds were sold. Some were interest-bearing mini-bonds for

$500 each and, for the first time, we sold capital appreciation bonds for $200 each. These bonds vvill pay $488.05 ifheld to maturity in 2002.

Our employees were the strength of this year's corporate theme, "The People Behind the Spirit." Their commitment to ex-cellence was shown in their work and in their many volunteer ac-tivities in their communities.

Their efforts

are, in large measure, the reason this past year was successful for Salt River Pro-ject.

Through our employees'alents, expertise and dedication, we expect to be able to meet the challenges of the coming year.

Challenges willinclude meeting financial capital requirements caused by new construction. These capital requirements are expected to cause our debt ratio to rise.

However, through all of the year's activities i~e'll be working closely with Valley communities and all levels of government, con-tinuing to be a strong presence in the Valley we serve. We'l be here, providing a reliable supply ofwater and electricity for our customers, for another 50 years to come.

John R. Lassen

&i~g.~

Marcel J. Boulais A.J. Pfister

(From left) Salt River Project General Manager A.J. Pfister, President John R. Lassen and VIce President Marcel J. Boulais.

Officers Elected Officers John R. Lassen President Marcel J. Boulais Vice President Principal Officers and Other Executives AJ. Pfister General h1anager John R.

NcNamara Associate Ceneral

h1anager, Corporate Engineering and Ibiver Group Robert J. Conlon Assistant General Nanager, Corporate Engineering Trent O.

Neacham Assistant General h1anager, lbwer Construction &Naintenance John O. Rich Assistant General hlanager, Power Operations D.S. Wilson, Jr.

Associate General Nanager, IVater Croup Richard Juet ten Assistant General Nanager, IVater Resources & Services Robert W. Mason Director, Water Croup Nanagement Staff Don G. Parlett Associate General hlanager, Corporate Services Croup Paul G. Ahler Assistant Ceneral h1anager, Human Resources James L. Swartz Assistant General h1anager, Operations Services Carroll N.

Perkins Associate Ceneral Nanager, Customer, Financial &Information Services Group John D. Jacobs Assistant General Manager, Information S>stems Oren D. Thompson Assistant General

hlanager, Customer Services Mark B.

Bonsall Corporate 71easurer, Financial Services Leroy Michael Jr. Associate Ceneralh1anager, Planning &Resources Arnold L. Schwalb

Director, Corporate Planning Darrell E. Smith Director, Resource Planning Stanley E.

Hancock Assistant General

h1anager, Communications & Public Affairs D. Michael Rappoport Assistant Ceneral
h1anager, Government Affairs Richard H. Silverman Assistant General h1anager, Law &Land C.A. Howlett Assistant Ceneral
Nanager, Special Rejects Paul D. Rice Corporate Secretary Consultants LegalAdvisers Jennings, Strouss 4 Salmon Auditors Arthur Andersen 6 Co.

Bond Counsel Nudge Rose Guthrie Alexander 4 Ferdon Financial Consultant Lazard Freres 6 Co.

3

SRP linemen continually upgrade and repair SRP's power lines, such as this high voltage line between H'yrene and Silver King receiving stations.

Electric customers benefit from decreased fuel costs, increased power i

t was a golden year for SRP's Power District.

In the 50th year since the for-mation of the Salt River Project Agricultural Improvement and Power District, the District:

~ Added nearly 30,000 new electric customers, including several major industrial customers

~ Passed on a slight decrease in fuel costs to customers, reduc-ing their cost of electricity

~ Began receiving low-cost power from the second unit of Palo Verde Nuclear Generating Station

~ Completed the Palo Verde transmission system to the Phoenix Metropolitan area, on-time and under budget

~ Brought on-line a new com-puter, the Energy Management System, to control SRP's electric system

~ And continued construc-tion ofthe third coal-fired unit of the Coronado Generating Station.

Further luster was added to the golden jubilee when SRP's District improved service to our customers by building a new regional service center; esta-blished a demand side implemen-tation program; and formulated a balanced strategy approach to resource planning.

SRP's service area remains a high-growth area The number of SRP customers continued to grow.

Electric customers, totaled 487,321 at year's end, compared to 457,489 the year before. SRP has added about 30,000 customers in each of the past four years including a record 34,715 customers in fiscal year 1985-86. Because of continuing growth, the number ofcustomers by the end of the next fiscal year is expected to easily surpass the 500,000 mark.

Of the increase in last year' customers, 27,153 were residen-tial and 2,245 were commercial and industrial.

Other electric users, including municipal street light contracts and irrigation pumps, increased by 434.

Several new industrial customers, including B.F.

Goodrich, Hamilton-Avnet, Parker Hannifin and Hexcel, ac-counted for about 8,000 kilowatts (kW) in new load, nearly 800,000 square feet of manufacturing space and more than 1,000 new jobs in the area.

Each new customer increased demand on the electric system.

Electric customer use reached a peak of 2,785 megawatts (MW) on August 20, 1986. This peak demand surpassed the previous high of 2,658 MW reached on August 29, 1985. 'Ibtal kilowatt-hour (kWh) sales to customers during the year increased by 1.06 billionkWh to 15.56 billion kWh from 14.50 billion kWh the previous fiscal year.

Electric bills drop slightly During the )mr, SRP was able to pass on to customers a slight decrease in fuel costs, thereby lowering the cost of electricity.

For residential customers, the average cost per kWh was 7.54 cents, compared to 7.56 cents per kWh the previous year.

The reduction was due to a decrease in the fuel cost adjustment fac-tor applied to bills. SRP's electric Transmission system completed under budget SRP's work on the Palo Verde Nuclear Generating Station's transmission system was com-pleted ahead ofschedule and $3 million under budget.

The 13-year project was completed in October 1986, at a cost of $95 million.

The high-voltage transmission system includes 165 miles of500 kilovolt (kV) power lines which Generating Sta-tion. Both began commercial opera-tion in calendar year 1986, the first unit on January 30, 1986 and the second unit on September 20, 1986.

SRP is one of Year Ending April 30 Hpb'o Gas 1984 15.8 3.9 1985 12.8 8.9 1986 11.0 103 1987 10.0 8.6 1992 63' 1

$prnjeded)

'inc&As bybo purchases bill numbers m prnraroprsl busc Oil Cnal Nuclear Purch.

0.5 78.6 0

1.2 0.4 76.2 0

1.7 0

683 1.0 9.4 0

58.4 12.4 10.6 0

67.6 21.0 0

seven owners of the nuclear powered station 50 miles west of Phoenix. SRP owns 17.49 per-cent of Palo Verde's three 1,270 MW units. With the commercial operation of the first two units, SRP gained 444 MW of generating capacity.

The third unit of Palo Verde.

Nuclear Generating Station is ex-pected to be in commercial operation by the end of 1987.

This unit will provide another 222 MWof capacity to SRP. The U.S. Nuclear Regulatory Commis-sion issued an operating license for the unit in March 1987. That license allows plant operator Arizona Public Service Company to load nuclear fuel and begin the prescribed testing process.

link Palo Verde Nuclear Gener-ating Station with Phoenix and other moor cities and the elec-trical grid connecting the Western states.

Meanwhile, construction began on the Papago Buttes-Pinnacle Peak 230-kV transmis-sion line. The line willstrengthen SRP's transmission system and increase electric reliability to the growing number of customers in the Scottsdale and Tempe area.

The line is expected to be com-pleted in early 1989.

During the fiscal year, SRP added a total of 15 miles of 69 kV subtransmission line and 39 miles of overhead distribution lines. SRP also installed 1,403 miles of primary underground rates contain a basic amount for fuel, but fuel costs can change on a daily basis.

Fluctuations be-tween the amount paid for fuel and the amount collected from customers are refunded or recovered on bills through periodic fuel cost adjustments.

SRP starts receiving low cost power from Unit 2 of Palo Verde Some of the power re-quirements of customers were met with electrici-ty from the first hvo units of Palo Verde Nuclear PROJECT ENERGY SOURCES

distribution lines and 513 miles ofsecondary underground distri-bution lines.

Also, five new residential distribution substation sites were opened and 15 new substations were installed.

Energy Management System is installed SRP's ability to control its power nebvork increased dramat-ically with the arrival and instal-lation ofthe Energy Management System (EMS), a new computer system installed in February 1987. EMS is a power network control system with which dis-patchers monitor and direct the flowofpower from generating fa-cilities to customers.

Thus far, about 70 SRP substations are operated by the new system. All 170 substations in the SRP elec-tric system are projected to be on EMS by late 1987.

The new system is far more advanced and efficient in every respect from the old control sys-tem, which SRP had outgrown.

In addition to features ofthe old

system, the EMS has powerful statecf-the-art computer analysis capabilities designed to help pow-er dispatchers react faster to sys-tem disturbances and make better decisions regarding alloca-tion of generation resources.

Besides the ability to quickly identify, analyze and determine the cause ofpower outages, EMS'ther advantages include an in-creased ability to analyze the best time to buy and sell electricity, and to quickly analyze demand on the system. As a result, the new system increases SRP's relia-bility and cost effectiveness.

SRP sent nine engineers and their families to Minneapolis for three years to supervise the build-ing of the computer and its soft-ware. Including installation, the new system cost $28 million.

Construction continues on Coronado 3 In January 1986, construction resumed on the third 350 MW unit ofthe Coronado Generating Station at St. Johns, Arizona. By the end of May 1987, construc-tion was 8 percent complete. The 6

unit is expected to begjn com-mercial operation by 1991.

SRP expects to spend about

$670 million in direct costs for the unit, about $50 million less than the 1985 estimate. SRP is one of a few U.S. utility compa-nies building a generating unit of this size and is benefitting from competitive prices for equipment and materials.

Supervision of Generating Station.

SRP completed the firstphase of its statewide study ofpotential locations for a new coal-fired generating station.

However, since current projections show that another
large, coal-fired generating station won't be needed until aiter the year 2000, and it takes about 10 years to plan and build a large coal-fired areas are evaluating the potential benefits, including deferral ofnew generating units, improved effi-ciency, enhanced reliability and better system coordination.

Regional service centers provide faster service to customers Regional service centers, new-ly opened or now under con-

~A C

~ 0 ~ E Phoenix

~ F

~ G 8/vga APACHE J FNREIICE JCT.

fflfVf8 oP MIAMI~ ~ GNBE

~ SUPERIOR

~ H O

Electric Service Area Served Exclusively by Salt River Project.

D Salt River Project Provides Full PoNer Requirements of Arizona Public Service for Resale. Project Makes Direct Sales to Customers for All Mining Loads.

Salt River Project Provides Full Po>>vr Requirements of Arizona Public Service for Resale.i Electric Service Areas Not Semd by Salt River Project contruction by SRP engineers also is keeping costs down.

Meanwhile, SRP is testing a potential source of new coal for Coronado Generating Station.

SRP has acquired leases for coal-bearing properties in western New Mexico. lhsting of 100,000 tons ofcoal willhelp SRP decide if that coal could be a future source of fuel for Coronado station, the study probably won' be resumed until the early 1990s.

SRP willcontinue to study sever-al options for meeting its cus-tomers'lectric demand.

One option under study is a high voltage transmission line to connect the Desert Southwest and the Pacific Northwest. SRP and 26 other utilities in the bvo struction, are bringing SRP closer to its customers.

Service centers in the western and eastern part ofthe Salt River Val-ley enhance operations by reduc-ing travel time and expenses.

When customers need

service, construction or repair, crews are able to respond quickly because they are closer to the work site.

SALT RIVER PROJECT ELECTRIC SERVICE AREA

The new Tolleson Service Center, opened in January 1987, is headquarters for 300 employees who serve the growing west Valley. By 1995, SRP pro-jects that it will be serving 200,000 electric customers in that area.

SRP is building a similar regional service center in east Mesa to serve the growing east Valley.

About 350 SRP employees willwork at the center when it opens in 1988, with ap-proximately 150,000 electric customers expected to benefit.

Customer service centers in Glendale and in the southeast Valley are also planned.

SRP opened its first service center in Tempe in September 1983.

SRP emphasizes demand-side planning SRP continually is looking for ways to reduce its costs and pass along its savings in the form of lower electric bills to its cus-tomers.

'Ib provide customers with more opportunities to reduce their electric bills and to bring about beneficial changes to the pattern of system demand, SRP established the Demand-Side Implementation Department last year.

Demand-side programs can moderate the rate of growth in peak demand and bring about a more constant demand for elec-tricity throughout the year. This lower rate ofgrowth means SRP does not have to build as many new generating plants, thus keep-ing down rising costs associated with new construction.

More constant demand means SRP can make more efficient use ofits existing generating system.

Last year the new department, in cooperation with other depart-

ments, continued a

program evaluating customers'esponses to the time-of-day program.

Within the time-of-day program, begun in March

1980, par-ticipating customers pay lower rates during off-peak hours. Con-versely, they pay higher rates dur-ing on-peak
hours, when electricity demand is great.

Results from the study will help SRP plan rate alternatives that tI,'/)

)

allow customers to take greater control over the cost oftheir elec-tricity.

SRP's Board of Directors voted in March 1987 to allow an additional 10,000 SRP customers to participate in the time-of-day program, increasing the number ofpotential customers in the pro-gram from 3,000 to 13,000.

Other demand-side programs include a cash incentive program for businesses, schools, or chur-ches which install thermal energy storage systems, rather than con-ventional air conditioners.

A thermal energy storage system uses electricity at night to form ice or liquid which is used to cool the building during the day, in-stead of a conventional refrigera-tion system.

Customers who replaced gas furnaces with high efficiency heat pumps last year received

$200 ELECTRI from SRP for the (ALL switch. The $200 incentive was boosted from a

$100 incentive of-fered when the program began in 4oo,ooo March 1985.

2pp ppp Another incentive offered was to customers who replaced old, inef-ficient air condi-tioners or heat pumps with new high<fficiency air conditioners or heat pumps. SRP offered cash in-centives of between

$50 and

$ 100 a

ton for the new equipment.

SRP's Energy Efficient Home (EEH) program achieved new heights in market penetration last year. Currently, six out of 10 new homes in SRP's service area are built by contractors in the EEH program. The program requires builders to meet 12 building specifications for a total-electric home.

EEH homes are more energy efficient and thus cost less to operate for the owner.

Resource planning aimed at reducing cost During the fiscal year, SRP used a

new

approach, called C CUSTOMERS CLASSES) 1977 1987 1982 balanced strategy planning, to plan methods of meeting pro-jected electric demand. This ap-proach reflects SRP's least-cost planning philosophy. Its goal is to find the best combination of demand-side load reductions and future power additions resulting in the lowest possible cost, while maintaining SRP's high level of customer service.

The balanced strategy plan calls for commercial operation of the third unit of Coronado Generating Station by 1991, a 200 MW purchase and a sales contract recapture, plus a reduc-tion in projected peak load up to 400 MW by the year 2006 through demand-side programs This plan allows SRP to delay construction of additional un-committed coal units until after the turn of the century.

1992 1997 2001 New electric customers, such as Westcourt In the Buttes hotel manager (right), receive personal assistance about the/r power needs from an SRP commercial customer representative.

SRP demonstrates a vital interest in hydraulic engineering projects at Arizona State University's SRP Hydraulic Engineering Laboratory.

Water Group reorganization reflects changing needs of the Salt River Valley S

RP's Water Group under-went major changes last year to satisfy changes in laws, community attitudes and the needs of water customers.

Last year, SRP's Water Group:

~ saw retirement of its top ex-ecutive

~ formed a new department and reorganized three others

~ participated in several city and SRP long-range water plan-ning forums

~ completed canal mainte-nance work to decrease water losses

~ and worked with Valley cities to build an intertie between SRP canals and the Central Arizona Project canal.

Urban land use increases in water service area The character of the area served by SRP continued to change during the past year. A total of7,165 acres was converted from agricultural use to urban use. By year's end, 68.6 percent of the 238,170 acres of SRP member lands was urbanized while 31.4 percent was used for agriculture.

SRP estimates that essential-ly all acreage withinSRP bound-aries will be out of agricultural production by the >mr 2015.

Water deliveries also have reflected the changes in land use.

During the past year deliveries for urban uses totaled 395,158 acre-feet (ao while deliveries for agricultural purposes totaled 290,572 af. During the previous year, urban use totaled 396,228 af and agricultural use was 381,341 af.

Reid M %epics Reid Teeples retires In January, Reid W. Teeples retired after 15 years as the head of the Project's Water Group.

Tt.epics, who joined SRP in 1948, was replaced by D.S. Wilson, Jr.

During his

tenure, Teeples coordinated the largest well-drillingprogram in SRP's history and established the Project's Groundwater Department.

He also was responsible for standar-dizing many of SRP's practices while heading the CivilEngineer-ing Department.

In addition to his work at SRP, he served in various leader-ship capacities with the Colorado River Water Users'ssociation, the National Water Reclamation Association and various other groups.

Wilson joined SRP in 1967.

He was manager of Water Resource Operations for eight years before being named to suc-ceed 'keples.

New department formed Arizona's Environmental Quality Act, passed last

year, placed stringent water quality re-quirements on the water use practices ofindustry, agriculture and municipalities.

In response to the act and other laws and regulations relating to water quality, SRP formed its Water Quality and Geohydrology Department.

Members of the department will monitor the quality of SRP's water resources and institute practices to ensure water man-aged by SRP meets all applicable standards.

SRP's Water Group also reorganized three departments to provide better service related to water rights administration and water construction and maintenance.

Water rights administration is expected to be particularly im-portant during coming years as the Gila River Water Rights Ad-judication progresses through the courts.

The adjudication will determine the relative water rights ofall lands within the Gila River

basin, including SRP member lands, and the land on the watersheds of the Salt and Verde rivers.

One of SRP's primary duties is to ensure protection of water rights for lands within the SRP water service territory. Those rights were established under the Kent Decree in 1910 and other court actions. By protecting the water rights, lands in the SRP water service area are assured a

portion of the water in SRP reservoirs. As a result, the water supply of lands within SRP boundaries is more secure than the water supply for many other portions of the Valley.

The Project also was involved in discussions over a potential joint groundwater storage and recovery project, meeting with 1986 PLANNING CASE 2005'RBAN IRRIGATION 111,000 ABYR SYSTE>1 LOSSES 122.900 ABYR ll'Yo 12%

1244 URBAVIRRIGATION 97700 ABYR SYSTE'V LOSSES 121~ AF/YR OTHER VALLEYCONTRACIS 184~ AF/YR AGRICULTURE 290.800 AF/YR 29%

2494 OTHER VALLEYCONTRACIS 90900 AF/YR AGRICULTURE 252,900 AF/YR NlMCIPAL 4 INDUSTRIAL 284200 AF/YR 29%

46%

0HMCIPAL 4 Bil)USTRIAL 470.000 AF/YR TOTAL DE41AND 993,600 AFIYR

'IIALDEbfAND 1.033.000AFIYR AF (ACR&F0071 %$ 880 CALLOVS COMPONENTS OF SRP WATER DEMAND

the CityofMesa and the Arizona Municipal Water Users Associa-tion (AMWUA).SRP is consider-ing groundwater storage to recharge Salt and Verde river waters during above-normal runoff years. The underground stored water would then be recovered for use during below-normal runoff years.

SRP increases efforts to assist cities with water planning As the number of people living in the Valley continues to grow, the cities here are faced with an increasing demand for water. During the past year, SRP continued its meetings with the City of Phoenix and expanded those meetings to include other cities in its water service area to seek solu-tions to mutual problems.

By working ivith the cities, individually and as a group, all involved can share information and avoid costly duplication of ef-forts in planning ways to meet water demand.

Among the ef-forts worked on by of adequate supplies now and in the future throughout the Valley.

Also, the cities and other pro-viders will find it easier to comply with the conservation requirements of Arizona's Groundwater Management Act.

During the year SRP organ-ized a regional water planning forum with the cities it serves, to identify and address long-range water planning issues. Four water planning groups were established, each led by an SRP facilitator, to inform each other about the cities'nd SRP's needs and limitations and to avoid duplication of efforts.

years, an abundance of surface water allowed SRP to keep groundwater pumping to less than 7 percent ofdeliveries. lbtal Project groundwater use was 65,538 af.

Combined surface and groundwater produced for Pro-ject use totaled 993,591 af, which was 90 percent ofthe median for the last 10 years. Depending on surface water supplies, ground-water historically has satisfied between 5 percent and 40 per-cent of SRP customers'nnual water demand, or 55,000 af to 440,000 af each year. Reduced pumping helps eliminate over-SRP was institu-tion of a Valley-wide water conser-vation effort. SRP, along with other members of AMWUA encour-aged the cooperation of local broadcasters, under the leader-ship of KPHO 'klevision, on an extensive campaign called Water Wise." Each month a water con-servation tip is communicated through public service an-nouncements carried by local television and radio stations. A printed version of the tip is distributed through ABCO Markets Inc., Bashas and Lucky grocery stores.

drafting supplies.

The Arizona Groundwater Management Act calls for pumping to be limited to the quantity recharged by January 1, 2025.

Water storage above normal SRP began the year with 1,671,535 af of water in storage.

Inflows from the 13,000-square-mile watershed to the SRP reser-voirs totaled 1,070,214 af during the year, which was 87.0 percent of average.

Inflows during 1985 totaled 1,7?4,667 af. Unusually heavy summer rainfall on the Salt and Verde watersheds contri-buted to runoff that kept reser-voirs fuller than normal. Storage at year-end totaled 1,691,741 af or 84 percent of capacity. This

'otal was 139 percent of normal.

For the third time in four Tbtai water deliveries hit a 10-year low. Deliveries totaled 870,658 af compared to 1,016,612 af in 1985 and 881,009 in 1984. Agricultural use was less than usual due to government set-aside programs which re-duced the quantity of crops grown. Summertime municipal use declined because of greater than normal summer rainfall which reduced laivn irrigation.

By working together toward the common goal of conserving water, customers can be assured 10 SRP Is a recognized world authority on water systems. These Egyptians were among nearly 600 visitors from 58 countries who toured SRP facilities In 1986, During SRP visits, Egyptian participants received handswn training In the operations, maintenance and management of the Project's irrigation system.

Tbtal water deliveries to the cities during the year totaled 284,192 af, an increase ofslight-ly less than one percent from 1985's total of 281,464 af.

SRP coordinates construction with cities As more and more streets and freeways are built, the rights of way often conflict with those of SRP wateiways. In 1986 SRP met with Valley cities, the Arizona Department of itansportation, and the Maricopa County Highway Department to discuss ongoing design and construction projects. More than 30 meetings were held resulting in improved coordination behveen SRP and the agencies on irrigation-related projects where facilifles of bvo or more entities are involved.

Interagency coordination saved time and money by reduc-ing the impact ofresidential and freeway construction on SRP's ability to supply water to homes, businesses, municipalities and farms.

SRP continued its commit-ment to water conservation by lining 7.4 miles of canals and in-stalling 98 lateral structures last year.

Lining canals decreases water system losses for a savings of thousands of acre-feet ofwater each year.

SRP also completed a

beautification project along part of the Arizona Canal which in-cluded improving the appearance of the canal by extensive brush and tree removal, and tree trim-ming.

Similar projects are planned for other canals.

Congress funds dam improvements Under the Safety of Dams Act, Congress appropriated

$3 1 million for safety improvements at Theodore Roosevelt Dam and

$3.9 millionfor work at Stewart Mountain Dam.

Shortly after the end of the fiscal

year, Arizona's congres-sional delegation negotiated an agreement with environmental groups concerning Plan 6. Under the agreement, CliffDam willnot be built. In return, environmen-

tal groups agreed not to oppose the remaining elements of Plan 6.

The plan willprovide Central Arizona Project water storage and regional flood control and dam-safety modifications. Other elements are an enlarged Theo-dore Roosevelt Dam and modifi-cations to Stewart Mountain Dam on the Salt River. Construction outside the SRP reservoir system included New Waddell Dam on the Agua Fria River.

During 1986 SRP entered into agreements with the U.S.

Bureau of Reclamation to add several maintenance items to necessary dam safety modifica-tions scheduled at Stewart Moun-tain Dam. The proposed changes will enhance operating and maintenance facilities at the dam.

For 1987 SRP contributed about

$1.5 million in safety modifications. SRP is prepared to contribute an additional

$5 million to the U.S. Treasury in fiscal 1988. The Project's involve-ment is through a local cost-share agreement for completion of Plan 6.

The federal government has accepted

$371 million in local funds in exchange for a federal commitment to complete all elements of Plan 6 by 1997. SRP pledged $52 million of the local funds as its share of dam-safety modifications.

The federal government is responsible for the balance.

Work to be performed on Theodore Roosevelt Dam in-cludes raising the overall height of the dam by 77 feet. The modifications to the dam will enable itto provide flood control, dam safety and additional water conservation storage on the Salt River.

Modifications to Theodore Roosevelt and Stewart Mountain dams are included in the Plan 6 agreement.

The Arizona Department of Transportation will begin con-structing a

bridge on the upstream side of Roosevelt dam in 1987 to be finished by 1990.

The bridge will remove the Ql Imk Q~~~o&

O 13,000 Sq. &tile Project Watershed The Central Arizona Project is a water-delivery system being constructed by the Bureau of Reclamation to deliver water from Lake Havasu on Arizona's western border to

Maricopa, Pinal, and Pima counties in cen-tral and southern Arizona. Cur-rently, construction is complete to just north of 'Ittcson.

Although SRP hasn't con-tracted for CAP water, SRP may need the intertie to receive CAP water for use when Roosevelt Lake is drawn down for construc-tion of the federally mandated safety modifications.

CAP received record levels of funding from the 99th Congress, despite the pressure of the Gramm-Rudman deficit reduc-tion law. For fiscal year

1987, CAP received $202.8 million.

ASU dedicates student laboratory Continuing its longtime tradi-tion ofsupporting higher educa-tion, SRP provided grants to Arizona State University's SRP Hydraulic Engineering Labor-atory.

The joint endeavor between SRP and ASU's College DOMESTIC WATER DELIVERIES Chandler Gilbert Glendale Mesa Peoria Phoenix Scottsdale Tempe Total ilit numtpers are 1986 1985 7,936 6,700 4,357 3,125 25,222 23,982 44,391 41,476 4,028 4,351 156,412 160,876 3,478 3,843 38,367 37,172 284,192 281,464 in acre feet, crcept percents of change change

+ 10.39%

+ 39.44%

5.17%

+

7.03%

+

7.47%

2.77%

9.50%

+

3.38%

+ 1.00%

of Engineering and Applied Science exemplifies the business-education partnership SRP strives to maintain.

The new equipment in the laboratory will be used by students to study the mechanics and engineering pro-blems associated with water and other fluids.

Work with representatives from countries around the world was continued through SRP's Office of International Affairs.

The office hosted nearly 600 visitors from 58 countries, held 20 on-the-job training programs and conducted seminars for 160 representatives of 15 nations.

Through efforts coordinated by the office, SRP helped install four radial gate structures in Egypt. The installation was part of the ongoing Professional Employee Exchange Program (PEEP) with Egypt's Ministry of Irrigation. Also, a seminar on telemetry was presented to the Ministry of Irrigation by SRP personnel.

Also under PEEP, tm Cairo University students completed a 15-week summer study program.

One student worked in SRP's Civil Engineering Department and the other in Water Resources and Services'ydrology Division.

baffic from the to SALT RIVER PRO JECT IRRIGATED AREA of the dam.

Intertie willlink SRP canals and CAP

@+LE

Locally, SRP worked with six ecoOl Valley cities to ob-tain agreement on a plan to build a

$3.1 million struc-ture that would link SRP's canal system with the Central Arizona Project (CAP) aqueduct. The in-

tertie, which will carry up to 800 cubic-feet-per-second of water, willtransport water from the CAP aqueduct near Granite Reef Diver-sion Dam to SRP's main canals for Salt Riwr Project delivery to CAP Irrigated Area users.

a f

~ I~

~'

1 46 erat

.. ~

I",1 I I t

,t

. +'4y;:.I'~

, j~;p IE.

P The Salt River Pete water safety program teaches water safety to school children. The award-winning program has reached more than half a million children in 2D years.

Salt River Project's service extends beyond water and power S

RP employees

'The People Behind the Spirit'

'ontinued to put their customers and their communities first. And it showed.

In fiscal year 1986-87:

~ 97 percent of customers rated SRP service as "good" or "excellent"

~ Volunteer work by SRP employees reached new heights

~ Business offices were

moved, improving customer service

~ And SRP's Better Way and Quality Circle programs meant savings for SRP and its customers.

SRP receives high marks "The People Behind the Spirit" kept up SRP's tradition of giving first-rate customer service.

Nearly all of SRP's electric and

~ater customers polled last year were very satisfied with the quali-ty of service they received from the Project, according to monthly surveys.

SRP's goal was for 90 percent of its customers to rate overall quality ofservice good or excellent. The Project exceeded that goal with the 97 percent rating.

Employees'ommunity involvement remains high SRP employees showed pride in their communities by donating their time, money and energy to community-related projects. Pro-ject employees pledged a total of

$326,772 to 52 non-profit agen-cies.

And Project employees donated approximately 480 pints of blood last year to a statewide blood service.

Thanks to the volunteer ef-forts of SRP employees, Valley teenagers last year learned more about the free-enterprise system through SRP-sponsored Junior Achievement companies.

Employees helped raise

$106,000 during February 1987's Junior Achievement Telephone Campaign.

A total of 97 volunteers, representing 33 com-

panies, called area businesses requesting donations for Junior Achievement.

SRP volunteers raised

$12,242, the second highest amount of any business during the telephone campaign.

The money went toward pro-grams and operational support for the organization.

In a joint effort, SRP and Arizona Public Service Company (APS) raised more than $8,700 for needy citizens in the fourth annual S.H.A.R.E.

Affair 10-kilometer run January

10. A record 835 people participated in the fund-raising event, which also included a two-mile fun run and a five-mile walk.

Proceeds were donated to the Salvation Army, which ad-ministers the Service to Help Arizonans with Relief on Energy (S.H.A.R.E.).

Formed by SRP and APS in

1982, Project S.H.A.R.E.

provides funds through the Salvation Army for energy-related bills and home repairs of needy families.

SRP customers donated

$114,313 to the S.H.A.R.E. pro-gram last year. Customers donate through their monthly electric bills.

Meamvhile at St. Johns, the seventh annual Coronado Generating Station benefit run attracted 440 participants and resulted in a donation of $1,640 to the St. Johns Senior Citizens Association.

The annual Page Attacks

'fhsh program received first place in the statewide 'hke Pride in America" competition spon-sored by the Commission on Arizona's Environment and se-cond place in the national com-petition sponsored by the U.S.

Department of Interior.

Each

>m; the community effort has in-volved more than 75 percent of Page's 6,500 residents.

Page Attacks %ash started in 1981 as a city-wide cleanup pro-gram sponsored by SRP's Nava-jo Generating Station (NGS) and the Glen Canyon National Recreational Area.

The Page Kiwanis Club and Elks Lodge have helped to coordinate the event in recent years with help from NGS employees. Last year' participants collected 212 tons of trash.

SRP's organizational and monetary involvement in Page At-tacks

Thrash, along with other anti-litter efforts, was honored by an award from Arizona Clean and Beautiful, the state arm of the na-tional Keep America Beautiful campaign.

SRP was distin-guished as the most outstanding business in the state with regard to its anti-litter efforts.

The Delta Gamma National Foundation for the Blind honored SRP with an award recognizing the Project's support of the Foundation for Blind Children. The award recognized SRP as a long-time supporter of the organization through employee volunteering, financial donations and in-kind services.

Employees also hold key posi-tions on the foundation board.

SRP recognizes the value of excellence in education.

Last year, SRP honored 61 seniors during its fifth annual Spotlight on Excellence program. Honored students were graduating seniors from Maricopa County, Page and St. Johns areas in which 8RP has electric facilities. Honorees were selected by their school principals for academic achieve-ment and all-around excellence.

For younger students, SRP and APS co-sponsored the an-nual Ener@

Fair. The fair at-tracted 200 entries for "Energy Changes and Challenges."

Kindergarten through 12th grade students participated.

Russell Moreland of Willis Junior High School, Chandler, made the win-ning entry.

Ten outstanding employees and one retiree were honored for their service to civic and com-munity organizations in Arizona with SRP's Karl F. Abel Volunteer awards.

Named for SRP's im-mediate past president, these awards are presented each year to employees who devote their time and energy to their com-munities.

Saundra Reedy, administrative assistant at Coronado Generating

Station, was named St. John' Outstanding Chamber of Com-merce member in 1986. She was honored for her efforts in several Chamber of Commerce activities promoting the St. Johns area.

SRP honored for two safety programs SRP received two moor safe-ty awards last year. They were 13

Ittdta $I

'd IO StttOO

> $ tt, ttttt

~t i

I tlt tttl IO n II I grams include SRP's Speakers'ureau, where employees volunteer to make presentations to organizations or groups.

'lbpics range from the early beginning ofthe Project through the most up-to4ate activities of the utility.

During fiscal year 1986-87, SRP made about 2,300 presen-tations to audiences totaling 87,343 persons.

SRP also conducted programs about microwave cooking, com-puter equipment

safety, and energy conservation, SRP's Power Saver Store opened last year at Westridge Mall. Nothing is for sale. Instead, employs offered fire, expert ad-vice about the efficient use of water and power.

third place in the American Public Power Association's (APPA) Electric Safety Award contest and the Arizona Safety Association's Howaid Pyle Award.

APPA is a national organiza-tion representing more than 1,750 publicly owned electric utilities. APPA conducts the an-nual safety contest to draw atten-tion to the importance of safe working habits in the electric utilityindustry, and to recognize excellence in that area.

The Arizona Safety Associa-tion is a chapter ofthe National Safety Council. The Howanl Pyle Award recognizes safety promo-OOO~

O IM$$$ICr tion in the community. SRP is the first utility to receive this honor.

SRP's public safety programs extend to construction workers, school children, professional law enforcement officers, firefighters and others.

Additional public service pro-Customer service representative Elaine Spencer is one of several SRP employees who volunteer their time to needy organizations throughout the state.

//

An SRP employee shows the tools of his trade to his son during an open house at the new 'Iblleson Regional Service Center. The regional service center Is designed to speed servIce to customers.

Customer business offices moved for greater convenience

'le customer business offices were moved forgreater speed and more ease in helping customers.

The Mesa Business office was moved in May to a larger facility, and customers in the Fountain Hills area found it more con-venient to receive help at the Fountain Hills office's new location.

Courteous, helpful and quick replies to customer inquiries are goals at SRP.

Tb increase the number of calls handled, SRP's phone center began opening at 7:00 a.m. instead of 7:30 a.m.

The phone center was remod-eled and expanded to provide 12 additional work positions. By rescheduling existing personnel to work during peak periods, an additional 90,437 calls were answered without hiring addi-tional people. Last year Project employees received more than 1.2 million calls.

A major billingsystem change was implemented in February 1987 to billaccounts by route in-stead of by billing districts.

Regionalized billing has leveled the flow of customer traffic into the business

offices, reducing customer lines and thereby pro-viding faster service.

Reduced travel time to customers'eters also has resulted in increased

SRP's newly remodeled History Center appeals to all ages. Through displays and vIdeos, the Center depicts the development of water usage In the Phoenix area from prehlstorlc times to the present.

productivity and reduction ofcur-rent and future costs.

Continuation ofthat excellent customer service was enhanced last year when SRP and Local Union 266 of the International Brotherhood of Electrical Workers signed a three->mr labor agreement. This longer-term con-tract enables management to more accurately predict future labor costs, provides employees with greater stability in wages and

benefits, and provides SRP customers with reduced exposure to a work stoppage.

Counties get monetary boost from SRP SRP contributed

$35.8 million of in-lieu property taxes to seven Arizona counties during fiscal year 198687. In effect, SRP is the state's third-largest property taxpayer.

Under special legislation passed in

1963, SRP, as a

political subdivision of the state, makes voluntary contributions in lieu of property taxes to school districts, cities, special districts, counties and the state.

Employee programs save money Sixty-seven ideas from entre-preneurial employees saved the Project $423,000 in first-year sav-ings through the Better Way pro-gram. The Better Way program uses employee suggestions that deliver real dollar savings to SRP.

Once a dollar savings is esta-blished, a percentage ofthe sav-ings is paid to the employee who submitted the idea.

Last year employees received

$34,000 in awards.

The potential for savings to SRP and its customers is virtual-ly unlimited through the Better Way program. As long as SRP employees continue to think creatively and submit sugges-tions, the Project willcontinue to realize greater savings and employees will be rewarded for their creativity.

SRP's Quality Circle program uses a group approach to pro-blem solving. Employee groups develop consensus and report to management.

Since 1983, SRP's Quality Circle program has saved

$3 million and improved service to customers.

Also, the program helps develop problem-solving skills and an enhanced sense of value for individual employees.

Research and development projects at SRP provide technical information that could benefit SRP's customers. More than $3 millionin research activity, involv-ing dozens of SRP employees went toward 29 major research and development products. Pro-jects included studies ofthermal energy storage and solar resources, which could help customers save on their electric bills. Projects also included im-proved precipitation forecasting, which could help assure ade-quate water supplies and reduce potential for floods.

A program at Arizona State University has meant multiple benefits for SRP and the com-munity. SRP sponsors the Elec-tric Pope Research Laboratory (EPRL), which is in its third year at ASU.

SRP contributes

$100,000 per year to EPRL to fund research for power genera-tion projects conducted by ASU

students, professors and SRP engineers.

15

SRP mini.bonds are proving to be popular investments.

Some bonds can be purchased for only S200.

Management, economy combine to produce strong financial position areful management of Salt River Project resources, healthy financing opportunities and a strong local economy con-tributed to another good finan-cial year for SRP.

During fiscal year 1986-87:

~ The debt service coverage ratio increased from 1.85 to 2.00

~ SRP bonds maintained their AA and Aa ratings

~ Gross revenues increased; but net revenues fell reflecting ac-counting transactions related to the start-up of Palo Verde Nuclear Generating Station.

Debt service coverage rises A 4.70 percent increase in gross revenues in fiscal year 1986-87 raised SRP's debt ser-vice coverage to 2.00. That com-pares with last year's ratio of 1.85.

The debt service coverage ratio measures the number of times the sum ofprincipal and interest due on outstanding debt during the year is covered by revenues available after payment of operating expenses.

Keeping healthy financially allows SRP bonds to continue to be rated highly by the nation's leading rating agencies. SRP first issued Electric System Revenue Bonds in 1973. The bonds have been rated investment grade-those suitable for purchase by prudent investors ever since.

Currently, the bonds are rated AAby Standard 6 Poor's and Aa by Moody's Investor Services, Inc.

Gross revenues increase Hot weather and nearly 30,000 new customers increased enerib sales, helping to build a 4.7 percent increase in gross revenues to $888.5 million, up from the previous year's revenues of $848.6 million. Average an-nual use for residential customers increased from 12,175 kilowatt-hours (kWh) to 12,440 kWh.

Although gross revenues in-creased, so did the cost ofdoing business. Operating expenses in-creased 9.9 percent to $706.4 million from $643.0 million the previous year.

SRP produced $74.8 million in net revenues during fiscal year 1986-87. That was a substantial decrease from the $158.3 million in fiscal year 198546.

The decrease resulted from account-ing transactions related to the start-up, of the Palo Verde Nuclear Generating Station.

Specifically, when the firstunit of the Palo Verde Nuclear Generating Station began com-mercial operation in January 1986, SRP stopped making en-tries to record the allowance for funds used during construction.

Instead, these finance costs were listed as expenses.

At the same

time, SRP began recording depreciation, operating and maintenance expenses for the unit. System sales did not in-crease commensurate with the commercial operation ofthe first unit, resulting in a decrease in net revenues.

Palo Verde's second unit was treated the same way when it began commercial operation.

The same format will follow for the third unit when it goes into commercial operation.

Commercial operation of the first Palo Verde unit also trig-gered an exchange of capacity with the Ias Angeles Deparbnent ofWater and Power (LADWP). In 1977, LADWPpurchased 30 per-cent of SRP's Coronado Generating Station near St.

Johns, Arizona. LADWP agreed to trade its share of the station for 5.70 percent of Palo Verde Nuclear Generating Station when its first unit went into commer-cial operation.

With commercial operation of the firstunit in January 1986, the, trade took place. SRP reduced its share ofPalo Verde to 17.49 per-cent and regained 100 percent ownership of Coronado Gener-ating Station.

At that

time, LADWP also paid SRP a partial payment of $90.65 million in recognition ofthe greater cost of Palo Verde. A second payment of

$74.75 million (including in-terest) was received during fiscal 198647.

Despite the decline in net revenues, SRP's debt ratio dipped slightly from 68.06 percent in the previous fiscal year to 67.67 percent.

The time was right for a com-petitive sale because interest rates were relatively low and stable and the then<urrent sup-ply of municipal bonds was limited. Salomon Brothers, Inc.,

of New York placed the winning bid. Three other groups also of-fered bids.

SRP, as a special-purpose im-provement

district, sells tax-exempt revenue bonds to finance new construction and im-provements to its electric system.

Tax-exempt financing and SRP's solid credit ratings help keep financing costs relatively low.

This, in turn, can help delay rate increases.

Low financing costs could also minimize rate in-creases.

DEBT SERVICE COVERAGE RATIO As a public power utility,SRP does not issue stock or pay dividends.

Net revenues are reinvested in SRP to help replace equipment and finance construc-tion of new facilities.

Such reinvestment reduces the need to issue bonds, thus keeping rates Iow.

Bonds sold on competitive basis For the first time since 1981, SRP sold bonds on a competitive bid basis. For the past five years, SRP has used negotiated sales.

In October 1986, SRP sold $100 million in tax-free electric system revenue bonds. The bonds were sold in $5,000 denominations at an effective interest rate of 7.34 percent.

SRP sold approximately

$18.70 million in interest-bearing mini-bonds for $500 each and

$3.60 million in capital apprecia-tion bonds. The capital apprecia-tion bonds were purchased for

$200 per bond and will pay

$488.05 if held 'to maturity in 2002. The sale closed May 15, 1987.

Construction begins on corporate headquarters In January 1987, SRP began construction on the firstbuilding of a planned five-building cor-porate headquarters in north Tt.mpe.

The corporate head-

quarters, on 40
acres, is ex-pected to be completed by 2010.

SRP expects to invest about 984==85 1986-87

=1983 84==2:=={)9M988 86==-2:=00

=92:

1===.85=

=1:==:.85::

$290 millionby 1992 on the first two of the five buildings. The corporate headquarters will be the focal point of Papago Park Center, a business park on the adjacent 484 acres.

SRP will coordinate development of the center which will be opened to private and commercial develop-ment. Revenues from the sale or lease offacilities in the center will help offset the costs ofproviding electricity to SRP customers.

In May, SRP estimated savings of $30 million over a 20-year period due to the operating effi-ciencies gained through central-izing administrative operations.

Compensation funds set aside for APS customers SRP set aside $3 milhon last year to compensate certain Arizona Public Service Company (APS) electric customers who are SRP shareholders.

Qualified SRP shareholders are those in-dividuals who own and live on land within the boundaries ofthe Salt River Valley Water Users'ssociation.

Some receive elec-tricity from APS.

A comparison of 1986 electric bills from SRP and APS in-dicated that some SRP shareholders paid APS at least 15 percent more than they would have paid SRP for the same amount of electricity.

SRP's obligation to make payments to some APS cus-tomers is the result of a 1928 SRP bylaw which protects residential landowners residing within SRP boundaries, but served by APS, from paying sub-stantially more for electricity than if they were served by SRP. In 1967, the courts defined substan-tial as 15 percent or more.

SRP shareholders in 1984 voted to grandfather the right to compensation to those share-holders who received electric ser-vice on or before Dec. 31, 1984, and also voted to end the com-pensation program in 1994.

17

Salt River Project Agricultural Improvement and Power District and its agent, Salt River Valley Water Users'ssociation Combined Balance Sheets As of April 30, l987 and 1986 Assets UTILITYPLANT, at historical cost (bootes 1, 2, 3 and 4):

Plant in service-Electric Irrigation General Less - Accumulated depreciation on plant in service Construction work in progress Nuclear fuel, net of amortization (¹te 1) 1987

$3,721,898 92;127 166,559 3,980,584 861,043 3,119,541 740,767 92,736 3,953,044

($000) 1986

$3,132,867 87,503 143,021 3,363,391 738,283 2,625,108 1,025,680 92,596 3,743,384 SEGREGATED FUNDS, consisting of cash and U.S.

Government obligations set aside in accordance with resolutions of bond issues:

Debt service funds, excluding $61,916,000 in 1987 and $51,032,000 in 1986 for payment of accrued interest (¹te 5).

Construction fund.

99,318 49,652 148,970 94,769 23,000 117,769 CURRENTASSETS:

Cash and temporary investments, at cost Deposit in debt service fund for payment of accrued interest on bonds Trade and other accounts receivable, less reserves of $1,207,000 in l987 and

$1,120,000 in 1986 for doubtful accounts...

Note receivable (Arote 4)

Fuel stocks, at last-in, firstwut cost Materials and supplies, at average cost Prepayments, interest receivable and other.

111,412 61,916 46,754 28,969 81,144 69,297 13,433 412,925 108,967 51,032 61,071 90,653 55,522 4?,095 8,119 422,459 DEFERRED CHARGES AND OTHER ASSETS

(¹tes 1 and 57 l86,181

$4,701,120 169,60?

$4,453,219 The accompanying notes are an inlegrai part of these combined balance sheets.

18

Capitalization and Liabilities LONGTERM DEBT (Pote g:

Electric system revenue bonds Commercial paper and other (h'ote 8) 1987

$2,626,709 360,028 2,986,737

($000) 1986

$2,541,383 339,024 2,880,407 ACCUMULATEDNET REVENUES:

Balance, beginning of year Net revenues for the year Balance, end of year 1,351,904 74,761 1,426,665 4,413,402 1,193,588 156,316 1,351,904 4,232,311 CURRENT LIABILITIES,excluding $26,140,000 in 1987 and

$17,775,000 in 1986, representing current portion of long-term debt which is to be paid from segregated funds:

Accounts payable....

Accrued taxes and tax equivalents Accrued interest..

Customers'eposits Other liabilities.

85,428 41,434 63,761 21,462 24,881 236,966 66,657 36,142 52,628

'17,619 24,223 197,269 DEFERRED CREDITS AND RESERVES (Ãote 7).

50,752 23,639 COMMITMENTSAND CONTINGENCIES (Notes 3, 5 and 7j

$4,701,120

$4,453,219

Salt River Project Agricultural Improvement and Power District and its agent, Salt River Valley Water Users'ssociation Combined Statements of Net Revenues For the Years Ended April 30, 1987 and 1986 1987

($000) 1986 OPERATING REVENUES (Note 2):

Electric Water and irrigation Total operating revenues..

881,340 7,166 888,506 841,936 6,682 848,618 OPERATING EXPENSES:

Purchased power.

Fuel used in efectric generation Other operating expenses

~...........

Maintenance....,

Depreciation and amortization (Note 1).

Taxes and tax equivalents.

Total operating expenses...

Net: operating revenues.,

49,086 181,331 151,308 88,231 133,324 103,097 706,377 182,129 49,151 216,083 122,304 80,985 90,576 83,864 642,963 205,655 FINANCING COFIS:

Interest on bonds.

Amortization of bond discount, issue and refinancing expenses (Note 1).....,...........

Interest on other obligations...

Interest earned on investments, deposits and other.

Net financing cos(s Less - Allowance for funds used during construction (AFUDC) state 1)

~

6 v

~ ~

~

~

~

~ e

~ ~

~

~ i r w

~

~

~

~

~

~

~

~

~

~

~ 6

~ ~

~

~ w ~

Financing costs less AFUDC...................

179,109 6,089 16,081 (36,08()

165,195 (59,902) 105,293 179,928 2,387 17,864 (37,681) 162,498 (120,161) 42,337 OTHER EXPENSES, net 2,075 5,002 NET REVENUES 74,761 158,316 The accompanying notes ar)e an integral part'f these combined statements 20

Salt River Project Agricultural Improvement and Power District and its agent, Salt River Valley Water Users'ssociation Combined Statements of Cash Flows For the Years Ended April 30, 1987 and 1986 1987

($000) 1986 NET CASH FLOWS FROM OPERATING ACTIVITIES:

Net revenues Noncash items included in income:

Depreciation and amortization.

Amortization of bond related expenses.

Increase in fuel stocks and materials and supplies Increase in other assets, net Increase (decrease) in accounts payable Increase in accrued taxes and tax equivalents Increase (decrease) in accrued interest Increase in other liabilities, net

~.

Gain on sale of property Net cash provided from operating activities NET CASH FLOWS FROM INVESTING ACTIVITIES:

Gross additions to utility plant, net of AFUDC.

Allowance for funds usia during construction Gross additions to nonutility plant Proceeds from sale of plant Decrease (increase) in note receivable Contributions in aid of construction Net cash used by investing activities.

NET CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds of bond issues Other long-term borrowings, net of repayment Repayment of principal on bonds and U.S. debt.

Defeasance of revenue bonds Deferred loss on defeasance of bonds Net cash provided by financing activities........

NET INCREASE (DECREASE) IN CASH AND TEMPORARY INVESTMENTS AND SEGREGATED FUNDS......

BALANCE AT BEGINNING OF YEAR IN CASH AND TEMPORARY INVESTMENTS AND SEGREGATED FUNDS.... ~........

BALANCEAT END OF YEAR IN CASH AND TEMPORARY INVESTMENTS AND SEGREGATED FUNDS.......

74,761 133,324 6,089 (47,824)

(8,897) 18,771 5,292 ll;133 9,317 (96) 201,870 (309,356)

(59,902)

(10,812) 972 61,684 25,395 (292,016) 120,814 21,845 (18,867) 123,792 33,646 226,736 260,382 158,316 90,576 2,38?

(14,234}

(21,967)

(67) 1,781 (9,587) 6,375 (4,268) 209,312 (352,993)

(120,161)

(658) 194,192 (90,653) 19,181 (351,092) 596,143 30,318 (18,917)

(472,692)

(81,168) 53,684 (88,096) 314,832 226,736 The accompanying notes are an integrai part of these combined stalemenls.

21

Salt River Project Agricultural Improvement 6 Power District and its agent, Salt River Valley Water Users'ssociation Notes to Combined Financial Statements For The Years Ended April 30, 1987 and 1986 (1) Summary of Significant Accounting Policies:

(a) Principles of Combination The combined financial statements include the accounts of the Salt River Project Agricultural Improvement and Power District (the District) and the accounts of its agent, the Salt River Valley Water Users'ssociation (the Association) and a wholly-owned subsidiary, Salt River Generating Company, together referred to as the Salt River Project (the Project). All significant intercompany transactions have been eliminated. The Project follows the accounting principles promulgated by the Financial Accounting Standards Board.

(b) Regulatory Agency The District's Board of Directors serves as its regulatory agency.

(c) UtilityPlant, Depreciation and Maintenance The accounting records of the Project are maintained substantially in accordance with the Uniform System of Accounts prescribed for electric utilities by the Federal Energy Regulatory Commission. Utilityplant 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 construction work in progress (AFUDC) is capitalized as a part of the electric and general plant. This allowance is deducted from net financing costs in the combined statements of net revenues and added to utility plant. Capitalization rates of 10.7/o and 9.7/o were used in 1987 and 1986, respectively.

Depreciation expense is computed on the straight-line basis over estimated useful liam of the various classes of plant. Rates in erect resulted in provisions approximating 3.37'/o and 3.31/e for 1987 and 1986, respectively, on the average cost of depreciable electric plant, and 1.42'/o and 1.39/o for 1987 and 1986, respectively, 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 utility plant 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 and replacement of minor items of property.

(d) Bond Expense Bond discount, issue and refinancing expenses are being amortized over the terms of the related bond issues.

(e) Revenues Meters for residential, commercial and small industrial customers are read cyclically and sales recorded only when billed. This system of billing results in estimated earned but unbilled revenues which amounted to $20,273,000 and

$22,100,000 at April 30, 1987 and 1986, respectively. For large industrial customers, meters are read near month-end and billings recorded on the accrual basis. Electric revenue billings 22 are adjusted periodically for changes in costs of fuel and purchased power. Revenues from water and irrigation operations are recorded when earned.

(I) Electric Rates Under Arizona laiv, the District's Board of Directors has the exclusive authority to establish electric rates. The District is required to follow certain procedures, including certain public notice requirements and holding a special Board meeting, before implementing any changes in the standard electric rate schedules.

The District is currently studying the need for an additional rate increase to be effective in October 1987. Such increase is anticipated to be approximately 6e/o. The current rates have been in place since October 1985.

(g) Nuclear Fuel The District amortizes nuclear fuel to fuel expense on a unit of production method.

Under the provisions of the Nuclear Waste Act of 1982, the District is charged one mill per kilowatt-hour (kWh) on its share of electricity produced by Palo Verde Nuclear Generating Station (PVNGS) Units 1 and 2. The District records this charge as a current year expense.

(h) Decommissioning The District began reserving for the cost of decommissioning PVNGS Units 1 and 2 commencing with their dates of commercial operation. The estimate to decommission the District's share of PVNGS Units 1 and 2 of $108 million is based upon an outside engineer's study. The estimated costs will be reviewed and adjusted periodically. Decommissioning funds collected from the ratepayers will be deposited in a separate bank account which is classified as part of the general fund.

(i) Income ihxes The District is exempt from federd and state income taxes.

(j) Reclassifications Certain 1986 amounts have been reclassified to conform to the current year presentation.

Electric generating facilities.............,..

Transmission and distribution..

Irrigation plant......,...,.......>......>

Other construction Total

$529

$873 124 80 16 12 72 61 S741 S1,026 (2) Possession and use of utility plant:

The United States of America retains a paramount right or claim in the 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.

(3) Construction program:

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

Plillions) 1987 1986

Construction expenditures planned for fiscal years 1988 through 1992 are shown below.

1988 1989 1990 1991 1992 Construction

$404 629 491 360 296 (hlilllons)

AFUDC

$47 34 39 39 14 Total

$451 663 530 399 310 These expenditures will be financed primarily by funds currently on hand, future net revenues and the sale of revenue bonds.

Construction of PVNGS Unit 3 is proceeding on a schedule for commercial operation in late 1987. PVNGS Units 1 and 2 were placed into commercial operation in January and Sept-ember of 1986, respectively.

Construction of Coronado Unit 3, a planned 350,000 kw coal-fired unit is proceeding on a schedule for commercial operation in the spring of 1991. The total estimated construction costs for Unit 3, including AFUDC, is approx-imately $790 million.

Projected construction expenditures include contingency allowances to reflect potential cost increases.

At April 30, 1987, commitments had been entered into for delivery of materials and services on construction projects. In

~ addition, various firm commitments exist under coal and fuel oil supply contracts.

The Project had committed to spend approximately $50 million over the next eight years for its share of a project to build or modify dams on the Salt, Verde and Agua Fria rivers for flood control, to ensure dam safety and provide water storage associated with the Central Arizona Project. Recent actions by legislators will result in significant changes to the project. Management has not yet been able to determine the impact upon the construction program, however it is not believed the previously committed amount will increase significantly.

(5) Long-term debt:

Interest Rate Electric System Revenue Bonds.....

4.7-11.5%

Unamortized Bond Discount...,......

(Millions) 1987 1986

$2,716

$2,633 (89)

(92)

Maturitles 1988-2025 Total Revenue Bonds Outstanding U.S. Government Non Interest Bearing Debt.......

Commercial Paper...

3.44.9'ther,............

6.5-7.7%

Total Long-Term Debt...........

2,627 8

350 2

$2,987 2,541 9

325 5

$2,880 1987-2004 1988-1989 On January 29, 1986 the District exchanged 5.7% interest in PVNGS for the Los Angeles Department of Water and Power's (LADWP) 30% share of the Coronado Generating Station Units 1 and 2. Of the net cash settlement,

$162.4 million has been received by the District. The remaining due from LADWP of

$28.9 million (including accrued interest) has been withheld.

LADWP claims that the amount of AFUDC charged to PVNGS construction is excessive. It is the opinion of management and legal counsel that the AFUDC amount is in agreement with the contract exchange agreement, Federal Energy Regulatory Regulations and past and current practices. At this time negotiations are continuing; however, legal action may be required to settle the matter.

The District acts as the operating agent for the participants in the Navajo Project. As operating agent, the District utilizes advanced billings to the participants, based on ownership percentage, to pay the cost of operations. A separate operating fund is maintained by the District to process Navajo transactions.

The District's share of direct. expenses of the jointl~wned plants is included in operating expenses in the combined statements of net revenues.

(4) Interests in jointly-owned electric utility plants:

The District has entered into various agreements with other electric utilities for the joint ownership of electric generating and transmission facilities. Each participating owner in these facilities must provide for the cost of its ownership share. The following schedule reflects the District's ownership interest (at cost) in jointly-owned electric utility plants at April 30, 1987:

(Millions)

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 by the bond resolution, subject to amounts due the United States of

$7,768,532.

The debt service coverage ratio, as defined in the bond resolution is used by bond rating agencies to help determine the financial health of the District and other bond issuers. For the years ended April 30, 198?, and 1986, debt service coverage was as follows:

Ownership Share Plant Name Percent Four Corners (New Mexico)...........10.00Yo Mohave (Nevada)........10.00 Navaio (Arizona)........21.?0 Hasten (Colorado).......50.00 Craig (Colorado)........29.00 Palo Verde (Arizona)..

~..17.49 Plant In Service 81 43 212 67 225 1,106

$ 1,734 Accumulated Depreciation

$ 16 16 77 24 50 42

$225 4

1 7

414

$426 Revenues Available for Debt Service.......:

Total Debt Seince Requirements Debt Service Coverage Ratio ~.....

(Millions, except for ratios) 1987 1986

$399

$ 365 200 197 2.00 1.85 23

The annual maturities of long-term debt (excluding commercial paper) as of April 30, 1987, due in the fiscal years ending April 30, are as follows:

1988 1989 1990 1991 1992 Thereafter (Millions) 26 29 32 31 37 2,571 82,726 Interest and amortization of discount on the various issues results in an effective rate of approximately 7.18% over the remaining terms of the bonds.

At April 30, 1987, The Project has authority to issue additional electric system revenue bonds totaling $131,426,260 principal amount and electric system refunding revenue bonds totaling $806,840,000 principal amount.

On April 1, 1986, the District defeased

$486,150,000 of electric system revenue bonds, resulting in lower future debt service requirements as well as a loss of $81,168,089. The District's Board of Directors determined that such loss should be recovered from the ratepayers during the period of reduced debt service requirements.

Accordingly, under the provisions of Statement of Financial Accounting Standards (SFAS) No. 71, the loss is being amortized on a monthly basis over the life of the Electric System Refunding Revenue Bond Issue, 1986 Series C.

On February 9, 1984, the District refunded its then outstanding General Obligation Bonds. Although the refunding constituted a legal defeasance of the prior lien on revenues which secured said bonds, the General Obligation Bonds continue to be general obligations of the District, secured by a lien upon the real property included in the District, a guarantee by the Salt River Valley Water Users'ssociation, and by the District's taxing authority. As of April 30, 1987 the amount of defeased general obligation bonds outstanding was $129,705,000.

The discount rate used in determining the actuarial present value of the projected benefit obligation was 9.0%. The rate of increase in future compensation levels used varies from 9.0% to 5.5%, on a graded scale, based on the age of the participant The expected long-term rate of return on assets is 9.75%.

The following schedule reconciles the funded status of the Plan with amounts reported in the Project's combined financial statements as of April 30, 1987:

Plan assets at fair value Actuarial present value of projected benefit obligation:

Vested bendit obligation.

Nomested benefit obligation..

Accumulated benefit obligation.......,............

Excess of projected benefit obligation over accumulated benefit obligation,.............,

Projected benefit obligation.

Plan assets in excess of projected benefit obligation Unrecognized net assets Unrecognized net gain Prior service cost not )et recognized in net periodic pension cost.

Prepaid Pension Cost.

(Millions)

$ 259 (111)

(12)

(123)

(45) 068) 91 (65)

(21) s 6

In addition to providing pension benefits, the Project provides certain health care and life insurance bendits for retired persons.

Substantially all of the Project's employees may become eligible for those benefits ifthey reach normal retirement age while working for the Project, retire from the Project, are eligible for pension benefits, and have completed a minimum of 5 years regular employment. The cost of retiree health care and life insurance benefits is recognized as expense as the premiums and/or deposits to the mustee are paid. For 1987 and 1986, those costs totaled $1,361,170 and $1,172,077, respectively.

(6) Employees'etirement Plan The Project has a retirement plan covering substantially all employees.

The Plan is funded entirely from Project contributions and the income earned on invested assets.

Contributions to the Plan were $2,181,799 and $9,515,491 in fiscal years 1987 and 1986, respectively. The Project recorded income of $4,098,777 for fiscal year 1987 and expense of

$6,264,699 for 1986 related to the Plan. Plan assets consist primarily of common stocks, U.S. obligations and corporate bonds.

In '1987, the Project adopted Statement of Financial Accounting Standards No. 87, Employers'ccounting for Pensions. Net periodic pension cost under that statement is made up of the components listed below as determined using the projected unit credit actuarial cost method. (No comparable analysis is required to be made for 1986):

(Millions)

Service cost.....,....................

8 Interest cost...,............,...,.....

13 Actual return on assets...

~ ~.....

~..

(45)

Net amortization and deferral.......,.

20 Net periodic pension income.........

S (4)

(7) Litigation and other contingencies:

Environmental:

Various pending litigation or administrative proceedings involving environmental matters could affect the Project and its present and proposed generating facilities. In general, these lawsuits seek to impose higher air quality standards for generating plants. If ultimately decided adversely to the interest of the Project, the lawsuits could result in increased construction costs, increased future operating costs or possible loss in the operational reliability of certain generating plants.

Such increased costs would be passed on to customers through increased electric rates.

Other Litigation:

In the normal course of business, the Project is a defendant in various litigation matters. In management's opinion, the ultimate resolution of these matters will not have a significant adverse effect on the Project's financial position or results of operations.

Payments to Certain Property Owners in the Association's Service Areas Now Provided Electric Power by Others:

The Articles of Incorporation of the Association provide for the indemnification of certain property owners in the Association's service areas now provided electric power by others 24

4 if they are required to pay substantially more for power than they would if they were furnished electric power by the Association. A reserve for these payments has been established which, in the opinion of management, adequately covers the Project's liability as of April 30, 1987.

Navajo taxes; In 1977 and 1978 the Nav@o Thbal Council promulgated three tax resolutions affecting electric generating stations, in which the District has an interest. The District and other participants in the affected generating stations filed lawsuits challenging the resolutions on grounds the 1Nbal Council had previously approved generating station leases containing covenants not to tax. In 1981 the lawsuits were mooted by the enactment of a Thbal Council Advisory Committee resolution reaffirming the convenant not to tax.

In the fall of 1984 the Navajo Ve Commission notified the District of its enactment of amended tax resolutions, which contained provisions purporting to repeal any prior waiver of the power to tax. The District responded by reminding the Commission of the prior resolution, reaffirming its tax covenants.

The District has recently received a ruling by'he Commission, denying the contractual claim of immunity from taxation under the covenant not to tax contained in the Navajo Generating Station Lease. The District is unable to predict the ultimate outcome of this action. However, management believes that the District has a valid immunity from such taxation and if necessary will challenge the Nav@o Tax Commission ruling. In addition, the Board of Directors of the District has approved an action allowing it to recover from its customers the amounts of such taxes if the payment thereof is ultimately required.

liquidity support for the Promissory Notes. Under the terms of the Agreement, the District may borrow up to $350,000,000 until October 14, 1988. Ifthe agreement is not: renewed prior to,October 15, 1987, the District may continue to borrow but must reduce its outstanding borrowings to not more than

$250,000,000 by October 14, 1988 and to not more than

$150,000,000 by October 14, 1989. Following October 14, 1989, the District may not make additional borrowings and must repay all outstanding borrowings by October 15, 1990. As of April 30, 1987, the District had no borrowings outstanding under the Agreement.

The indebtedness of the District evidenced by the Promissory Notes and/or borrowings under the Agreement is an unsecured obligation of the District payable from the general funds of the District lawfully available therefore, subject in all respects to the prior lien of the United States, the Revenue Bonds, and other indebtedness of the District secured by revenues or assets of the District. The Promissory Notes and borrowings under the Agreement are not payable from taxes, The District's Board has limited the total amount of indebtedness evidenced by the borrowings under the Agreement and Promissory Notes to an aggregate of $350,000,000.

(9) Irrigation and water operations:

Irrigation and water operations

expenses, including depreciation, exceeded the assessments, delivery fees, and other revenues therefrom by approximately $15,975,000 for 1987 and

$12,384,000 for 1986. These amounts do not include expenditures for additions and improvements to irrigation plant and for repayment of long-term debt.

(8) Revolving credit agreement/commercial paper program:

The District's Board has authorized the issuance of up to

$350,000,000 of short-tenn promissory notes (the Promissory Notes), which are sold in the tax-exempt commercial paper market. The Promissory Notes will mature in no more than 270 days from the date of issuance and in no event after October 15, 1990. As of April 30, 1987, the District had $350,000,000 of the Promissory Notes outstanding at an average interest rate to the District of 4.30/0.

The District maintains a revolving credit agreement (the Agreement) with a consortium of bventy-two banks to provide (10) Subsequent events:

On May 26, 1987, the District entered into a revolving credit agreement with Fuji Bank, Limited to provide support for the District's mini-bond program. Under the terms of the agreement, the District may borrow up to $30,000,000 at the Federal Funds Rate plus one-quarter to one-half percent, based on length of time outstanding. The agreement expires November 15, 1988.

On May 15, 1987, the District sold approximately

$22,300,000 of 1987 Series A and B Mini-Bonds. The proceeds were used to refund the costs of construction pursuant to the District's capital improvement program and to pay financing expenses.

To the Board of Directors, Salt River Project Agricultural Improvement and Power District, and Board of Governors, Salt River Valley Water Users'ssociation:

We have examined the combined balance sheets of SALT RIVER PROJECT AGRICULTURALIMPROVEMENT AND POWER DISTRICT (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 April 30, 1987 and 1986 and the related combined statements of net revenues and cash flows for the years then ended. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the financial statements referred to above present fairly the financial position of the Salt River Project as of April 30, 1987 and 1986 and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.

Arthur Andersen k, Co, Phoenix, Arizona, June 26, 1987.

25

Statistical Review PROJECT GENERAL Operating revenues Electric Water and irrigation.

Operating expenses Net financing costs less capitalized interest.....,..

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

Net revenues Gross additions to plant, excluding allowances for funds used during construction Utilityplant, gross Contributions of electric revenues to support water operations...

Taxes and tax equivalents Employees at )mr-end.

'Does not include temporary employees.

1987 888,506 881,340 7,166 706,3?7 105,293 2,075 74,761 309,356 4,814,087 15,975 103,097 5 735

($000) 12 Months Ended April 30 1986 848,618 841,936 6,682 642,963 42,337 5,002 158,316 352,993 4,481,667 12,384 83,864 5,468'981 539,669 534,357 5,312 400,323 47,460 (1,644) 93,530 302,702 2,843,247 4,8?0 58,134 4,580 12 Nonths Ended December 31 1976 225,268 220,961 4,307 182,662 31,060 259 11,287 234,012 1,229,617 7,341 30,869 3,325 KATER*

Total storage and pumping capacity (acre-feet)

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

Installed pumping capacity Water in storage Jan.

1 (acre-feet).................

Project storage only Runoff (acre-feet)

Water in storage Dec. 31 (acre-feet)................

Project storage only Sources of water for deliveriers (acre-feet)...........

Gravity supply.

Groundwater supply (pumping by SRP)...........

Groundwater supply (pumping by others).........

Use of water (acre-feet)

Agricultural Urban City domestic Subdivision irrigation.

Other non-agricultural irrigation (schools, parks, churches, etc.)................

Decreed deliveries......

Contract deliveries Seepage and evapotranspiration................

Canals, total (miles)

Lined..

Laterals, total (miles).

Lined and piped Drainage and waste ditches (miles).................

Lined and piped Assessed area (acres)

Number of assessed accounts...

Number of times water delivered to water users......

1986 2,889,725 2,019,102 870,623 1,671,535 1,445,710 1,070,214" 1,691,741 1,464,978 993,591 928,053" 50,482 15,056 870,658 290,572 395,158 284,192 60,877 50,089 47,963 136,965 122,933 133 91 892 792 240 82 238,170 181,894 471,845 1985 2,863,769 2,019,102 844,667 1,781,671 1,543,5?1 1,774,667 1,671,535 1,445,710 1,136,429 1,072,373 46,593 17,463 1,016,612 381,341 396,228 281,464 60,263 54,501 52,410 186,634 119,817 133 87 890 783 240 78 238,170 181,645 468,144 1981 2,891,177 2,063,948 815,229 1,480,332 1,227,055 566,245 1,116,338 895,118 1,222,376 870,262 337,424 14,690 896,802 440,047 381,457 265,002 62,908 53,547 64,431 108,358 240,326 131 70 884 758 243 63 238,221 178,796 456,129 1976 2,841,818 2,072,050 769,768 1,040,000 771,440 817,419 9?6,725 711,353 1,190,720 848,734 335,988 5,998 1,190,720 451,377 295,123 187,044 56,753 51,326 58,464 82,467 315,632 131 59 878 715 251 52 238,266 166,048 500,607 Water statistics are computed on a calendar year basis.

" Based on V.S.G.S. provisonal records and are subject to adjustment.

26

PolVER 1987 12 Nonths Ended April 30 1986 1981 12 Nonths Ended December 31 1976 Energy Sources (kWh)

Net nuclear generation Net steam generation'et gas turbine generation...,

....... ~....

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

Net run of river generation Pumped storage generation,.......,...,,......

1btal net generation'urchased......,...........,............

~..

Interchange receimd...

Wheeling received Total energy sources'nergy disposition (kWh)"

'esidential Commercial R Industrial Irrigation pumping,.. ~...............,.......

Street Ei highway lighting............,.........

Public authorities Interdepartmental Sales for resale...

'Ibtal sales.

Interchange delimred.........................

Wheeling delivered, Energy losses Energy for pumped storage operation............

'Ibtal disposition of energy Peak omrall power system (kW)

Date and time (MST)........,......,......,.

Peak Project customers (klV).

Date and time (MST)

Generating capability (kW)"

Nuclear Steam',

Gas turbines Combined cycle................,

Hydroelectric conventional H>droelectric pumped storage.....

Total operating capability'.

Contract purchase at peak...,...

lbtal resources'lectric customers->ear end' Residential Commercial R Industrial........,

Other.......,....,..

'Ibtal.

Average annual kWh use"

'esidential

.......,,. ~.

Average annual klVh revenue"'esidential (cents/kWh) 1,955,479,000 9,667,574,000 2,287,000 991,739,000 410,679,000 211F088,000 13,238,846,000 3,586,056,028 105,3 87'00 15,091,962 16,945,380,990 5,333,601,362 6,252,344,184 233,684,815 98,746,120 270,239,264 82,902,577 3,294,959,549 15,566,477,871 104,549,000 13,887,031 958,912,088 301,555,000 16,945,380,990 3,264,000 Aug. 20, 5 p.m.

2,785,000 Aug. 20, 5 p.m.

213,730 2,411,115 393,000 288,000 96,400 137,000 3,539,245 605,547 4,144,792 441,293 37,218 8,810 487,321 12,440 7.54 149,186,614 10,957,903,000 45,396,000 813,684,000 451,783,000 236,545,000 12,654,497,614 3,207,390,046 106,666,000 11,912,340 15,980,466,200 4,889,987,668 5,931,148,985 248,577,084 88,327,881 257,127,813 72,022,538 3,016,789,686 14,503,981,655 93,'772,000 10,891,950 1,033,899,395 337I921,000 15,980,466,000 2,9?1,000 July 9, 5 p.m.

2,658,000 Aug. 29, 5 p.m.

0.

2,201,115" "

393,000 288,000 96,400 137,000 3,329,245 410,547 3,739,792 414,140 34,973 8,376 457,489 12,175 7.56 10,385,225 F000 62,336,000 4,110,000 468,174,000 118,324,000 11,038,169,000 2,098,800,868 145,837,000 9,793,314 12,292,600,000 3,674,758,035 4,430,656,608 243,257,760 43,203,039 351,055,276 80,008,412 3,205,534,954 12,028,474,084 245,224,000 9,024,579 840,845,337 169,032,000 13,292,600,000 2,386,000 Aug. 11, 6 p.m.

2,057,000 July 28, 5 p.m. 1,919,250 393,000 288,000 95,000 137,000 2,832,000 329,547 3,'161,797 305,870 22,771 1,610 330,251 12,310 5.78 i0 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 9c260i530i000 2,089,000 July 7, 6 p.m.

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

.0.

1,548,250 378,000 288,000 94,000 140,000 2,448,250 325,563 2,773,813 238,989 17,591 1,361 257,941 12,597 3.51

'ncludes SRP participation in jointly owned projects

" Unit capabilities during summer peak

"'nergy disposition kWh through total sales, electric customers pear end, average kWh use, and average annual revenue are, estimated figures.

"" Decreased due to a rating change at Four Corners Units 4 and 5.

27

Board Members B

oard members establish policies for the management and conduct ofSalt River Project's business affairs.

The 10 members ofthe Board of Governors of the Salt River Valley Water Users'ssociation are elected every tm years by the shareholders (property owners) of the Association.

The Board of Directors ofthe Salt River Project Agricultural Improvement and Power District consists of 14 members who serve four-year terms.

One District boanl member is elected from each of the 10 SRP voting divisions, and four members are elected at-large.

'Iladitionally, members of the Association board are elected to similar positions on the District board.

Pictured at right are SRP Board Members (lop row from left)

Joe Bob Neely, John L. Burton Jr., William W. Arnett, (bollom mw from lefl) Olen Sharp and John M. Williams Jr.

Pictured below are SRP Board Members (lefl lo right) Fred J.

Ash, Rudolph Johnson and Thomas P. Hurley.

Salt River Project Board Members shown above are Pelt lo right) Clarence C. Pendergast Jr., Stanford F. Hartman and Gilbert R. Rogers.

Pictured at left are SRP Board Members aft lo right) William P. Schrader, Dwayne E. Dobson and Bruce B. Brooks.

District 1 Rudolph Johnson District 2 Clarence C. Pendergast Jr.

District 3 Bruce B. Brooks District 4 Gilbert R. Rogers District 5 John M. Williams Jr.

J District 6 Thomas P. Hurley District 7 william P. Schrader District 8 Joe Bob Neely District 9 Olen Sharp District 10 Dwayne E. Dobson At-large lVilliam W. Arnett Fred J. Ash John L. Burton Jr.

Stanford F. Hartman

Council Members iYQ J V T

he councils enact and amend bylaws relating to the management and conduct of SRP's business affairs, and they approve negotiated revenue bond sales.

Three council members are elected by SRP shareholders to two-year terms in each ofthe 10 areas of the Salt River Valley Water Users'ssociation.

Three council members are elected to staggered four-~mr terms in each of the 10 divisions of the Salt River Project Agricultural Improvement and Power District.

'&aditionally, Association council members seek identical positions on the District council.

)

~t Ji t

SRP Council Members pictured at left are aft io righi) Roy W.

Cheatham, John A. Vanderwey, Carl E. Weiler (Chairman),

Wayne A. Hart, James L. Diller, George B. Willmoth, Robert E.

Hurley and Levi H. Reed.

SRP Council Members pictured below are (iop row fiom iefl)

Martin Kempton (Vice-chairman), Lester R. Nowry, Wayne A.

Marietta, (botiom iow from left) Orland R. Hatch, C. Dale Willis, William P. Schrader Jr. and Larry D. Rovey.

V

))I E

fi I

.r/f',

~<<

i Q<<<<V'RP Council Members pictured above are (lop iow fiom lefi)

Dean W. Lewis, James R. Marshall, Edmund Navarro, Michael K. Gantzel, Mark V. Pace, (bottom iow from left) W. Curtis Dana, Emil M. Rovey and Lee L. Tregaskes.

C 0

E District 1 Robert L. Cook Howard W. L>dic Emil M. Rowy District 2 Wayne A. Hart Larry D. Rovey John A. Vandemey District 3 James M. Accomazzo John E. Anderson Elvin E. Fleming District 4 Lloyd Lee Banning Levi H. Reed Byron G. Williams District 5 Roy W. Cheatham Edmund Navarro Carl E. Weiler, Chaiiman District 6 James L. Diller Dean W. Lewis James R. Marshall District 7 EVayne A. Marietta Lester Mowry George B. Willmoth District 8 Michael K. Gantzel Martin Kempton, Vice-chairman Mark V. Pace District 9 W. Curtis Dana Robert E. Hurley Lee L. Iiegaskes District 10 Orland R. Hatch William P. Schrader Jr.

C. Dale Willis SRP Council Members pictured above are (left to righi) James N. Accomazzo, Elvin E. Fleming, John E. Anderson, Robert L.

Cook, Byron IVilliams, Howard W. Lpllc and Lloyd Lee Banning.

SALT RIVER PROJECT Box 52025, Phoenix, AZ 85072-2025 Return requested BULK fA~~

U.S. POLI'AuE PAID PHOENIX, ARIZONA Permrt No. 395

~~EWTJ>~

SALT RIVERPROJECT AN EQUAL OPPORTUIVITY EMPLOYER As a special service, SRP is making this Annual Report information available throru8r the Arizona State Library for the Blind and Physically llandicapped, 1030 N. 32nd St., Phoenix, AZ 85008 (602) 2554578.

Annual Report do Salt River Project Communications 6'r Public Affairs Box 52025 Phoenix, AZ 85072-2025 (602) 2368240

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