Opposition is growing to the Salt River Project's proposed 8.8 percent rate increase as opponents question the need for such a large rise during an economic slowdown.
Opposition is growing to the Salt River Project’s proposed 8.8 percent rate increase as opponents question the need for such a large rise during an economic slowdown.
But SRP officials insist the increase is needed to offset upward cost pressures, especially the cost of building a new coal-fired power plant near Springerville to replace older plants and expiring purchased power contracts.
That reasoning was rejected by Tim Hogan, director of the Arizona Center for Law in the Public Interest, which is opposing the increase. If the new hike is approved by the SRP board, the utility’s cumulative increases over the past two years would amount to nearly 25 percent, he said.
“For the life of me, I don’t understand the problem,” he said. “They have no income taxes, no shareholders, lower fuel costs, growth has slowed to nothing.”
He added that rates for residential customers would rise by an even greater amount — 10.2 percent — under the proposal, which Hogan said is “way too much.”
Hogan is especially dismayed by SRP’s contention the increase is needed to pay for the new coal plant and for more renewable energy.
“If they did more of that (use renewable energy), we wouldn’t have to be paying for a new coal plant,” Hogan said. “Their renewable portfolio is so low as to be meaningless … They are always 20 to 30 years behind everyone else.”
The public interest lawyer also said he has been rebuffed in his efforts to learn the salaries of top SRP executives. But he said he isn’t giving up and might go to court to compel their release.
“If they’re going to charge us over 10 percent more, that’s information we should have,” he said. “They are a public entity. I do not understand how they can claim it’s secret stuff.”
Leslie Cooper, executive director of the Arizona Consumers Council, said her organization has not yet formed an official response, but she added “obviously we’re concerned at the size of the increase. It seems fairly significant.”
If an increase is approved, she said some of the additional funds should be earmarked to expand energy-efficiency programs such as rebates if customers buy more energy-efficient appliances. That would help offset the impact of the rate hike on consumers, she said.
Diane Brown, executive director of the Arizona Public Interest Research Group Education Fund, said SRP should have an expanded energy-efficiency program already in place before implementing a rate hike. She said that “is akin to having an exam before surgery — it makes sense and can save dollars.”
Rob Nichols, SRP’s manager of corporate pricing, said the utility agrees with the need for more efficiency programs, and the company’s proposal calls for that. For example, he said an optional price plan that encourages shifting power consumption to off-peak hours will become available to all residential customers. The budget for energy-efficiency programs, which stands at $30.4 million in the current fiscal year, will be increased to $44.5 million in 2011 and $55 million in 2012, he said.
As for Hogan’s complaint that lower fuel prices and slower growth should reduce the need for a price increase, Nichols said SRP’s managers have included those factors in their proposal.
“SRP has implemented a number of belt-tightening measures to mitigate the impact of upward pressure on its costs,” he said, citing $40 million in budget cuts and more than $90 million in decreased capital expenditures. “Over 230 jobs have been eliminated, with the remaining salaried employees forgoing merit increases and receiving reduced overtime opportunities. Additionally, advertising, travel and sponsorships have been reduced.”
Still, that is offset by the higher cost of the new power plant, which is replacing power contracts negotiated 30 years ago when costs were far less, he said.
The utility is hosting a series of public meetings to hear consumer comments on the proposed increase this month. One will be held at 5:30 p.m. Wednesday at the Southeast Regional Library, 775 N. Greenfield Road, Gilbert.
SRP’s board of directors will discuss the proposal at a meeting on Sept. 10 and will make a final decision on Oct. 1. The increase, if approved, would go into effect in November bills.