There is nothing like passing the fruits of good management on to customers to build a strong relationship, and Salt River Project (SRP) is doing just that by reducing electricity prices by an average of 1.6 percent for the next 10 months.
Starting with the January 2017 billing cycle, typical residential customers will see a reduction of just under a dollar per month during the winter billing season. The savings will increase to $2.50 to $3.50 per month when the summer billing season begins in May. Prices will return to original winter season prices approved in 2015 with the November 2017 billing cycle.
This is the second time in less than a year that the SRP board has lowered electricity prices for the utility’s 1-million-plus customers. SRP previously instituted a temporary reduction of 3.7 percent for the 2016 July and August billing cycles.
The temporary decreases reflect SRP’s success in identifying market opportunities and cutting costs, said SRP General Manager and Chief Executive Officer Mark Bonsall. “Utility customers are generally more used to seeing price increases than decreases, so we are very happy to be able to lower our prices,” he stated.
SRP has been able to temporarily lower rates because of reduced expenses in two components of its electric prices: the Environmental Programs Cost Adjustment Factor (EPCAF) and the Fuel and Purchased Power Adjustment Mechanism (FPPAM).
EPCAF tracks costs and revenues related to the renewable energy and energy-efficiency programs SRP adopted to comply with its sustainable portfolio standard. The temporary reduction reflects SRP’s ability to meet its sustainable goals at a lower cost to customers.
FPPAM allows SRP to recover fuel costs incurred to generate electricity and supplemental power purchases to serve customer needs. Savings in this area are primarily because natural gas costs have been lower than anticipated in the utility’s budget.
SRP passes the costs of these two components directly to customers without any markup. The latest temporary reduction will decrease EPCAF and FPPAM revenue collection by about $40 million.
Succeeding at sustainability
SRP has set a goal to meet 20 percent of its retail electricity requirements through sustainable resources by the year 2020. Solar, wind and geothermal energy, hydropower and energy-efficiency programs currently provide 746 megawatts (MW) of capacity. This diverse mix of clean resources represents more than 14 percent of retail energy needs, putting SRP ahead of schedule to achieve its goal.
Bonsall attributes that success to constantly monitoring the market to find the most reliable, affordable and environmentally responsible resource mix. For example, the 45-MW Sandstone solar power plant puts electricity onto the SRP grid that is both clean and affordable. The cost SRP pays per kilowatt-hour (kWh) from the facility is very close to the utility’s average on-peak market price for electricity.
Energy efficiency programs also play an important role in meeting SRP’s sustainability goals. Last year alone, SRP’s business and residential efficiency programs saved customers 526 million kWh, and they continue to have the most potential of all resources for cost-effective growth.
Communicating is critical
As a not-for-profit public power provider, SRP puts the needs of its consumers first, and that means keeping them up to date on utility activities. Customers learned about the temporary rate decrease through a variety of channels, including customer newsletters, social media, traditional media outlets and through customer service representatives. And customers are giving feedback: “We are hearing from them that they are pleased about the recent announcement,” said SRP Spokesperson Patty Garcia-Likens.
Keeping the lines of communication open, offering customers energy- and money saving programs and providing affordable, reliable electricity has paid off for the utility in customer satisfaction. SRP has ranked highest for residential electric service in the western United States among large electric utilities for the last 15 years, according to annual studies conducted by J.D. Power.