Salt River Project is planning a rate hike of around $12 a month, with residential customers paying on average about 8% more. The following is a release from the SRP Board explaining the reasons for the price hike.
Today, the SRP Board of Directors approved a further increase to the Fuel and Purchased Power Adjustment Mechanism (FPPAM) rate change already planned for Nov. 1, 2023. This will result in a total overall increase of 9.6 percent, or $0.01 per kilowatt-hour (kWh). Residential customers will experience an average increase of 8 percent.
FPPAM is the rate that SRP charges to recover the costs of fuel, including natural gas, and purchased power agreements used to maintain energy reliability. These costs are passed through to customers without any markup.
Last year, the SRP Board approved a two-part FFPAM rate increase to better reflect the price SRP pays for fuel and purchased power. The first part went into effect Nov. 1, 2022. Even with these previously approved increases, the under-collected balance for fuel and purchased power would have continued to grow. This is due to the addition of new renewable and battery storage projects, including some that have become more expensive because of supply chain disruptions, as well as higher costs associated with procuring natural gas and long-term purchased power commitments needed to ensure reliability.
This is due to the addition of new renewable and battery storage projects, including some that have become more expensive because of supply chain disruptions, as well as higher costs associated with procuring natural gas and long-term purchased power commitments needed to ensure reliabilitySRP Officials
This rate change will allow SRP to fully recover the under-collected fuel and purchased power balance on a more timely basis. The change will go into effect in November after the summer season. While customer impacts will depend on actual per kWh usage, the average residential customer using 1,188 kWh/month will experience an increase of $11.88/month.
“Accelerating the recovery of our under-collected fuel and purchased power balance is expected to result in fewer FPPAM rate increases going forward and lower overall costs for customers,” said SRP General Manager and CEO Mike Hummel. “SRP remains committed to keeping rates low as we work to meet the growing energy needs of the Greater Phoenix area.”
SRP’s goal is to keep the FPPAM balance at zero, meaning it typically does not over-collect or under-collect for its anticipated fuel and purchased power costs. However, during the COVID-19 pandemic, SRP allowed the FPPAM balance to be significantly under-collected to maintain rate stability during that time. SRP also forwent collection of $82 million in 2021 and $124 million in 2022 of the FPPAM balance to reduce impacts on customer prices.