Is the $1 billion Salt River Project proposal good for ratepayers?

By now, if you live in the Valley, you have likely heard that Salt River Project is proposing to add 16 gas units at a cost of ~ $1 billion to SRP customers. 

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Diane Brown
Executive Director

Author: Diane Brown

Executive Director

(602) 252-9227

Started on staff: 1985
B.S., Springfield College; M.Ed., Springfield College

Diane directs the policy and campaign priorities for Arizona PIRG. She helped lead members of the Coalition for Transportation Choices advocating for Proposition 104 in Phoenix—one of the boldest investments in public transportation passed in the nation. Diane is the recipient of recent awards from the Phoenix Business Journal, the League of Women Voters of Arizona and the Arizona League of Conservation Voters. Diane was previously the executive director of Illinois PIRG, and an assistant organizing director with the Student PIRGs.

The Arizona PIRG Education Fund has asked the SRP Board to respectfully request that they require SRP Management to publicly provide fundamental information prior to their vote.

Here’s why: A billion dollars for 16 gas units is a hefty expenditure and one that the Board should not approve without appropriate scrutiny.

SRP Management has yet to publicly answer basic questions on their proposal such as:

  1. What is the estimated impact on the monthly electricity bills of SRP customers, per customer class, and over what period of time? What is the estimated low-and-high bill impact per customer class?
  2. What is the likelihood, given costs and climate policy considerations, the units will become stranded assets and SRP customers will need to absorb the cost?
  3. At what capacity are the units expected to run during peak hours? At what capacity are the units expected to run during off-peak hours?
  4. What is the total projected cost of the proposal including fuel and maintenance?
  5. What is the total estimate for groundwater consumption? How will the use of groundwater affect availability, and water costs, for farmers, businesses, and consumers?
  6. What were the inputs used for load forecasts?
  7. What were the specific factors and scenarios contemplated? For example, were scenarios modeled that significantly increased energy efficiency, demand response, or delayed purchasing a portion of the gas units?
  8. Why didn’t SRP issue an All-Source RFP?
  9. Why was the proposal presented to stakeholders only 24 hours before the Power Committee vote? Why is the proposal on the agenda before the open houses for SRP customers are scheduled?
  10. Why should the Board approve a nearly billion dollar decision without answers to the above, and other questions?

While we raised the above questions to SRP, we also provided suggested next steps for the Board:

  1. Require Management to provide answers to the above and other questions that have been raised surrounding this proposal prior to a Board vote.
  2. Adopt a policy that ensures the Board, stakeholders, and SRP customers have sufficient, easy access to publicly available information, for any expenditure of $1,000,000 or more at least one month prior to a Board vote.
  3. Adopt a policy requiring All-Source RFPs. As you know, competitive bidding is a standard practice for many utilities.
  4. Encourage Management to hold a stakeholder meeting at least a month prior to any major policy decision(s) to present Management’s proposal, answer questions, seek input, and facilitate an understanding of varied perspectives.
  5. Upon request and within reason, meet with stakeholders and customers to help inform your decisions.

We would be remiss not to point out that the Arizona PIRG Education Fund is concerned about the growing list of problems associated with gas, most notably leaks, threats to our communities, and costs to consumers. Although gas has been touted as a relatively clean source of energy that can reduce global warming emissions, recent research shows that methane leaks during the production, transportation, and storage of gas can erode or nullify its climate benefits. Recent events in Chandler, Coolidge, Scottsdale, and Texas show both the dangers of gas and the extreme volatility of the cost of fuel.

Prior to voting on the proposed construction of 16 gas units at a cost of almost $1 billion to SRP customers, we are encouraging the Board to consider the above questions, suggestions, and comments. The Arizona PIRG Education Fund contends that the necessary information, including evaluation of clean energy options, has not been provided; and, therefore the Board should vote no or delay the vote until the answers have been provided in order for them to make an informed decision that will be in the best interest of SRP customers.

PHOTO: hubgoat via Flickr, CC BY-NC 2.0

Diane Brown
Executive Director

Author: Diane Brown

Executive Director

(602) 252-9227

Started on staff: 1985
B.S., Springfield College; M.Ed., Springfield College

Diane directs the policy and campaign priorities for Arizona PIRG. She helped lead members of the Coalition for Transportation Choices advocating for Proposition 104 in Phoenix—one of the boldest investments in public transportation passed in the nation. Diane is the recipient of recent awards from the Phoenix Business Journal, the League of Women Voters of Arizona and the Arizona League of Conservation Voters. Diane was previously the executive director of Illinois PIRG, and an assistant organizing director with the Student PIRGs.