Letter from
Salt River Project (SRP)

The following is a copy of a letter I received on Thursday, May 27, 2004.

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SRP BOARD APPROVES PRICE AND RULE CHANGES

After a three-month public process, the SRP Board of Directors on April 26 approved price plan changes effective June 1, 2004, and November 1, 2004.

The June 1 changes will have no impact on overall price levels. The changes simply rearrange various components of existing prices. The "competitive transition charge" has ended. The system benefits charge, included in the delivery portion of each bill, will be adjusted to reflect higher expenditures for renewable energy programs, energy efficiency and energy conservation.

The SRP Board also approved changes to the Rules and Regulations regarding liability in the event of interruption, variation or curtailment of electric service; and a provision to recover costs incurred if "Regional Transmission Organizations" are mandated in Arizona. In addition, the fuel and purchased power adjustment mechanism will be identified as a separate component of the price plans. Fuel and purchased power cost and revenue will be evaluated every six months. A change in the calculation of late payment fees and interest charges will become effective on November 1, 2004.

The November 1 changes will increase overall price levels by 1.5%. This is lowr than the originally proposed 1.8% increase. The increase will vary across customer classes and by the amount of electricity consuption. For residential price plans, and average increases are as follows:

E-23 (Standard Price Plan for Residential Service)	2.3% Increase
E-26 (Standard Price Plan for Time-of-Use Service)	2.3% Increase

The Board decided to keep the price process open until it can review additional information from two studies that will be conducted over the summer. The studies will be available to the public in the SRP Information Room on August 6. The Board will receive written comments on the studies through August 27. The Board will consider oral comments at a special meeting to be held on September 13. Following these written submissions and comments, the Board may make additional adjustments to the price plans.

SRP's Information Room will remain open. Customers can review any amended price proposal and other related documents in our Information Room at SRP's main administrative offices, 1521 N. Project Drive, Tempe, on weekdays fro 8:30 a.m. to 5 p.m., until November 1, 2004. Comments and questions should be submitted in writing by 5 p.m. on August 27, 2004, and addressed to [email protected], mailed to SRP Corporate Secretary, PAB 215, P.O. Box 52025, Phoenix, Arizona 85072-2025, faxed to (602) 236-2188 or hand-delivered to SRP Corporate Secretary, 1521 N. Project Drive, Tempe, Arizona 85281.

SRP electric prices comtinue to be lower than they were in 1991, even though the number of customers we serve has increased from 538,000 to 829,000. However, the cost of service and the need for new infrastructure - power plants, power lines and other electrical facilities - requires additional funding to maintain our high level of reliability and service. With the approved changes, SRP's prices remain among the lowest in the Southwest.

For copies of detailed residential price plans and riders, please go to www.srpnet.com/prices, or call (602) 236-8888. Upcoming issues of the CONTACT customer newsletter will provide further information regarding the price changes.