Letter from
Salt River Project (SRP)

The following is a copy of a letter I received on Wednesday, August 18, 2004.

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SRP BEGINS PUBLIC PROCESS

SRP is beginning a public process to review a management proposal related to an administrative change in the fuel and purchased powere adjustment mechanism. The public process reflects SRP's tradition of involving customers in decisions that will affect them. The process formally starts on August 17, 2004, and is scheduled to conclude with a decision by the SRP Board of Director's on October 4, 2004. If approved by the Board, the proposed change would be effective November 1, 2004.

In November 2001, SRP's Board approved Standard Electric Price Plans that included a Fuel and Purchased Power Adjustment Mechanism. In April 2004, the Board approved changed to the adjustment mechanism that provided for a semi-annual review of costs and the ability for the price of fuel and purchased power to go up or down effective November 1 and May 1 of each year.

In the current public process, Management is proposing modifications to the method of allocating fuel and purchased power cost recovery among electric customer classes. This is the only change being proposed in this process.

As a customer, you have the opportunity to learn more about SRP's proposal and to submit your comments. You can review management's proposal in our information room at SRP's main administrative offices, 1521 N. Project Drive, Tempe. Please visit our Web site at www.srpnet.com for information about current residential and business prices.

SRP's publicly elected Board will conduct a special meeting on September 17, 2004, beginning at 9:30 a.m. at SRP's main offices, 1521 N. Project Drive, Tempe, to formally review management's proposal and allow interested persons and opportunity to pose questions to SRP Management and present comments and proposals to the Board.

SRP's Board is scheduled to decide on this proposal on October 4, after considering management's recommendations and any public input. For further information about the public process, see the accompanying Legal Notice.

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LEGAL NOTICE

NOTICE OF MEETING OF BOARD OF DIRECTORS ON CHANGES TO THE FUEL AND PURCHASED POWER ADJUSTMENT MECHANISM AFFECTING STANDARD ELECTRIC RATE SCHEDULES (PRICE PLANS) PURSUANT TO A.R.S. 48-2334

SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT

The Board of Directors of the Salt River Project Agricultural Improvement and Power District ("SRP") is considering changing the method of calculating the existing fuel and purchased power adjustment mechanism of its price plans ("Fuel Adjustment Proposal") as determined in the reasonable discretion of the SRP Board of Directors. The revisions to the fuel and purchased power adjustment mechanism may affect the recovery of fuel, purchased power and generation costs.

From 8:30 a.m. on August 17, 2004, to 5:00 p.m. on November 1, 2004, weekdays, SRP will make available for inspection at its main administration offices, 1521 North Project Drive, Tempe, Arizona 85281, information pertinent to the Fuel Adjustment Proposal including:

1. Management's recommended Fuel Adjustment Proposal;
   
   
2. Relevant financial and other information as may be pertinent and upon which the management proposal is based, including data from budgets and long-range plans; SRP will timely supplement such information as may be reasonably requested by any interested person and will answer reasonable questions posed by any interested person;
   
   
3. Reports by consultants to the Board, if any; and
   
   
4. Proposals and comments submitted by interested persons. Interested persons may:
   
   
   1. File written comments and proposals: Written comments and proposals may be submitted at any time during the process. It is recommended, however, that written comments and proposals be submitted by September 27, 2004.
      
      
   2. Submit written questions to SRP management: Written questions may be submitted at any time through September 27, 2004. Management will make a reasonable effort to timely respond to each question.
      
      
   3. Submit written requests for documents to SRP management: Written requests for documents may be submitted at any time through September 27, 2004. Management will make a reasonable effort to timely accommodate each request.
      
      
   4. Request interviews with SRP management or with the Board's consultant. Requests for interviews may be submitted at any time through September 10, 2004. Such requests must be submitted in writing. Interviews, if any, would occur at the SRP Project Administration Building, 1521 North Project Drive, Tempe, Arizona 85281 on September 13, 2004 between the hours of 1:00 p.m. and 4:30 p.m.

Requests and written submissions should be (i) addressed electronically to [email protected], (ii) mailed to SRP Corporate Secretary, PAB 215, P.O. Box 52025, Phoenix, Arizona 85072-2025, (iii) faxed to (602) 236-2188 or (iv) hand-delivered to SRP Corporate Secretary, 1521 North Project Drive, Tempe, Arizona 85281.

Persons wishing to participate in these proceedings may provide their names, addresses, telephone numbers, facsimile numbers (optional) and e-mail addresses (optional) to the SRP Corporate Secretary. This will insure that the participant will be given timely notice of aditional meetings and copies of additional materials.

A meeting for the Board of Directors of SRP will convene at 9:30 a.m. on September 17, 2004, in the Project Administration Building, 1521 North Project Drive, Tempe, Arizona 85281, to:

1. Afford SRP management an opportunity to explain the Fuel Adjustment Proposal and to answer questions;
   
   
2. Afford the Board's consultant(s) an opportunity to comment upon the Fuel Adjustment Proposal; and
   
   
3. Afford interested persons a reasonable opportunity to orally present their views and comments.

The Board of Directors will make its decision on the Fuel Adjustment Proposal following review of information and comments gathered pursuant to the procedures set forth in the Notice. The Board anticipates conducting a meeting for the purpose at 9:30 a.m. on October 4, 2004, in the Project Administration Building, 1521 North Project Drive, Tempe, Arizona 85281.

BY ORDER OF THE PRESIDENT OF SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT.

August 17, 2004

Terrill Lonon
Corporate Secretary