Letter from
Salt River Project (SRP)

The following is a letter I received on Wednesday, October 20, 2004.

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October 2004


Dennis Betz
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Dear Dennis Betz,

SRP prices are established to provide reliable electrical service and are among the lowest in the southwest. There are several changes to your SRP prices taking effect November 1 that we want you to know about.

Your November bill will reflect SRP's substantially lower winter prices. During the cooler months, November through April, demand for electricity declines and our prices reflect the lower production costs of the season. This year, winter prices will be about 17% lower than summer prices. This is not as big a reduction as in prior years, and there are two reasons for this.

The first reason is that in order to fund the new power plants, transmission lines and other electrical facilities needed to serve the Valley's growing needs, last spring SRP's Board of Directors approved an average annual residential price increase of 2.3%. For example, beginning November 1, the monthly bill for a typical residential customer using 1,155 kilowatt-hours per month will increase $2.07 per month.

The second reason is the cost increases of natural gas and other fuels used to produce electricity and of purchased power. In Response, SRP is passing along these increases in fuel and purchased power prices through the Fuel and Purchased Power Adjustment Mechanism, which will increas overall prices an average annual 3.7%, beginning in November, and continue through April. This adjustment is a temporary increase, and for a typical customer will average approximately $6.60 per month.

As I stated, including the two increases outlined above, SRP winter prices still will be some 17% lower than summer prices. We do appreciate your understanding and will continue to provide you the best value for your energy dollar.

Sincerely,

Michael Lowe (signed)

Michael Lowe
Manager, Customer Services

P.S. Manage seasonal highs and lows of your elecric bill with SRP's Managed Payment Plan. Sign up today at www.srpnet.com/services/mpp or call (602) 236-8888.