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SRP revises earnings projection for fiscal 2010

Officials with one of Arizona’s largest utilities predict the company will earn about $25 million less this fiscal year than forecast a few months ago. That could possibly result in rate increases, outsourcing of jobs and other options to manage the budget.

Salt River Project’s fiscal 2010 budget, which covers the 12 months from May 2009 to April 2010, was forecast to bring the power and water provider $109 million in net revenue.

SRP Financial Planning Manager Dean Duncan said that figure has been revised to $84.4 million, mostly because the company expects to sell $40 million less electricity this year than it had forecast.

Duncan said the impact on net revenue would be greater, but there are some benefits associated with selling less energy, such as purchasing about $18 million less power-plant fuel and putting off some repair work.

SRP hasn’t yet reported what it earned in fiscal 2009 because the figures haven’t been audited, but its earnings have been declining.

In 2007, they were $367.8 million; in fiscal 2008, they were $257.1 million.

SRP officials planned to spend about $1.1 billion this fiscal year but are deferring about $120 million of that, according to Duncan.

Some of the expenses being pushed to later years include $35 million from investments in renewable energy and $16 million in smart meters, which the company is installing across its territory.

SRP general manager Richard Silverman told the utility’s elected directors last week that the finance officials were reporting the revised profit figures because the directors are beginning a long process to determine if the company will increase utility rates.

In March 2008, SRP raised rates an average of 3.9 percent and hiked prices again last October by an average of 5.9 percent.

The next pricing decision is scheduled to come to a vote in October, becoming effective in November.

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