Salt River Project customers are expected to see a rate hike in November to help recoup the costs of fuel for generating stations and supplemental power.

On Monday,  the  SRP Board of Directors voted to approve an annual fuel and purchased power adjustment mechanism  increase effective November of this year, SRP said in a press release. 

According to SRP Spokeswoman Patty Garcia-Likens , the increase will result in an average $5.58 increase in the average residential customer’s monthly bill.

The board also approved a second increase in November 2023 of another $5.58 average bump in price per month, she said.

 The board voted not to collect from customers $124 million of the existing under-collected balance of fuel costs, the press release said. 

SRP uses a fee called the fuel and purchased power adjustment mechanism to help recover constantly fluctuating costs of natural gas prices and power purchases the utility makes to meet customer demand.

The move is to adjust for increasing fuel and purchased power agreements to SRP. SRP routinely monitors costs incurred to purchase fuel for generating stations and buys supplemental power on the wholesale and spot markets to meet customer demand.

The mechanism was established to ensure SRP recovers these costs and has flexibility to adjust its mechanism when fuel and spot power prices rise or fall.

SRP passes fuel costs directly to customers without any markup.

In recent months, fuel and purchased power expenses have increased faster than SRP had adjusted, and SRP’s under-collection balance was $306 million at the end of July 2022, necessitating this board action, the press release said.

“SRP is rebalancing our prices to address our substantial under collection with two incremental increases and forgoing collection of a significant amount so that price changes are gradual, and costs are spread equitably among all customers,” said SRP General Manager and CEO Mike Hummel.

“By breaking up the necessary increase and announcing this upfront, we allow customers to anticipate and plan for upcoming changes.”