compiled by George Draffan, Public Information Network

for the Center for Biological Diversity

History

Corporate Structure

Governing Structure

Regulation of SRP

Financial

Service Territory

Facilities

Sources of Energy for SRP Facilities

Environmental Issues

Nuclear Issues

Indian Matters

Litigation involving SRP

SRP's Agricultural Improvement and Power District (a political subdivision of the State of Arizona)

• generates more than 5,800-MW capacity
• distributes power to more than 700,000 customers
• is preparing for competition by establishing marketing subsidiary New West Energy.

SRP's Salt River Valley Water Users Association

• is a private firm that delivers about 1 million acre-feet of water to residents and agricultural irrigators
• operates canals, reservoirs, and wells in its service area.

Employees: 4,050

SRP's top competitors:

American States Water (San Dimas CA) http://www.aswater.com

Pinnacle West (Phoenix AZ) http://www.pinnaclewest.com

UniSource Energy (Tucson AZ) http://www.unisourceenergy.com

from the SRP website:

"SRP, based in Phoenix, was established in 1903 as the nation's first multipurpose reclamation project authorized under the National Reclamation Act. Today, SRP is the nation's third-largest public power utility and one of Arizona's largest water suppliers, providing power to customers throughout a 2,900-square-mile service territory in central Arizona. SRP also operates a system of dams and canals that deliver water to the area.

A need for water

"A century ago, Arizona settlers were challenged by the harsh desert environment. Water was scarce and the supply unreliable. In 1903, the settlers formed the Salt River Valley Water Users' Association, still a part of today's SRP, and pledged more than 200,000 acres of their land as collateral for a government loan to build a massive water storage and delivery system.

"That loan was made possible by the National Reclamation Act of 1902, which provided funding for the construction of water storage dams and canals, bringing new hope to those who had struggled to develop the area.

"With the government loan, the dam was built and named it after the President Theodore Roosevelt, whose foresight and commitment brought the project to life.

"In 1996, a $430 million modification project was completed that raised the height of Roosevelt Dam to 357 feet and expanded the lake's storage capacity by 20 percent. Roosevelt Dam was, and still is, the cornerstone of the Salt River Valley's water storage and delivery system.

More dams, canals built

"As the area grew, the Association added three more dams on the Salt River and two dams on the Verde River. A 1,300-mile system of canals and laterals was built to complete the water delivery system.

"The water storage and delivery system brought new life to the land. More than any other single factor, this system influenced the region's development.

"As the state grew, SRP realized that its storage system and groundwater supplies would not be adequate to support the future growth of Arizona's cities, agriculture, business and industry. So we helped bring the Central Arizona Project (CAP) to life. The CAP's canal system transports water from the Colorado River across the desert and into the state's central valley, augmenting the region's supply.

"Today, SRP's water storage and delivery system delivers more than 1 million acre-feet annually to the Salt River Valley.

"The hydrogeneration created by the Association was successful, and confirmed that electricity could generate revenue support for the Association.

Growth required power

"In 1937, the Association created the Salt River Project Agricultural Improvement and Power District, a political subdivision of the state of Arizona, which to operate the power generation and distribution system. The Association and District later became known as Salt River Project.

"SRP's electricity was first created through hydrogeneration., This electricity initially supported the growing agriculture and mining businesses. Our residential customer base rapidly increased each year - sometimes by as much as 30 percent and demand exceeded supply.

"SRP diversified to also produce electricity from steam and diesel oil. In the late 1940s, SRP committed to system expansion, purchasing new equipment, using new technology and building new substations - essentially creating a new power system.

A modern system

"As demand increased in the 1960s and 1970s, SRP again committed to keep its power system progressive, building Navajo and Coronado generating stations.

"Today, SRP and its partners generate power from plants in Arizona, Colorado, Nevada and New Mexico, with a diverse fuel mix of coal, nuclear, hydro, natural gas and oil. This allows SRP to take advantage of favorable markets and provide power to customers at the lowest possible cost.

"SRP's response to growth, commitment to progress and the environment has helped shape the West for nearly 100 years and made it possible for millions to live in the desert and enjoy and a bustling economy in metropolitan Phoenix.

Recognition

"In May 1999, SRP was recognized by the Library of Congress as one of Arizona's "Local Legacies" during ceremonies in Washington, D.C. SRP is the only electric or water utility to be so honored.

"Two U.S. Congressmen from Arizona nominated SRP for the prestigious honor, noting that SRP is the oldest multipurpose federal reclamation project in the nation, older even than the state of Arizona.

"The Local Legacies project, part of the Library of Congress Bicentennial celebration, documents America's grassroots heritage, providing a snapshot of the nation's unique traditions that define various communities and community events."

"The Salt River Project Agricultural Improvement and Power District (the District) is an agricultural improvement district organized in 1937 under the laws of the State of Arizona. It operates the Salt River Project (the Project), a federal reclamation project, under contracts with the Salt River Valley Water Users' Association (the Association) by which it has assumed the obligations of the Association to the United States of America for the care, operation and maintenance of the Project. The District owns and operates an electric system that generates, purchases and distributes electric power and energy. The Association operates an irrigation system as the District's agent. "

"On May 1, 1997, the District established a wholly-owned, taxable subsidiary, New West Energy Corporation (New West Energy), to market, at retail, energy produced by the District that may be rendered surplus by retail competition in Arizona in the supply of generation."

Possession and Use of Utility Plant

"The United States of America retains a paramount right or claim in the Project that arises from the original construction and operation of certain facilities as a federal reclamation project. Rights to the possession and use of, and to all revenues produced by these facilities, are evidenced by contractual arrangements with the United States."

Principles of Combination

"[SRP's] financial statements reflect the combined accounts of the Association and the District (together referred to as SRP).The District's financial statements are consolidated with its two wholly-owned taxable subsidiaries, New West Energy and Papago Park Center, Inc. (PPC). PPC is a real estate management company. All material intercompany transactions have been eliminated."

Regulation and Pricing Policies

"Under Arizona law, the District's publicly elected Board of Directors (the Board) serves as its regulatory body and has the exclusive authority to establish electric prices.The District is required to follow certain procedures, including public notice requirements and special Board meetings, before implementing changes in standard electric price schedules. Market fluctuations can influence prices for generation related products."

John M. Williams Jr., SRP Vice President.

Terrill A. Lonon, SRP Corporate Secretary.

C. Joy Baker, SRP Treasurer.

Richard H. Silverman, General Manager.

Water Group: John F. Sullivan, Associate General Manager

Power, Construction & Engineering Services: David G. Areghini, Associate General Manager

Public & Communications Services: D. Michael Rappoport, Associate General Manager

Operations, Information & Human Resources Services: L. J. "Chip" U'Ren, Associate General Manager

Commercial & Customer Service: Mark B. Bonsall, Associate General Manager

Corporate Counsel: Jane D. Alfano

Foothills Training Facility: Movita Hudson

SRP is two companies: the Salt River Project Agricultural Improvement and Power District, a political subdivision of the state of Arizona; and the Salt River Valley Water Users' Association, a private corporation.

The District provides electricity to retail customers in the Phoenix area. It operates or participates in seven major power plants and numerous other generating stations, including thermal, nuclear and hydroelectric sources.

The Association delivers nearly 1 million acre-feet of water to a service area in central Arizona. An extensive water delivery system is maintained and operated by the Association, including reservoirs, wells, canals and irrigation laterals. As a matter of tradition, most candidates seek identical positions in the District and Association. However, sometimes through the election process Board and Council seats may be "split," resulting in additional members.

The president is the chief executive office and chairman of the Board of each organization. The vice president fulfills the duties and responsibilities of the president during the president's absence. Together, they serve as the day-to-day representatives of the Boards in the management of SRP.

In the Association, landowners elect a president, a vice president, 10 Board members and 30 Council members. Each district elects one Board member and three Council members. The president and vice president are elected at-large, meaning they are elected by the sum of the votes from all voting districts.

The Association is the older of SRP's two organizations. It began when a group of early Valley residents searched for an effective means to bring water to their families, farms and communities.

These pioneers tried to irrigate crops with a simple canal system fed by the Salt River. Canal operations were unpredictable. Sometimes the river shrank to a trickle, while other times, the river swelled beyond its banks and washed away a season of hard work.

In 1902, President Theodore Roosevelt signed the National Reclamation Act. The law provided federal loans for construction of reclamation projects in the West. Valley settlers formed the Association in 1903 and pledged their land as collateral for federal government loan to build a massive water storage and delivery system.

The cornerstone of the system, Theodore Roosevelt Dam, was dedicated in 1911, six years after construction began. The dam was rededicated in 1996 following Safety of Dam modifications that added 77 feet of height to the dam and needed conservation and flood control capacity.

As part of its operations, the Association cooperatively manages a 13,000-square-mile "watershed" or natural drainage area in the mountains north and east of metropolitan Phoenix. This watershed feeds the Salt and Verde rivers that flow into the SRP reservoir system. From 1923 to 1946, five more water-storage dams were built along the Salt and Verde rivers to help satisfy the Valley's need for a reliable supply of water.

The duties of the Association increased as more people moved to metropolitan Phoenix. Water-quality monitoring and water conservation became priorities as agricultural needs decreased and urban uses increased.

Today, the Association delivers nearly 1 million acre-feet of water to a 240,000-acre service area in metropolitan Phoenix. The reservoir system feeds an extensive water delivery network comprising 1,265 miles of canals, laterals and smaller channels. This delivery network carries water to municipalities as well as agricultural and urban irrigators.

In the District, landowners elect a president, a vice president, 14 Board members and 30 Council members. Each of the 10 voting divisions elects one Board member and three Council members. The president, vice president and four remaining Board members are elected at-large from all of the voting divisions.

During the Great Depression, Valley farmers were hard-pressed to make payments on the federal loans for Theodore Roosevelt Dam and other dams on the Salt River. To help reduce payments on the outstanding loans, the Arizona Legislature enacted a law that allowed the formation of the Salt River Project Agricultural Improvement and Power District in 1937.

As a political subdivision of the state, the District can issue tax-free municipal bonds, thereby reducing interest costs and saving SRP electric and water users millions of dollars.

As the Valley's population has grown, the District has tapped many power sources to provide electricity to more than 700,000 customers. Besides the time-honored hydroelectric generating units at the dams on the Salt River, the District owns or participates in 10 generating stations in the Southwest. Customers also are served by power drawn from various other generating facilities in the Valley and state, as well as from contractual power purchases.

The Boards set specific policy and, through management, operate SRP in accordance with the provisions of the Articles of Incorporation, District and Association bylaws, and Arizona statutes. For example, the Boards approve major fuel contracts, authorize the purchase of major equipment, and set water and power rates.

The two Councils of Salt River Project enact and amend bylaws relating to business affairs of SRP and also serve as liaisons to District electors and Association shareholders.

Continuity in leadership and experience is provided through a system of various standing committees on the Boards.

Board and Council members are elected to four-year terms, with one-half of the seats eligible for election every two years.

The two Boards of Salt River Project work with management to establish policies to further the business affairs of SRP. The 10 members of the Salt River Valley Water Users' Association Board of Governors serve staggered four-year terms and are elected from voting districts by the landowners within the water service territory. The Association is SRP's private water corporation, which administers the water rights of SRP's 240,000-acre area and operates and maintains the irrigation and drainage system.

The 14 members of the Salt River Project Agricultural Improvement and Power District Board of Directors serve staggered four-year terms. Ten District Board members are elected from voting divisions and four are elected at-large, by landowners within the District's boundaries. The District is SRP's public power utility and a political subdivision of Arizona. Most often, candidates seek election to both Boards.

As with the SRP Boards, there is one Council for the District and one for the Association. The 30 District Council members are elected to staggered four-year terms from 10 voting areas. Most often, candidates seek election to both Councils.

Division 1: Larry D. Rovey

Division 2: Clarence C. Pendergast Jr.

Division 3: Elvin E. "Gene" Fleming

Division 4: Gilbert R. Rogers

Division 5: Carl E. Weiler

Division 6: James L. Diller

Division 7: Ann M. Burton

Division 8: Robert G. Kempton

Division 9: Dale C. Riggins Jr.

Division 10: Dwayne E. Dobson

Directors-At-Large: Eldon Rudd, William W. Arnett, Fred J. Ash, James R. Marshall

District 1: Larry D. Rovey

District 2: Clarence C. Pendergast Jr.

District 3: Elvin E. "Gene" Fleming

District 4: Gilbert R. Rogers

District 5: Carl E. Weiler

District 6: James L. Diller

District 7: Keith B. Woods

District 8: Robert G. Kempton

District 9: Dale C. Riggins Jr.

District 10: Dwayne E. Dobson

Division 1: Robert L. Cook, Kevin J. Johnson, John R. Starr

Division 2: Wayne A. Hart, John A. Vanderwey, Paul E. Rovey

Division 3: John E. Anderson, Mario J. Herrera, Robert L. Van Hofwegen

Division 4: Lloyd E. "Lee" Banning, Charles D. Coppinger, Leslie C. Williams

Division 5: Roy W. Cheatham, Steve Williams, Wayne A. Weiler

Division 6: Ben A. Butler, Clarence J. Duncan, David Rousseau

Division 7: Mark A. Lewis, Harmen Tjaarda, Jr., Keith B. Woods

Division 8: John R. Hoopes, Deborah S. Hendrickson, Mark V. Pace

Division 9: W. Curtis Dana, Arthur L. Freeman, Edward E. Johnson

Division 10: Orland R. Hatch, Lawrence P. Schrader, C. Dale Willis

District 1: Robert L. Cook, Kevin J. Johnson, John R. Starr

District 2: Wayne A. Hart, John A. Vanderwey, Paul E. Rovey

District 3: John E. Anderson, Mario J. Herrera, Robert L. Van Hofwegen

District 4: Lloyd E. "Lee" Banning, Charles D. Coppinger, Leslie C. Williams

District 5: Roy W. Cheatham, Steve Williams, Wayne A. Weiler

District 6: David Rousseau, Clarence J. Duncan, Robert W. Warren

District 7: Mark A. Lewis, Harmen Tjaarda, Jr., Ann M. Burton

District 8: John R. Hoopes, Deborah S. Hendrickson, Mark V. Pace

District 9: W. Curtis Dana, Arthur L. Freeman, Edward E. Johnson

District 10: Orland R. Hatch, Lawrence P. Schrader, C. Dale Willis

With the exception of the District's at-large Board members, SRP's president, vice president, Boards and Councils are elected by a "debt-proportionate" system based on land ownership. The debt-proportionate concept stems from the original financial commitment of landowners who pledged their acreage as collateral for a federal loan to build Theodore Roosevelt Dam in the early 1900s.

Under this system, a landowner with five acres casts five votes in an SRP election, while an owner with one-half acre is entitled to half (0.5) of a vote. Land held in trust or partnership, or owned by corporations or municipalities, cannot be voted.

The four at-large Board members are elected on a one-landowner, one-vote basis.

The constitutionality of SRP's acreage-based voting system has been upheld by the U.S. Supreme Court in 1981 and, more recently, by the U.S. Court of Appeals.

SRP is divided into 10 voting districts (Association) and divisions (District). The map of the Salt River Reservoir District shows how the voting boundaries are located geographically.

From the SRP website:

"The electric utility industry is undergoing fundamental changes leading to a more competitive environment. The District traditionally operated in a highly regulated environment in which it had an obligation to deliver electric service to customers within its service area. In May 1998, the Arizona Electric Power Competition Act (the Act) authorized competition in the retail sale of electric generation, recovery of stranded costs, and competition in billing, metering and meter reading.

"The Act allows for a temporary surcharge on electric distribution service prices to pay for all or a portion of unmitigated stranded costs of electric generation service that were incurred as a direct result of the onset of competition. Such costs must have been incurred to serve customers in Arizona before December 26, 1996. This surcharge may not continue past December 31, 2004, and must not cause rates to exceed the rates that were in effect on December 30, 1998.

"Since 1999, the Arizona Corporation Commission (the Commission),which regulates public service corporations, has been entering into settlement agreements with each of its regulated utilities, establishing terms and conditions precedent to a framework for stranded cost recovery and unbundled tariffs. The Commission's competition rules require each utility to make available at least 20% of its 1995 system retail peak demand for competitive generation supply once the Commission makes a final decision on its stranded cost recovery and unbundled rates. Beginning January 1, 2001, all customers may select an alternative generation provider. Additionally, the rules provide that, prior to January 1, 2001, each utility governed by the Commission must transfer all competitive generation assets and services either to an unaffiliated party or to a separate corporate affiliate. However, waivers have been obtained by certain utilities to defer this date until January 1, 2003.Various lawsuits remain outstanding regarding stranded cost recovery and the amendment of the rules on competition. Nevertheless, the territories of some regulated utilities are open to competition while the litigation continues.

"The Federal Energy Regulatory Commission (FERC) regulates the electric utility industry under the authority of various statutes. FERC issued rules in 1996 mandating, among other things, open nondiscriminatory access to transmission lines. The rules require comparable transmission service in order to use the transmission systems of public utilities. The District has filed a comparable open access transmission tariff to ensure reciprocal access, pursuant to rules FERC developed for nonjurisdictional entities like the District. In addition, FERC issued its order No. 2000 in December 1999, requiring all jurisdictional public utilities that own, operate or control interstate transmission to file by October 15, 2000, a proposal for a regional transmission organization (RTO) or, alternatively, a description of any efforts made by the utility to participate in an RTO. SRP is actively participating in the development of an RTO for the Southwest.

"SRP's Response to the Changing Regulatory Environment

"The Board passed resolutions in August 1998 and December 1998 to open 20% of the District's 1995 retail load to competition for the retail sale of electric generation on December 31, 1998. During the first two years of competition, customers who elect competitive electric services may also choose billing, collection and meter reading services on a competitive basis if their demand exceeds one megawatt. On April 10, 2000, the Board passed a resolution opening the District's entire service area to generation competition to electricity suppliers approved by the Commission. The service area will be open beginning June 1, 2000, thereby accelerating the original terms outlined in the Act which required opening the entire service area no later than December 31, 2000.The entire service area will be open to competition in billing, metering and meter reading no later than December 31, 2000.The District's electric distribution area will remain regulated and the District will not provide distribution services in the distribution areas of other utilities.

"On December 7, 1998, the District approved unbundled pricing plans effective December 31, 1998. For retail customers who are unable to choose competitive electric generation, prices reflect a decrease of at least 10% over a 10-year period, apportioned among customer classes. On April 10, 2000, the District approved a price plan redesign that resulted in an overall average 1.0% further price reduction. The new price plans more closely align the components of the unbundled price plans to costs. In almost all cases the energy price (shopping credit) increased, further promoting competition. The new price plans were effective May 15, 2000.The District prices its electric generation based upon market and cost induced factors. The new price plans do not affect the level of competitive transition charge (CTC) to be collected.

"Under the August 1998 and December 1998 resolutions, the Board has authorized the District to recover a non-bypassable CTC of $795.5 million. In addition, through a surcharge to the District's transmission and distribution customers, the Board also allowed for recovery of the cost of programs that benefit the general public, such as discounted rates for the elderly or impoverished, efficiency programs, demand-side management measures, renewable energy programs, economic development, research and development and nuclear decommissioning, including the cost of spent fuel storage. These surcharges have been separately identified and included in the District's price plans of the regulated portion of operations.

"The Board has provided mechanisms for evaluation of the CTC during the transition period, with respect to actual market price variances from the 2.6 cent market price per kWh used to determine the CTC, and with respect to activities to mitigate operation and maintenance costs. If the CTC is fully recovered before the planned six-year period, the District will cease collection of the CTC. Additionally, if cost mitigation exceeds certain targets, some of the savings from mitigation will be used to reduce the CTC charge."

Max Jarman, Out-of-State Firms Like Arizona for Power Plants, Arizona Republic, May 22, 2001 at http://www.arizonarepublic.com/special08/articles/0522outofstate22.html

Max Jarman, Deregulation's dark side: Arizonans rethinking electricity rule changes, Arizona Republic, July 6, 2001, http://www.arizonarepublic.com/special08/articles/0706deregulate06.html

Arizona Republic series on energy issues at http://www.arizonarepublic.com/power/

Mesa Arizona Tribune, August 22, 2001

"With the wholesale price of electricity soaring, Arizona utilities reaped a financial bonanza last summer. This year, with electricity prices and demand sagging, local utilities are feeling the heat, at least relatively speaking.

"Salt River Project is doing well financially this year, but that may not continue.

"Pinnacle West Capital Corp., the parent company of Arizona Public Service, reported a 26 percent drop in earnings in its fiscal second quarter.

"And the city of Mesa Electric Department, which supplies electricity to a small service area within the city, expects to generate less than half the net revenue this year that it did last year.

"Up to June, Arizona utilities benefited from soaring wholesale prices in California and elsewhere in the West, which allowed them to sell their surplus power at sky-high prices. In the past two months they haven't been able to sell their surpluses for nearly as much.

"As a result of formerly high prices, the 2001 fiscal year was a record for SRP with net revenue of $273 million. Despite the recent slide in the wholesale market, SRP's revenue continued to grow in its fiscal first quarter of 2002, which ended July 30. Total operating revenue was up 2 percent over the same period a year ago, and net revenue, the difference between income and expenses, was up 20 percent.

"Salt River Project officials said they were able to keep revenue growing because of growth in the number of customers. But Chief Financial Officer Mark Bonsall said SRP's financial results for the entire 2002 fiscal year won't be as strong as last year as lower wholesale prices are felt more fully in future quarters.

"APS was beset by a variety of problems that caused Pinnacle West's earnings drop in the quarter ended June 30. But that was only a relative decline because the same quarter a year ago was the best in the company's history, said spokeswoman Peggy Mulloy.

"Among the factors that hurt APS were high fuel and purchased power costs, a outage at the Palo Verde Nuclear Generating Station to replace fuel control assemblies, costly generation reliability measures, a new accounting standard and continuing decreases in the retail price of electricity.

"Since 1994 the utility has reduced retail prices more than $605 million in a bid to be more competitive. Under agreements with the Arizona Corporation Commission, the state's utility regulator, APS will reduce rates a total of 16 percent between 1994 to 2004. Mulloy declined to predict what impact lower wholesale prices will have on APS in the coming months.

"The city of Mesa electric department is expecting to produce net income of about $6 million this year, down from $15 million last year. Because the city's retail prices are stable, the drop will not affect customers, but it will mean the department will have less money to contribute to the city's general fund, said Utilities Manager Dave Plumb.

"Among the factors that Plumb said are cooling off the electric market this summer are lower than expected temperatures, which have reduced power demand in California; price caps imposed by the Federal Energy Regulatory Commission; and long-term power contracts signed by the state of California."

For year 2000

Operating revenues up 5 percent at $1.8 billion.

Water delivery revenues were $13.2 million.

Total assets $5,975,624,000

Electric plant assets $5,765,976,000

Irrigation facility assets $227,423,000

Common utility assets $396,627,000

Long-Term Debt $3,164,866,000

Net revenues were nearly $118,700,000

Customer numbers grew by 3.7 percent, topping the 727,000 mark.

launched a $29 million program to fund renewable energy resources.

Operating revenues FY 2000 (ending April 2000) $1,019,144,000

Operating expenses $899,072,000

Net operating revenues from non-regulated operations $120,072,000

Income Taxes

The District is exempt from federal and Arizona state income taxes. Accordingly, no provision for income taxes has been recorded for the District in the accompanying combined financial statements.

New West Energy recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in its financial statements or tax returns. Deferred tax liabilities and assets are determined based on differences between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Since its inception in May 1997, the tax effect of New West Energy's results of operations has been immaterial.

Revenue Bonds

Revenue bonds are secured by a pledge of, and a lien on, the revenues of the electric system, after deducting operating expenses, as defined in the bond resolution. Under the terms of the bond resolution, the District is required to maintain a debt service fund for the payment of future principal and interest. Included in segregated funds in the accompanying Combined Balance Sheets is $346.9 million and $346.0 million of debt service related funds as of April 30, 2000 and 1999, respectively. These amounts include $192.3 million and $191.1 million at April 30, 2000 and 1999, respectively, that were authorized by the Board in fiscal year 1999 for repayment of bonds. Subsequent to the balance sheet date, the Board authorized the transfer of $192.3 million from the segregated funds back to the general fund.

The District has $81.2 million of mini-revenue bonds outstanding which can be redeemed at the option of the bondholder under certain circumstances. The District has a $25.0 million revolving line-of-credit agreement available to refinance these bonds if significant redemption requests occur. Based on historical redemptions made on these bonds, management believes that these credit agreements are more than sufficient.

The debt service coverage ratio, as defined in the bond resolution, is used by bond rating agencies to help evaluate the financial viability of the District. For the years ended April 30, 2000 and 1999, the debt service coverage ratio was 3.35 and 3.20, respectively.

Interest and the amortization of the bond discount and issue expense on the various issues results in an effective rate of 5.86% over the remaining term of the bonds.

The District has authorization to issue additional Electric System Revenue Bonds totaling $72.7 million principal amount and Electric System Refunding Revenue Bonds totaling $2.9 billion principal amount.

Commercial Paper

The District has issued $525.0 million of tax-exempt commercial paper consisting of $375.0 million Series B Issue and $150.0 million Series A Issue, initiated in fiscal year 1998.The issues have an average weighted interest rate to the District of 3.9%.The commercial paper matures not more than 270 days from the date of issuance and is an unsecured obligation of the District. The commercial paper has been classified as long-term debt in the accompanying Combined Balance Sheets in connection with refinancing terms under two revolving line-of-credit agreements that support the commercial paper. Under the terms of these agreements, the District may borrow up to $525.0 million through February 5, 2001.

While the revolving credit agreements contain covenants that could prohibit borrowing under certain conditions, management believes that financing would be available. The District has never borrowed under the two agreements and management does not expect to do so in the future. Alternative sources of funds to support the commercial paper program include existing funds on hand or the issuance of alternative debt, such as revenue bonds.

General Obligation Bonds

In 1984, the District refunded its then-outstanding general obligation bonds. Although the refunding constituted an in-substance defeasance of the prior lien on revenues which secured the bonds, the general obligation bonds continue to be general obligations of the District, secured by a lien upon the real property of the District, the authority of the District to assess taxes, and a guarantee by the Association. As of April 30, 2000, the amount of defeased general obligation bonds outstanding was $8.0 million.

Line-of-Credit Arrangements

In addition to the $525.0 million in revolving line-of-credit agreements that support the commercial paper, the District has a $25.0 million revolving line-of-credit agreement available for general corporate purposes.

Among other restrictions, covenants within the line-of- credit agreements require the District to maintain minimum accumulated net revenues of $1.1 billion plus 50% of accumulated net revenues earned subsequent to April 30, 1995 (not reduced by any net losses), or $1.4 billion at April 30, 2000.Additionally, the agreements require the District to maintain a minimum debt service coverage ratio of 1.35.

SRP also provides power to more than 700,000 customers in a 2,900-square-mile (7,511 sq. km.) service area in central Arizona.

Communities served by SRP

SRP's electric service territory is in Central Arizona. These cities and towns are served all or in part by SRP electric power:

Phoenix

Mesa

Tempe

Paradise Valley

Fountain Hills

Scottsdale

Apache Junction

Peoria

Queen Creek

Avondale

Chandler

Town of Gilbert

Glendale

Guadalupe

Tolleson

You can access a printable map of SRP's electric service territory in PDF format. http://www.srpnet.com/about/graphics/areamap.pdf To view and print the map, you'll to download Adobe Acrobat Reader http://www.adobe.com/prodindex/acrobat/readstep.html if you don't already have it.

The District has entered into various agreements with other electric utilities for the joint ownership of electric generating and transmission facilities. Each participating owner in these facilities must provide for the cost of its ownership share. The District's share of expenses of the jointly owned plants is included in operating expenses in the accompanying combined statements of net revenues.

The following table reflects the District's ownership interest in jointly owned electric utility plants as of April 30, 2000 (in thousands):

The District acts as the operating agent for the participants in the Navajo Generating Station (NGS).

Owner/operator: Wholly owned by SRP.

Location: Peoria, Ariz., on Northern Avenue east of 75th Avenue.

Description: Three steam generation units and three combustion turbine generators.

Capacity: 600 megawatts, from six units, plus 200 kilowatts from one solar generating unit.

Fuel source: The station can burn either natural gas or oil, depending upon availability and cost. The station is also capable of solar generation.

Fuel consumption: When burning oil, the units use 653,000 gallons a day at full load. When using natural gas, Units 1, 2 & 3 burn 97,600,000 cubic feet a day at full load.

Plant construction: Construction began in the late 1950s. Unit 2 was completedin April 1957, Unit 1 in January 1958 and Unit 3 in April 1961. Units 5 & 6 were completed in July 1974 and Unit 4 in May 1975. The solar generating unit was completed in March 2001.

Construction cost: Units 1 & 2 cost $24 million total, Unit 3 cost $20 million, and Units 4,5 & 6 cost $22.3 million total.

Plant operations:

Agua Fria units are used to supplement base-load plants and add power during peak demands.

Agua Fria is a quick source of electricity, capable of producing power within 22 minutes.

Agua Fria is the largest capacity generating station in the Valley.

Owner/Operator: Owned and operated by SRP.

Location: Near St. Johns, in eastern Arizona.

Plant construction: Construction began 1975. Unit 1 completed Dec. 31, 1979.

Unit 2 completed Oct. 1, 1980.

Description: Coal-fired, steam electric generating station.

Capacity: 760 megawatts, from one 365 MW unit and one 395 MW unit.

Fuel source: The McKinley Mine, located east of Window Rock near the New Mexico-Arizona border. Sulfur content of coal is 0.5 percent.

Note: The Coronado facility gets coal from the McKinley Mine north of Gallup, which is projected to play out in five to seven years; SRP plans to get coal from the proposed Fence Lake Mine in New Mexico.

Coal consumption: A maximum of 9,135 tons per day if both units are running at full load.

Construction costs: $700 million, including $220 million in environmental control equipment.

Environmental control equipment:

Electrostatic precipitators to contol fly ash.

Scrubbers to remove sulfur dioxide (SO2).

Water reservoir is lined to help recover and contain process waste.

Approximate air emission from the plant:

SO2

Unit 1 -- 0.7 pounds per million British Thermal Units (MMBTU) of heat input.

Unit 2 -- 0.72 pounds/MMBTU

Nitrogen Oxides (NOx):

Unit 1 -- 0.42 pounds/MMBTU

Unit 2 -- 0.42 pounds/MMBTU

Particulates:

0.01 pounds per MMBTU

Over 75% of SRP's Craig Station coal requirements are supplied by under two long-term agreements with Kennecott Energy's Colowyo Coal Company (79,429 tons of coal per year) and the nearby Trapper Mining, Inc. mine (189,108 tons of coal per year).

Operator: Tri-State Generation & Transmission Association, Inc.

Owners: Units 1 & 2--Yampa Project

SRP 29.0%

Tri-State G&T 24.0%

Pacificorp 19.3%

Platte River Power Authority 18.0%

Public Service Co. of Colorado 9.7%

Owners: Unit 3

Leased by Tri-State G&T 100%

Location: Near Craig, in northwestern Colorado.

Description: Coal-fired, steam electric generating station.

Capacity: 1,260 megawatts from three 420 MW units.

Fuel source: Trapper Mine, adjacent to the station near Craig, and Colowyo Mine in northwestern Colorado.

Coal consumption: A maximum of 15,000 tons per day if all three units are running at full load.

Plant construction: Construction on Units 1 & 2 began in September 1974. Unit 2 completed in November 1979 and Unit 1 in January 1980. Unit 3 construction began in January 1980 and was completed in October 1984.

Construction costs:

Units 1 & 2 -- $700 million.

Unit 3 -- $510 million.

Environmental controls costs: $285 million.

Environmental control equipment:

Electrostatic precipitator on Units 1 & 2 to control fly ash.

Wet limestone scrubbers on Units 1 & 2 to remove sulfur dioxide (SO2).

Fabric filter "baghouse" on Units 3 to control particulate matter.

Dry limestone scrubber on Unit 3 to remove SO2.

Appoximate air emission from the plant:

SO2:

Unit 1 -- 5534 Cumulative Total Tons

Unit 2 -- 4886 Cumulative Total Tons

Nitrogen Oxides (NOx):

Unit 1 -- 0.34 pounds per million British Thermal Units (MMBTU) of heat input.

Unit 2 -- 0.36 pounds/MMBTU

Particulates: All units under allowable limits for opacity.

Operator: Arizona Public Service Co. (APS is a subsidiary of Pinnacle West Capital Corp).

Owners: Units 1,2 & 3: APS 100%

Owners: Units 4 & 5:

Southern California Edison 48%

APS 15%

P.S.C. of New Mexico 13%

SRP 10%

Tucson Electric Power 7%

El Paso Electric 7%

Location: Navajo Indian Reservation, 15 miles west of Farmington, N.M., just south of U.S. Highway 550.

Description: Coal-fired, steam-electric generating station.

Capacity: 2,040 megawatts from two 170 MW units (1 & 2), two 745 MW units (4 & 5) and one 220 MW unit (3).

Fuel source: Nearby Navajo Mine, operated by BHP Utah.

Coal consumption: A maximum of 28,000 tons of coal per day if all units are running at full load.

Plant construction: Construction began in 1961. Unit 1 was completed in February 1963 and Unit 2 in May 1963. Unit 3 was completed in April 1964. Unit 4 was completed in May 1969 and Unit 5 in April 1970.

Construction costs: Units 1,2 & 3--$98.5 million.

Units 4 & 5--$174.3 million.

Environmental controls costs: Units 1,2 & 3--$47,950.

Units 4 & 5--$500 million.

Environmental control equipment:

Wet venturi scrubbers on Units 1,2 & 3 to control sulfur dioxide (SO2) and particulate emissions.

Fabric filter particulate removal system or "baghouse" on Units 4 & 5, and a lime-slurry scrubber system to contol SO2 emissions. Fabric filter "baghouse" on Units 3 to control particulate matter. Dry limestone scrubber on Unit 3 to remove SO2.

Approximate air emission from the plant:

SO2:

Unit 1 -- 13309 Cumulative Total Tons

Unit 2 -- 11770 Cumulative Total Tons

Nitrogen Oxides (NOx): Unit 1 -- 0.513 pounds per million British Thermal Units (MMBTU) of heat input.

Unit 2 -- 0.517 pounds/MMBTU

Particulates:

All units under allowable limits for opacity.

"Four Corners' total net generation capacity is 2,040 megawatts, enough to power more than 300,000 homes. It is one of the largest coal-fired generating stations in the U.S. The total original cost of all five units was $283 million.

"The low-sulfur coal burned at Four Corners comes from the adjacent Navajo Mine, operated by BHP Minerals. The five boilers burn an average of 28,000 tons of coal each day, or about 10 million tons annually.

"Cooling water for all five units comes from the man-made Morgan Lake, adjacent to the plant.

"Four Corners delivers power through its switchyard to utilities in Arizona, California, New Mexico and Texas.

"By the end of 1990, abundant, low-sulfur coal had become the fuel for 62 percent of Arizona Public Service Company's electric generation needs. Today, we are continuing to increase our reliance on the most economical fuels available - coal and uranium - so that, by the end of the century, even more of our electric load requirements will be met using these fuels."

Four Corners pollution record http://dinecare.indigenousnative.org/4_corners_toxins.html

Operator: Public Service Co. of Colorado (PSC)

Owner: Unit 1

PSC 75.5%

PacifiCorp 24.5%

Unit 2

SRP 50.0%

PSC 37.4%

PacifiCorp 12.6%

(PSC merged with Southwestern Public Service Co. of Texas).

Location: Four miles east of Hayden, Colorado, along U.S. Highway 40 in Route

County, Colorado.

Description: Coal-fired, steam-electric generating station.

Capacity: 446 megawatts; 184 MW from Unit 1 and 262 MW from Unit 2.

Fuel source: The Seneca Mine, six miles away.

Coal consumption: A maximum of 5,100 tons per day if both units are running at full load.

Plant construction: Unit 1 construction began in April 1962 and was completed in July 1965. Unit 2 construction began in March 1973 and was completed inSeptember 1976.

Construction costs: $170 million, including $33 million in environmental-control

equipment.

Environmental control equipment:

Hot-side electrostatic precipitators to control fly ash and particulates.

Closed-cycle, zero-discharge water-cooling system.

Evaporation and holding ponds to eliminate discharge in Yampa River.

Dust and runoff-control designed coal and ash-handling facilities.

Approximate air emission from the plant:

Sulfur dioxide (SO2) -- 7,607 cumulative total tons

Nitrogen oxides (NOx) -- 0.37 pounds per million British Thermal Units

(MMBTU) of heat input.

Particulates -- 0.01 pounds per MMBTU.

Scrubber being installed.

Owner/operator: Owned and operated by SRP. SRP is proposing an expansion for this facility. Please check www.kyrenefacts.org, for information on this project.

Location: Tempe, Ariz., south of Guadalupe Road on Kyrene Road.

Description: Two steam generation units and three combustion turbine

generators.

Capacity: 250 megawatts from five units.

Fuel source: The station can burn either natural gas or oil, depending upon availability and cost.

Fuel consumption: When burning oil, Units 1 and 2 use 214,200 gallons a day at full load. When using natural gas, they burn 27,264,000 cubic feet a day at full load.

Plant construction: Construction began in 1951. Unit 1 was completed July 1, 1952. Unit 2 was completed on June 1, 1954. The three gas turbines were constructed in the early 1970s.

Construction costs: $35 million.

Peaking power:

Kyrene is a quick source of electricity; Units 5 and 6 can produce electricity within nine minutes. Kyrene units add critical power to meet peak power demands. Kyrene units do not run when system demand is being supplied by less-expensive energy from other power plants. Kyrene is SRP's oldest operating steam plant

from the SRP website

Certificate of Environmental Compatibility Process

Application filed: June 14, 2000

Siting Committee hearing and approval: Aug. 14, 2000

ACC approval: Nov. 1, 2000

Air permit

Application filed with Maricopa County: August 2000

Permit issued: March 14, 2001

EPA process

Draft Environmental Information Document filed with EPA: November 2000

Environmental Assessment and Draft Finding of No Significant Impact issued by EPA: February 2, 2001

Final Finding of No Significant Impact issued by EPA: March 23, 2001

National Pollution Discharge Elimination System (NPDES) permit for wastewater discharge to be issued: fall 2001

Plant construction and operation

Construction scheduled to begin: March 2001

Commissioning and start-up: February 2002.

Tempe to give proposed SRP plant an examination, by Chris Fiscus, Arizona Republic, March 3, 2000

Tempe agrees to review proposed plant expansion, by Alan Levine, Tempe Chandler Wrangler News.

Agreement between the City of Tempe and the Salt River Project, Save Our Air website.

Operator: Southern California Edison

Owners:

Southern California Edison 56%

Los Angeles Dept. of Water & Power 20%

Nevada Power Company 14%

SRP 10%

Location: Southern tip of Nevada, in the town of Laughlin.

Capacity: 1,580 megawatts from two 790 MW units.

Fuel source: Peabody Western Coal Company's Black Mesa Mine near Kayenta, Ariz. Sulfur content of coal is 0.5%.

Coal consumption: A maximum of 18,240 tons per day if both units are running at full load.

Plant construction: Construction began in June 1967. Unit 1 was completed April 1971 and Unit 2 in October 1971.

Construction costs: $214 million, including $10 million in environmental control equipment.

Environmental control equipment:

Electrostatic precipitators to control fly ash.

Lined waste water pond with geophysical leak-detection system.

Ash disposable protection dam.

Approximate air emissions:

SO2:

Unit 1 -- 21524 Cumulative total tons

Unit 2 -- 19831 Cumulative total tons

Nitrogen oxides (NOx):

Unit 1 -- 0.420 pounds per million British Thermal Units (MMBTU) of heat input.

Unit 2 -- 0.389 pounds/MMBTU

Particulates:

All units under allowable limits for opacity.

Operator: SRP

Participants:

U.S. Bureau of Reclamation 24.3%

SRP 21.7%

Los Angeles Dept. of Water & Power 21.2%

Arizona Public Service Co. 14.0%

Nevada Power 11.3%

Tucson Electric Power 7.5%

Location: Navajo Indian Reservation near Page, Ariz., 80 miles northeast of the South Rim of the Grand Canyon.

Description: Coal-fired, steam-electric generating station.

Capacity: 2,250 megawatts from three 750 MW units.

Fuel source: Peabody Western Coal Company's Kayenta Mine near Kayenta, Ariz. Sulfur content of coal is 0.6 percent.

Coal consumption: A maximum of 25,000 tons per day if all units are running at full load.

Plant construction: Construction began in the early 1970s. The first unit began producing electricity in 1974. Commercial operation of the other units began in 1975 and 1976.

Construction costs: $650 million, including $200 million in environmental-control equipment. An additional $420 million was spent on new scrubbers.

Environmental control equipment:

Electrostatic precipitators to control fly ash.

Water reservoir is lined to help recover and contain process waste.

Navajo Scrubber Project

Service area: Serves electric customers in Arizona, Nevada and California. The station also supplies energy to pump water through the Central Arizona Project.

Approximate air emissions:

SO2:

Unit 1 -- 0.03 pounds per million British Thermal Units (MMBTU) of heat input.

Unit 2 -- 0.03 pounds/MMBTU

Unit 3 -- 0.03 pounds/MMBTU

Nitrogen Oxides (NOx):

Unit 1 -- 0.38 pounds per million British Thermal Units (MMBTU) of heat input.

Unit 2 -- 0.38 pounds/MMBTU

Unit 3 -- 0.38 pounds/MMBTU

Particulates: All units under allowable limits for opacity.

Navajo Scrubber Project

SRP's Navajo Generating Station (NGS), near Page, Arizona, has completed a multi-year construction project that improves air quality in the region. During this period, SRP installed three scrubbers at Navajo, one for each electric generating unit at the plant. With the scrubbers, Navajo is among the cleanest coal-fired power plants in the U.S.

The Navajo Scrubber Project was part of a negotiated settlement between SRP, the state of Arizona, the Grand Canyon Trust and the U.S. Environmental Protection Agency. Under the settlement, SRP agreed to remove approximately 90 percent of the sulfur dioxide (SO2) produced by the combustion of low-sulfur coal at Navajo.

In addition to eliminating almost all of the SO2 emissions from the plant, the wet-scrubber process used at Navajo also removes more fly-ash, the gray-colored particulate produced by burning coal, which means clear skies.

What is NGS?

NGS (Navajo Generating Station) consists of three 750 megawatt (MW) coal-fired generating units. Located approximately six miles east of Page, Ariz., NGS is a participation plant owned by a consortium of electrical power utilities and a division of the United States government. SRP, the nation's third-largest public power utility, is the plant manager for NGS.

The plant was initiated in 1968 as an alternative method to meet the power needs of the Southwest after a major hydroelectric project was blocked. NGS' first unit became operational in May 1974, and the entire plant was functional in April 1976.

How scrubbers work

Scrubbers were installed on NGS' three generating units in compliance with the EPA's Final Ruling. The basic purpose of the scrubbers is to remove sulfur dioxide from the gases emitted through the plant's three chimneys.

To scrub these gases, they are mixed with a reagent, lime or limestone, which causes the sulfur dioxide to be absorbed by the reagent. The reagent containing the sulfur dioxide then is disposed of in an environmentally compatible manner.

Today two basic scrubber processes exist; wet and dry. The wet scrubber process uses equipment to mix reagent and water and to spray the mixture directly into the flue gases. The dry scrubber process uses a rotary atomizer to atomize the reagent into the flue gases. The Navajo Scrubber Project retrofitted wet limestone forced-oxidation scrubbers at NGS in order to meet the EPA's Final Ruling.

Who owns NGS

NGS is a participation plant owned by a consortium of five electric utilities and the United States government. The participants are responsible for portions of the scrubber project costs respective to their percentage of ownership:

United States Bureau of Reclamation (USBR) 24.3%

Salt River Project (SRP) 21.7%

Los Angeles Department of Water and Power 21.2%

Arizona Public Service Co. 14.0%

Nevada Power Co. 11.3%

Tucson Electric Power Co. 7.5%

SRP manages NGS and the associated scrubber project on behalf of the

participants.

Project milestones

Establish Binding Contract with AE - June 1, 1992 (April 21 - Actual)

Initiate Construction - Jan. 1, 1995 (Oct. 17, 1994 - Actual)

Initiate First Unit Start-Up - May 1, 1997 (Feb. 7, 1997 - Actual)

First Unit in-Service - Nov. 19, 1997 (Actual)

Initiate Second Unit Start-Up - May 1, 1998 (Nov. 10, 1997 - Actual)

Second Unit in-Service - Nov. 19, 1998(Actual)

Initiate Third Unit Start-Up - Feb. 1, 1999(July 7, 1998 - Actual)

Third Unit in-Service - Aug. 19, 1999 (Actual)

Demolition of all three original chimneys completed - September 2000

Project costs

The original project budget was $530 million. As of Nov. 1, 1999, we estimate that project costs will total $420 million. Completing the project "under budget" was accomplished through value engineering, contracting strategies and competitive bidding.

Training

More than 142 Navajos completed various levels of training for specific crafts. The craft training program was discontinued in October 1997. The peak workforce required for the project occurred in December 1996 and was approximately 600 workers -- on average, 96% of these workers were Navajos. Training opportunities continue to be explored for future O&M purposes.

Transportation

Due to the potential impacts of truck hauling activities in providing reagent by a trucking operation, the local representatives of ADOT and SRP partnered to accelerate a planned bypass road to avoid trucking impacts to the local access routes. On March 16, 1995, SRP signed an Interagency Agreement with the Arizona Department of Transportation (ADOT) to provide up-front funding to accelerate the construction schedule on the proposed State Route 89 to 98 Highway inter-tie which was completed on Oct. 12, 1995. ADOT reimbursed SRP on July 12, 1996.

Contact information

For more specific information about the Navajo Scrubber Project, or to find out about Project Services (project management, engineering, procurement and construction)available through SRP, please call (602) 236-2552 or e-mail aarojas@srpnet.com. You also can learn about the Project Services' Homeward Bound project.

A $420 million project intended to cut pollutants emitted by a northern Arizona power plant has been completed with the demolition of the last of the plant's three original chimneys. The project at the Salt River Project's Navajo Generating Station in Page stemmed from environmentalists' efforts to protect visibility at Grand Canyon National Park. The last tower was demolished Aug. 31.

Operator: Arizona Public Service Co. (APS)

Owners:

APS 29.1%

SRP 17.5%

El Paso Electric Co. 15.8%

Southern California Edison 15.8%

Public Service Co. of New Mexico 10.2%

Southern California Public Power Authority 5.9%

Los Angeles Dept. of Water & Power 5.7%

Location: Fifty-five miles west of Phoenix, Ariz.

Description: Uranium-fueled, steam-electric nuclear generating station. Palo Verde is a pressurized water reactor.

Capacity: 3,810 megawatts from three 1,270 MW units.

Fuel source: Enriched uranium fabricated by Combustion Engineering of Windsor, Conn.

Uranium consumption: Each of the three units are reloaded with 800,000 pounds of uranium every 18 months. The three units use a combined average of 1.6 million pounds of uranium per year.

Plant construction: Construction began in June 1976. Unit 1 was completed in January 1986, Unit 2 in September 1986, and Unit 3 in January 1988.

Construction costs: $4.7 billion for construction and $1.2 billion for pre-operational and startup testing, for a total of $5.9 billion.

Environmental controls cost: According to a state of Arizona study, 22% of the facility's cost is environment-related.

Emissions from the plant: Palo Verde is a zero-emissions facility.

Nuclear Decommissioning

The total cost to decommission the District's 17.49% share of Palo Verde Nuclear Generating Station (PVNGS) is estimated to be $271.8 million, in 1998 dollars.This estimate is based on a site specific study prepared by an independent consultant, assuming the prompt removal/ dismantlement method of decommissioning authorized by the Nuclear Regulatory Commission (NRC). This study is updated as required, every three years, and was last updated in the fall of 1998. Based on the 1998 site study, the District estimates its share of ultimate decommissioning expenditures will be $1.9 billion.

The estimate assumes earnings on the decommissioning funds of 7.65%, as well as a future annual escalation rate of 5.92% in decommissioning costs. The actual decommissioning costs may vary from the estimate. Expenditures for decommissioning activities are anticipated over a fourteen-year period beginning in 2024. Estimated decommissioning costs are accrued over the estimated useful life of PVNGS. The liability associated with decommissioning is included in deferred credits and other non-current liabilities in the accompanying Combined Balance Sheets and amounted to $76.8 million and $67.9 million as of April 30, 2000 and 1999, respectively.

Decommissioning expense, net of earnings on trust fund assets, of $4.1 million and $4.5 million was recorded in fiscal years 2000 and 1999, respectively. The District contributes to an external trust set up in accordance with the NRC requirements. Decommissioning funds of $122.1 million and $104.7 million, stated at market value, as of April 30, 2000 and 1999, respectively, are held in the trust and are classified as segregated funds in the accompanying Combined Balance Sheets. Unrealized gains on decommissioning fund assets of $46.6 million and $38.1 million at April 30, 2000 and 1999, respectively, are included in accumulated comprehensive income as a component of accumulated net revenues

Owner/operator: Owned and operated by SRP. SRP is conducting a public planning process for the Santan Expansion Project. Please check www.santanfacts.org, for information on this project.

Location: Corner of Warner Road and Val Vista Drive in Gilbert, Arizona.

Description: Four combined cycle, combustion and steam generation units.

Capacity: 300 megawatts, from four 75 MW units, plus 200 kilowatts from two 100-kW solar generating units.

Fuel source: The station can burn either natural gas or oil, depending upon availability and cost. The station is also capable of solar generation.

Fuel consumption: When burning oil, the units use 432,000 gallons a day at fullload. When using natural gas, they burn 57,600,000 cubic feet a day at full load.

Plant construction: Construction began in early 1973. Units 1 and 3 were completed in October 1974. Unit 2 was completed in December 1974. Unit 4 went on-line in May 1975.

Construction cost: $55 million.

Environmental control equipment:

Electrostatic precipitator to serve as oil demister.

Power plant waster-water discharge is rerouted into a lateral for agricultural reuse and to avoid nitrate problems at a city treatment plant.

Concrete containment structure under acid and caustic storage tanks.

Intermediate load resource:

Santan is used to supplement base-load plants.

Santan is a relatively quick source of electricity, capable of producing power within 20 to 60 minutes.

Santan units are very efficient.

Metropolitan Phoenix is one of the nation's fastest-growing urban areas. That's why there is a need for an additional source of power in the East Valley. We're working with the community to provide electricity with as little impact on the surrounding area as possible.

New poll shows Valley residents support increasing generation capacity

TEMPE (April 23, 2001) -- Arizonans have been watching the California electricity debacle and fear similar circumstances could occur in the Grand Canyon State if new generation facilities are not built and conservation measures undertaken, according to a new poll released today by Dr. Bruce Merrill of Arizona State University.

Among those with an opinion, 54% of the poll's respondents think that electric "brown outs" like those occurring in California are very (16%) or somewhat likely (38%) to occur in Arizona.

Additionally, 72% of those with an opinion, think that there are not enough generating plants in existence to meet the needs of future growth in Maricopa County.

"The fear of the California power experience is migrating into Arizona," said Merrill. "Valley residents are worried about brown outs, escalating electricity rates, and the need to adopt more energy conservation policies. With summer approaching, one can only anticipate this consumer angst will increase."

Besides building new power generating facilities, 76% of those with an opinion, feel that energy conservation policies should be adopted in Maricopa County to reduce electricity consumption.

Consumer pocket book issues were also prevalent in the poll. Of those with an opinion, 76% feel the "brown outs" occurring in California will have a significant (29%) or some (47%) impact on electric bills in Arizona.

The poll also showed that 90% of the respondents who knew about plans to expand SRP Santan Generating facility favored the plans expansion.

"This poll shows that Arizonans are focused on our region's electricity crisis," Merrill said. "Valley residents are very concerned and are ready to support remedies to the problem. They support a multi-faceted solution of building new power facilities, the utilization of alternative fuels, and the adoption of energy conservation policies."

The survey was based on a random sample of 403 adult heads of households living in Maricopa County and was conducted by professional interviewers on April 20-21, 2001.

The poll was commissioned by a coalition of Arizona Power Consumers, including the East Valley Partnership, Westmarc, the Arizona Association of Industries, and East Valley Chamber Alliance. It has a margin of error +/- of 4.9%.

Power for progress

More people and more buildings create a need for more power. It's a simple equation.

During the past five years, the number of customers in SRP's electric service territory grew by about 16 percent. In the past fiscal year alone, SRP welcomed more than 27,000 new customers to its service territory.

SRP's challenge and responsibility is to prevent the growing demand for electric power to outstrip our available resources. This is especially true in the Southeast Valley, site of the majority of the population growth

In the next 10 years, the greatest power usage in SRP territory is expected to occur in Gilbert, Tempe, Mesa, Chandler the and Ahwatukee/east Phoenix area.

A new poll shows that Valley residents support increasing generation capacity to prevent electricity shortages such as those experienced in California.

Record demand

SRP delivered a record amount of energy to its Phoenix-area retail customers July 2, 2001. Between 4 and 6 p.m., SRP delivered a peak demand of approximately 5,163 megawatts (MW).

That peak topped the previous record of 5,002 MW, set July 26, 2000. In fact, in July 2000, customers surpassed SRP's all-time peak demand six times.

To offer a perspective, one megawatt is enough generating capacity to serve approximately 225 households.

To meet the need for additional power, there are only two choices:

1.Bring power in from a distant location via transmission lines. But this is an expensive option and would require locating additional power lines through existing neighborhoods.

2.Generate additional power at an existing facility located in the area of greatest need -- the East Valley. This is being proposed as the most cost-efficient and prudent solution to meet the future power needs of the Southeast Valley.

Please also see the article "Santan Expansion Will Benefit East Valley Residents."

Property value findings

PricewaterhouseCoopers LLP has completed a real estate consulting assignment related to the proposed expansion of the existing SRP Santan Generating Facility (the "Facility") located near the southeast corner of Warner and Val Vista roads in Gilbert, Maricopa County, Arizona.

The purpose of this assignment is to evaluate the impact, if any, of the proposed Facility expansion (the "Expansion Plan") on the marketability, pricing and/or market value of improved residential properties located in the neighborhoods surrounding the Facility ("Study Area").

Findings and conclusions

Based on their analysis, PricewaterhouseCoopers has drawn the following conclusions, which are discussed in detail in the document linked at the end of this page:

Home sale price appreciation rates have remained generally consistent at varying distances from the Facility since before the initial announcement of the Expansion Plan to the present time. While there has been some variability across Study Areas during the Update Period, there is no empirical support for the proposition that the Expansion Plan has negatively affected home appreciation rates in neighborhoods nearest to the Facility.

There is no indication that the marketing time of homes located near the Facility has been negatively affected by the Expansion Plan.

There is no indication that the turnover rate for homes located near the Facility has been affected by the Expansion Plan.

The ratio of selling prices to listing prices for homes located nearest to the Facility has generally improved during the Update Period relative to prior time periods and relative to Study Areas located farther from the Facility.

Listing prices for homes located nearest to the Facility have increased at rates consistent with or exceeding those of homes located farther away.

Multivariate statistical analysis provides no support for the proposition that the Expansion Plan has negatively impacted home sale prices.

To review the detailed findings, click on the link below. To view the document, you will need the Adobe Acrobat Reader if you don't have it. It is free and you will only need to download it once. Then, return to this page and click on the link below:

Property values findings http://www.santanfacts.org/property.pdf

Could Arizona face the woes of Southern California?

The following is a summary of issues published in news articles about the recent power shortage in Southern California. This information shows what could happen in Arizona if we fail to plan for additional sources of power to meet population growth.

Power prices rise in California

San Diego was hardest hit during the recent heat wave due to wholesale market swings caused by a combination of deregulation of the electric industry and lack of power generation capacity.

As a result, power prices in the San Diego area rose significantly this summer. San Diego Gas and Electric Co. reported that monthly electric bills nearly doubled from prices a year ago.

A typical residential power bill increased to about $105 during the first week of August compared to $55 for the same electricity during the same period last year.

Fixed-income customers and small businesses were hit the hardest.

Many small businesses saw profits evaporate into monthly electric bills, reported The San Diego Union Tribune.

Growth fuels power demand

In the last decade, demand for power surged along with the California economy, according to The New York Times. But utilities, fearing they would be unable to recover their costs as the state moved away from regulations that guaranteed them profits, stopped building power plants, leaving the state's power supply simply no longer able to keep up with peak demand.

California's economy has surged in the last five years, a boom led by Internet and high technology companies, which are voracious power users.

Growth is even more vigorous in the Pacific Northwest, Arizona and Nevada, making it harder for California to import the power on which it has relied.

The Wall Street Journal reported that California's crisis reflects several immense miscalculations:

that California could indefinitely rely on surrounding states to meet its energy needs. In fact, neighboring states power demands have been growing so fast that they have less and less surplus power to sell to California.

there was a dangerous assumption that demand would stay far beneath supply, so the state hasn't added significantly to its power plant capacity since the mid-1980s.

New power plants stalled

Power company officials have been critical about government reaction to this significant electricity supply shortage. Steve Baum, chairman of San Diego Gas and Electric Co. said the state has failed since it has done nothing to expedite construction of new power plants.

L.A. planned ahead

One region of California has eluded the power shortage crisis: The city of Los Angeles has excess generation capacity and has been able to meet its demand needs as well as sell power to keep the California power grid stable.

By investing in generation capacity in years past, Los Angeles has avoided the current crisis according to S. David Freeman general manager of the Los Angeles Department of Water and Power.

have been published at the SRP website http://www.santanfacts.org/letters.asp

including letters from:

Arizona State University

Arizona Utility Investors Association

Arizonans for Electric Choice and Competition

Cerprobe Corporation

East Valley Chambers of Commerce Alliance

East Valley Institute of Technology District #401

East Valley Partnership

Gilbert Chamber of Commerce

I.B.E.W. Local Union 266

Roosevelt Water Conservation District

Williams Gateway Airport

from SRP website

The need for additional power generation is not only a local issue - various parts of the nation have experienced power grid overload. Most notably is California, which has suffered with a power crisis since summer 2000. Short supply and skyrocketing prices there have had effects on businesses and consumers alike.

The following articles will help keep you informed about the situation in California and in our own community.

"Environment, energy needs weighed: Commissioners found Santan balance," © The Arizona Republic, May 2, 2001. http://www.santanfacts.org/news/republic_010502.asp

"ACC approves Santan Expansion Project," SRP news release, April 27, 2001. http://www.santanfacts.org/cecapproval.asp

"New poll shows Valley residents support increasing generation capacity," ASU,April 23, 2001. http://www.santanfacts.org/news/merrillpoll.asp

"Gilbert created Santan plant debacle, now, it's making it worse," © The Arizona Republic, April 6, 2001. http://www.santanfacts.org/news/republic_010406.asp

"Some question motives in Gilbert SRP vote," by Edythe Jensen, © The Arizona Republic, April 5, 2001. http://www.santanfacts.org/news/republic_010405.asp

"Assessor proves prophet of doom," © The Arizona Republic, March 10, 2001. http://www.santanfacts.org/news/republic_010310.asp

"Assessor Office off base predicting home values," © The Arizona Republic, March9, 2001. http://www.santanfacts.org/news/republic_010309.asp

"Expansion project clears major hurdle," SRP news release, Feb. 13, 2001. http://www.santanfacts.org/approval.asp

"SRP's Santan add-on needed: Our chance to avoid a California-style crisis," © The Arizona Republic, Jan. 25, 2001 http://www.santanfacts.org/news/republic_010202.asp

"California electric crisis is warning: Keep our lights on!" © The Arizona Republic, Dec. 23, 2000. http://www.santanfacts.org/news/republic_001223.asp

Southern California power crisis news summary. http://www.santanfacts.org/news/arizona_000906.asp

"Get the Facts on Santan Expansion," by Mark Schnepf, July 22, 2000 http://www.santanfacts.org/news/schnepf_000722.asp

"Santan Expansion Will Benefit East Valley Residents," by Richard M. Hayslip, letter to the editor in the Gilbert Independent, June 7-13, 2000 http://www.santanfacts.org/news/hayslip_000623.asp

"Deregulation weighs on overloaded U.S. power grid" , by Vibeke Laroi, March 13, 2000, ©Reuters. http://www.santanfacts.org/news/laroi_000313.asp

New on this site http://www.santanfacts.org/new.asp

Community Working Group information http://www.santanfacts.org/cwg.asp

Minutes from the latest public meetings http://www.santanfacts.org/involved.asp#meetings

Community Working Group public meeting scheduled http://www.santanfacts.org/involved.asp#meetings

SRP operates several dams along the Salt River and the canal system, and operates two hydroelectric plants.

Crosscut Hydroelectric Plant. This facility is one mile north of downtown Tempe, where the Crosscut Canal drops 116 feet in Papago Park. The water is tunneled under Washington Street and then flows into the Grand Canal. This hydroelectric unit, which began commercial operation in late 1915, has a generating capability of three megawatts (MW).

South Consolidated Hydroelectric Unit. Constructed in 1981, this plant is located on a 35-foot drop in the SouthCanal in Northeast Mesa, just below the head of the Eastern Canal. Its generating capacity is 1.4 MW.

In addition, SRP has several hydroelectric power purchase contracts. See Sources of Energy for SRP Facilities below.

SRP operates a system of six dams and 1,300 miles (2,092 kilometers) of canals and laterals, delivering nearly 1 million acre feet (1.2 billion cu. ft.) of water to eight cities as well as agricultural and urban irrigators.

Arizona Lakes & Dams http://www.srpnet.com/water/lakes/

Apache http://www.srpnet.com/water/lakes/default.asp

Bartlett http://www.srpnet.com/water/lakes/bartlettlake.asp

Canyon http://www.srpnet.com/water/lakes/canyonlake.asp

Horseshoe http://www.srpnet.com/water/lakes/horseshoelake.asp

Saguaro http://www.srpnet.com/water/lakes/saguarolake.asp

Roosevelt http://www.srpnet.com/water/lakes/rooseveltlake.asp

Tempe Town Lake http://www.srpnet.com/water/tempelake.asp

Canal System http://www.srpnet.com/water/canals/map.asp

Canal characteristics http://www.srpnet.com/water/canals/descriptions.asp

Canal map & distances http://www.srpnet.com/water/canals/canalmapdistances.asp

Canal history http://www.srpnet.com/water/canals/history.asp

Canal safety http://www.srpnet.com/water/canals/canalsafety.asp

Canal dumping http://www.srpnet.com/water/canals/canaldumping.asp

Canal dry-ups http://www.srpnet.com/water/canals/canaldry.asp

Water banking http://www.srpnet.com/water/grusp.asp

Water services http://www.srpnet.com/water/services/

New West Energy Corporation is a SRP unit set up in 1997 to market electricity outside its traditional service territory.

Gena Trimble, Manager

Jane Lewis, Assistant Development Manager

Papago Park Center, Inc. is SRP's real estate management company, and a 350-acre wholly-owned business park in Tempe. Papago Park Center continues SRP's tradition of mixing public and private monies and structures.

SRP, which owns the land, is not subject to Tempe's zoning and planning regulations. The utility provider operates as a separate government entity under state law.

Supposedly Papago Park Center is wholly-owned by SRP, but Pulice Construction listed a $13 million contract with the City of Tempe for Papago Park Center, Phase II.

The City of Tempe's agreement to lease land from Papago Park Center for a new stadium for the Arizona Cardinals has been questioned. SRP and Papago Park Center cintrobuted money to the ballot measure. City officials say "enough issues have arisen that they may seek help again" from former Arizona attorney general Grant Woods, who helped them negotiate their deal with the sports authority. US Senator John McCain has joined the negotiations to deal with height issues raised by the FAA. And Citizens have questioned the use of city monies. Tempe is apparently responsible for about $23 million in up-front costs, "most of which will be covered by issuing bonds." The $330 million stadium will be 70 percent publicly financed (half from county taxes), with the team contributing $85 million but retaining all ticket, concession, and other NFL revenues. Newspaper columnists have encouraged the project to fulfill "promises" to the community.

For an article which includes Phoenix developer John F. Long's threat to sue to block public money being spent on stadium, the August 18, 2001 Arizona Republic.

Gena Trimble, manager of Papago Park Center, Inc is chair of Urban Land Institute's Public/Private Partnership-Gold (PPPC-G) as well as vice chair of the ULI's Arizona District Council. Other ULI executive committee members are employed by Grossman Company Properties, Pivotal Group, CB Richard Ellis, DMB Associates, SunCor Development, Vestar Development, Grubb & Ellis, City of Scottsdale, Westcor Partners, Arizona Land Advisors, Alliance Residential Co., and Opus West.

According to the Tempe Chamber of Commerce, "Papago Park Center is booming on the north side of the Salt River. It is a 522-acre, $2 billion mixed-use development. The headquarters of Salt River Project is located in the Center, along with other highly visible companies such as Tosco/Circle K, J.B. Rodgers Mechanical Contractors, OrthoLogic, Express Scripts and Three-Five Systems. DHL Worldwide Express is currently expanding its operations into the Park. Papago Park Center looks forward to future industrial, research and development, and office space expansion along with new retail and hospitality space."

Real estate and economic development consulting firm ESI conducted a "market research and analysis" for SRP on "ten select business locations within the Metropolitan Phoenix area. This work entailed conducting visual site inspections, utilizing GIS technology to create detailed maps of each area boundary incorporating parcel boundaries based on APN, land ownership, existing buildings and utility lines, creating an excel spreadsheet for each site on a variety of key factors, and recommending the appropriate mix of business and industry for target marketing purposes."

Downtown Tempe Community, Inc. describes "a number of park improvements and economic development projects including hotels, restaurants, mixed commercial developments and entertainment districts are currently in the planning or construction phases" in downtown Tempe.

"The four main developers include Ciudad del Lago, Hayden Ferry/Rio Salado Landing, Papago Park Center and Arizona State University. Ciudad del Lago is a 100-acre planned development project which includes the 1,000 room, five-star Peabody Resort Hotel and Conference Center. Development plans also include 300,000-plus square feet of retail, restaurant and entertainment venues near the Town Lake's southeast perimeter.

"The Hayden Ferry development is a 30-acre site which will be located on the southside of the lake between Mill Avenue and Rural Road. Development plans include a full-service hotel, extensive office, retail and restaurant space, as well as a movie complex and lake-view condominiums. Other plans include pedestrian connections to Mill Avenue as well as the Town Lake.

"Papago Park Center, a 500-acre corporate office site, is located in the northwest end of Tempe's Rio Salado Project. The center currently is home to such national and internationally acclaimed companies as: Tosco Corp., OrthoLogic, Three-Five Systems and the Salt River Project.

"Future recreational activities include fishing and swimming. These activities will be allowed once the City of Tempe's water quality program has been completed."

(see also Kayenta Mine)

Peabody Western Coal Company (PWCC)'s Black Mesa Mine near Kayenta supplies SRP's Mohave station.

EPA Superfund status: PEABODY COAL CO BLACK MESA MINE SITE http://www.epa.gov/superfund/sites/arcsites/reg09/a0900674.htm

Peabody Coal Company was founded in Chicago in 1883, and has snce been owned by a string of interests and consortiums which included Kennecott Copper, Boeing, Bechtel, Eastern Enterprises, Newmont Mining, and Hanson PLC. In 2001, Peabody Energy completed an initial public offering of its own stock, thus becoming an independent, publicly held corporation again, but according to Hoover's Online in August 2001, Lehman Merchant Banking Partners owned nearly 60% of Peabody's stock.

Peabody Energy

701 Market St., St. Louis, MO 63101

Phone: 314-342-3400

Fax: 314-342-7799

http://www.peabodyenergy.com

claims to generate 9% of US and 2.5% of world electricity

controls 9.5 billion tons of coal

produces 180 million tons per year

operates 35 mines and processing facilities in 9 US states

sells coal to 280 power plants and industrial facilities in the US and to customers in 10 other countries

Peabody's predecessors in interest obtained coal leases from the Navajo and the Hopi tribe in 1964 and 1966. The leases cover a large coal deposit in the western part of the Navajo reservation known as Black Mesa. PWCC began surface coal mining operations on Black Mesa in 1972 in two separate coal mining operations known as the Black Mesa Mine and the Kayenta Mine.

There are an estimated twenty billion tons of high grade, low-sulfur coal underlying Black Mesa.

Peabody Coal Company began strip-mining operations in 1968.

In year 2000 Peabody shipped 13 million tons of coal to the Mojave and Navajo stations.

The Black Mesa and Kayenta mines provide 700 jobs; more than 90 percent of Peabody's work force is Native American.

Peabody's year 2000 $49 million in royalties repesent 40% of the Navajo Nation budget and 80% of the Hopi Tribe's budget.

Peabody discovered coal at Black Mesa in northeastern Arizona in 1950, and leases were signed by Navajo and Hopi Tribal Councils in the 1960s as a result of corporate interest in native lands containing oil, coal, uranium, and natural gas. Since then, coal contracts at Black Mesa, located on Hopi and Navajo land, have led to the U.S. government forcibly relocating indigenous people from Big Mountain. Begun in 1986, the relocation has been under the guise of a long-standing "land dispute" between Hopi and Navajo, and the 1974 Navajo-Hopi Land Settlement Act (revised in 1980, 1985, and 1988). Peabody's Black Mesa coal mine supplies fuel to the Mohave power plant, which is owned by Southern California Edison, the Los Angeles Dept. of Water & Power, and Nevada Power. Eighty percent of Hopi tribal revenue comes from the mine. The mine itself has operated under temporary permits since the Surface Mining Control and Reclamation Act of 1977. Peabody uses about a billion gallons of water per year to slurry the coal from Black Mesa to the Mohave Generating Station in Laughlin, Nevada. Peabody has proposed building a pipeline to ship water from Lake Powell to the Black Mesa Mine (High Country News, Apr. 18, 1994, p. 4).

For background on the Navajo-Hopi land dispute and how it ties to the Navajo v. Peabody lawsuit over royalties, see:

Conspiracy Theories Still Rage Over Land, by Jerry Kammer, Arizona Republic, Feb. 2, 2000 http://www.azcentral.com/news/navahopi/navahopi4.shtml

Navajo Lawsuits Contend U.S. Government Failed the Tribe in Mining Royalty Deals, by Barry Meier, New York Times, July 18, 1999, http://college1.nytimes.com/guests/articles/1999/07/18/479790.xml

GALLUP, NM (Associated Press, March 4, 2000) -- "The Hopi Tribe has joined the Navajo Nation in a lawsuit against Peabody Coal Co., Southern California Edison Co. and the Salt River Project, alleging that the coal and power companies defrauded them. In papers filed in U.S. District Court in Washington, D.C., the Hopi Tribe says it seeks "to vindicate its right to control and receive full and fair compensation for its coal resources." The Hopis allege that Peabody, Edison and the SRP engaged "in a scheme to defraud and convert the money and property of the tribe through interference with the relationship between the tribe and the United States government," the Gallup Independent reported Friday. They contend the defendants "acted in concert to deliberately lure the Hopi Tribe and the Navajo Nation into renegotiating the terms of various coal mining leases, and then failed to negotiate in good faith." The Hopis said they were not aware of the scheme until the Navajos filed suit last year. Navajo President Kelsey Begaye said he welcomed the Hopi participation. The two tribes have been tangled in a land dispute for more than a century, but their joint coal leases are a common interest, and the lawsuit could bring both tribes additional money. "The Navajo Nation looks forward to standing together with the Hopi Tribe to obtain compensation for those damages to both our peoples," Begaye said."(Associated Press, March 4, 2000).

Over 75% of SRP's Craig Station coal requirements are supplied by under two long-term agreements with Kennecott Energy's Colowyo Coal Company (79,429 tons of coal per year) and the nearby Trapper Mining, Inc. mine (189,108 tons of coal per year).

Colowyo Mine is at Meeker Colorado.

Owned by Kennecott Energy.

Salt River Project Agricultural Improvement and Power District, an extensive utility in Arizona, plans to develop the 7,885-acre coal mine near Quemado in remote Catron and Cibola counties.

The Fence Lake Coal Mine would include a new 44-mile railroad corridor to haul coal across the state border into Arizona and fuel SRP's Coronado Generating Station in St. Johns, Ariz.

The strip coal mine would operate for the next 38 years, extracting about 81 million tons of coal. It would be owned by the Salt River Project which contracted with the North American Coal Corp. to operate the facility to provide electricity to southern Arizona.

...

The Salt River Project declared water rights to several aquifers near the mine site in 1991. The New Mexico Mining and Minerals Division approved a mining permit which would allow SRP to pump an average of 85 gallons of water per minute for 40 years from any of those aquifers."

(see also Black Mesa Mine)

Peabody Western Coal Company's Kayenta Mine near Kayenta, Arizona supplies SRP's Navajo station.

The Kayenta Mine produces approximately 7.5 million tons of coal each year, resulting in approx. $45 million in royalties paid by PWCC to the Navajo Nation annually.

The mine covers over 10 miles on the Navajo Indian reservation.

EPA Superfund status: PEABODY COAL CO KAYENTA MINE SITE http://www.epa.gov/superfund/sites/arcsites/reg09/a0900156.htm

Peabody's Kayenta mine permit was renewed by the U.S. Office of Surface Mining in July 1995; the Navajo's Dine Alliance, and Don't Waste Arizona filed an appeal of the renewal; a U.S. Dept. of Interior judge reversed the permit renewal, citing desecration of burial sites, poisoned livestock, and air and water pollution; Peabody is being allowed to operate temporarily, but was ordered to meet permit requirements (High Country News, Apr. 29, 1996, p. 3).

According to the Dine Alliance,

"Twelve (12) outstanding violations are still unresolved. A new, highly controversial coal mining method (Highwall Side Overburden Mining) is being considered without the required Environmental Impact Statement (EIS). The unpermitted railroad continues to operate in violation of applicable federal regulations, with no reclamation bond money posted for it or the Kayenta mine site. The unpermitted and illegal slurry pipeline continues to pump over 1.3 billion gallons of pristine water annually. The unpermitted and illegal slurry pipeline continues to operate under Administrative Block, pending no continued use of the Navajo aquifer by the Hopi Tribal Council, past their permit expiration. Hopi Tribal Council Studies documents have determined that at the present rate of usage, water sources in Tuba City and surrounding communities will run dry in fifteen years. The Navajo aquifer is a sole source aquifer for the Hopi and Navajo. Burial sites of the Dineh people continue to be desecrated and human remains bulldozed by Peabody."

Dineh Alliance

c/o Louise Benally, President

Box 810, Pinon, AZ 86510

E-mail: dineh@primenet.com

Dineh Alliance (dineh@primenet.com) analysis, March 21, 1996, http://nativenet.uthscsa.edu/archive/nl/9603/0199.html

Julian W. James analysis against OSM permit renewal http://nativenet.uthscsa.edu/archive/nl/9507/0110.html

A slurry pipeline that runs from Peabody's Kayenta mine to Bull Head City, Nevada, uses two-to-three million gallons of Navajo Aquifer water daily. As a result, the whole Dinnebito Watershed ecosystem is drying up, causing a loss of vegetation and increasing erosion. At present rates of usage, water resources are expected to run dry in 15 years.

Water issues resources http://jeff.scott.tripod.com/water.html

The McKinley Mine supplies coal to SRP's Coronado facility.

McKinley Mine is located east of Window Rock near the New Mexico-Arizona border.

Company office

P.O. Box 4590, Gallup, New Mexico 87305-0338

Phone: (505)371-6220

Fax: (505)371-6289

McKinley Mine has been active since 1962.

Ownership of Surface: Federal, Indian Allotment, State Trust, Private Fee.

Ownership of Minerals: Federal, State Trust.

Production:

1997 - 6,606,700

1998 - 6,923,700

1999 - 7,184,365

Customers:

Arizona Public Service's Cholla plant at St. Joseph, Arizona.

Salt River Project Coronado Station, St. John's Arizona.

Tuscon Electric, Irvington Station, Tuscon, Arizona.

Stone Container, Snowflake Arizona.

Arizona Electric Power Coop, Apache Generating Station Benson, Arizona.

McKinley mine is on the Navajo reservation, and more than 90 percent of the mine workers are Navajo. Labor strike from May to August 2000.

McKinley Mine is expected to close in 2006.

McKinley Mine is operated by Chevron subsidiary Pittsburg and Midway Coal Co.

Pittsburg & Midway Coal Mining Co

6400 S Fiddler's Green Circle, Englewood, CO 80111

Tel.:303-930-3600

P&M owns and operates five coal mines in four states - the York Canyon Mine near Raton and the McKinley Mine by Gallup in New Mexico, the open-pit Kemmerer Mine in Wyoming, and the underground North River Mine in Alabama and Sebree Mine in Kentucky. The mines' principal customers are electric utilities and industrial concerns in Alabama, Arizona, Idaho, Kentucky, Texas, and Wyoming. P&M has a one-third partnership interest in the Black Beauty Coal Co. in Indiana, a joint ownership with Wesco Resources, Inc. of extensive low-sulfur coal reserves in Montana, and a 30-percent ownership of Inter-American Coal Holding N.V. of Aruba, which has its principal interests in an active coal mine and other assets in Venezuela.

In August 1998 Chevron announced its intent to sell P&M but as of August 2001, had not.

Meurer said Chevron will sell P&M's holdings as a total package and will not separately sell assets. P&M produced 19.6 million tons of coal in 1997. Chevron's coal and other minerals business segment, which primarily comprises P&M coal operations, earned $48 million in 1997. P&M was founded in Pittsburg, Kan., in 1885. Chevron acquired P&M in 1984 as part of its acquisition of the company's previous owner, Gulf Oil Corp.

The Navajo Mine supplies SRP's Four Corners station, which consumes a maximum of 28,000 tons of coal per day if all units are running at full load.

Navajo Mine is operated by BHP.

BHP (formerly Broken Hill Proprietary, now BHP Billiton) is Australia's largest public company, with $14 billion in revenues from steel, petroleum and mining. Began in the 1880s; Australian steel monopoly by the 1930s; World War II munitions; offshore oil drilling in the 1960s; major operations include Australia (iron ore in Western Australia; silver, lead, zinc and coal in Queensland; coal in New South Wales), Brazil (iron ore), the United States (coal and copper), Indonesia (coal), Chile (copper), Papua New Guinea (copper), Peru (copper) and Canada (diamonds), as well as operations in South Africa, Malaysia, Indonesia, Mozambique, Argentina, Brazil, Colombia, Suriname, Venezuela, etc. Subsidiaries and operations are listed at the BHP and Mbendi websites.

BHP's operational control over the infamous OK Tedi mine in Papua New Guinea has earned it a place on lists of the worst corporations.

Navajo mine has been listed by the EPA as a Superfund site.

BHP Minerals

300 W Arrington, Suite 200

Farmington, NM 87401

Telephone: 505-598-4350

Facsimile: 505-325-3574

From the BHP website for New Mexico operations:

"BHP owns and operates three large surface coal mines in the northwestern area of the State of NewMexico collectively managed under the name of New Mexico Coal Operations. Together, the Navajo, SanJuan and La Plata mines produce approximately 14 million tons of coal annually and employ about 900people with an annual payroll of $55 million. Seventy-five percent of BHP's employees are members ofthe Navajo Tribe of Indians. Navajo Mine, which provides coal to the Four Corners Power Plant operated by the Arizona Public Service Company, is located on the Navajo Indian Reservation (Navajo Nation). The San Juan and La Plata mines supply fuel to the Public Service Company of New Mexico's San Juan Generating Station which is located adjacent to the Navajo Nation. Together, these facilities produce about 4 000 MW of electricity for distribution throughout the southwestern United States. The Navajo Mine, which is the largest of BHP's three New Mexico mines, employs 428 people, producesapproximately 8 million tons of coal per year and has operated continuously since 1963 without any workstoppages. The hourly workforce is represented by the International Union of Operating Engineerspursuant to a collective bargaining agreement with BHP. The lease agreement between the Navajo Nation and BHP, entered into in 1957, requires Navajo Mine to provide preferential employment, training, career development, and business opportunities for members of the Navajo Nation. In addition, current Tribal employment and business statutes require similar preferential treatment for Tribal members. The historical performance and success of BHP's Navajo workforce encourages our New Mexico Coal Operations to practice employment preference at the San Juan and La Plata mines even though they are not located on the Navajo Nation and are not contractually bound to implement the preference... BHP has successfully conducted coal mining operations on and near the Navajo Indian Reservation for the past thirty-five years. The Navajo Mine, which is located exclusively on Navajo lands, enjoyed record sales of 8.7 million tons of coal in FY '95. BHP's success demonstrates that Navajo resources can be productively and profitably developed under a lease arrangement that pays royalties and taxes and provides meaningful employment for Tribal members (Navajo Nation royalties approximated $20 million in calendar year 1997.) BHP's long term business relationship with the Navajo nation is founded upon BHP's recognition and understanding of the special circumstances that accompany business activity on the Reservation. Specifically, BHP has fulfilled its commitment to provide revenues and jobs to the Navajo people by enthusiastically honoring all contractual and statutory obligations regarding preferential employment and applicable Tribal and Federal rules that govern coal development on Navajo land."

BHP also runs the Peaches uranium and vanadium mines.

EPA Toxic Release Inventory data for the Navajo mine is available.

The Seneca Mine supplies SRP's Hayden station, , which consumes a maximum of 5,100 tons per day if both units are running at full load.

Seneca Coal Company is owned by Peabody.

"Seneca Mine has been in operation 35 years... In fiscal 2000, Seneca's 100 employees produced 1.4 million tons of compliance coal for the nearby Hayden Station, [and] has delivered more than 42 million tons since the [Hayden] plant began producing electricity. {The mine has an] annual payroll and fringe benefits of more than $6.3 million."

PSC turns up heat on big coal suit, by Paula Aven, Denver Business Journal, Nov 15, 1996

"Natural gas producers are furious about Public Service Company of Colorado's decision to continue burning coal at its Hayden Generating Station, but some coal companies are fuming about the way the state's biggest utility is trying to slash its fuel costs by $144 million.

"Seneca Coal Co., primary supplier for the Hayden plant near Steamboat Springs, and Public Service are trading claims and counterclaims in Denver District Court over the actual amount of coal Public Service is required to buy from the company during the next 15 years.

"Public Service believes it is only obligated to purchase the bare minimum of coal from Seneca each month as outlined in the contract. The utility also argues that it should be allowed to buy the rest of its fuel for Hayden from other sources.

"Seneca insists that the contract, which doesn't expire until 2011, legally binds the utility into purchasing all of its fuel for the plant from the company's Seneca Mine.

"The contract locks in coal prices at about $6 higher per ton of coal than the current spot-market price of $15. Public Service believes that "any successful effort on our part to reduce the cost of coal will make it a better primary fuel for the plant," said Ralph Sargent, vice president of production and system operations at Public Service.

"Public Service currently buys about 1.6 million tons of coal a year from the Seneca Mine at a cost of $21 per ton for a total of $33.6 million annually. The company calculates that it could save about $9.6 million a year or $144 million over the remainder of the contract if it were allowed to pay market price for its coal.

"The utility is in the process of "looking at other coal supply alternatives" including coal from Cyprus Amax Coal Co.'s Twenty-Mile Mine about eight miles from the Hayden plant, he said.

"Richard Fanyo, an attorney for Dufford & Brown P.C. representing Seneca and its parent company Peabody Coal Co. in the suit, refused comment on the case.

"Public Service chose to continue burning coal at Hayden for a number of reasons, including the fact that the commodity price for natural gas is much higher than coal and that, to burn natural gas at Hayden, the utility would have to buy out its long-term contract with Seneca Coal Co.

"In the long run, it was cheaper to simply pay the $130 million for pollution controls at the plant to meet environmental regulations, Sargent said.

"But the fact that the company is trying to find cheaper coal alternatives has the natural gas industry worried that the company will go outside Colorado for its coal supply, taking with it Colorado jobs and sever