By Phoenix Business Journal

Salt River Project reported a 2 percent increase in revenue but lower income for its 2011 fiscal year as the economy continues to stall electric sales for the utility.

SRP reported income of $304.6 million for its 2011 fiscal year that ended April 30 on revenue of $2.76 billion. That compares to income of $371 million on revenue of $2.7 billion the utility had in 2010.

The income, however, has several fair value adjustments relating to fuel contracts, power purchase expenses and investments that resulted in the drop. Without the adjustments, SRP would have had income of $203 million compared with $162 million in 2010.

While its revenues were up, it was largely because of a 5 percent rate hike SRP instituted in 2010. Customer electricity use was down 0.1 percent compared with last year, and wholesale electricity â¿¿ that sold to neighboring states and other utilities â¿¿ was down 17.3 percent over last year.

Part of the problem for SRP and other utilities is low growth. SRP reported its customer base grew less than 1 percent in the year. Prior to the Great Recession, the utility had seen 5 percent growth rates.

Lower fuel prices aided in SRPâ¿¿s bottom line as fuel and power purchase expenses dropped 2.3 percent on a adjusted basis from 2010. Maintenance expenses also were lower.

SRPâ¿¿s capital expenses continued their downward trajectory as it has pulled back from several large-scale power system upgrades in the wake of lower growth. In 2011, SRP spent $583 million on capital projects, down 25 percent from its capital expenses of 2010 and close to half of what it spent in 2008.

For info on SRPâ¿¿s annual report, click here.

Copyright 2011 American City Business Journals

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