Kathleen Davis, associate editor
Each year, the EL&P staff chooses one utility that we feel stands out as exemplary in our industry; to this victor goes our “Utility of the Year” honor. In the past decade, we have chosen utilities that have weathered hard times well and utilities which have seemed completely untouched by industry tsunamis. Southern Company, Con Edison, Puget Sound Energy and Xcel Energy are all past winners of this coveted title.
This year, we were struck by more than financial numbers and MWh. We were struck by one utility’s ability to remain on top with the customer-something that is often difficult in this industry, as the customer is unaware of the complications and layers involved in the “ease” of a flipped light switch quickly illuminating a room.
Salt River Project’s consistent and often cutting-edge use of new technologies, generous donation program and incredible community relations work all factored into their selection as 2004’s Utility of the Year, but it was that overwhelming attention to customer service that cinched the deal. (See Steve’s commentary on page 10 for more detailed reasons for SRP’s selection.)
This issue, we speak with William Schrader, president of Salt River Project (SRP) about the culture, community, technology and energy involved in keeping SRP on top of its game.
KD: Of all the awards, accolades and accomplishments that SRP has garnered over the years (on the power side), what are you, individually, the most proud of, Mr. Schrader?
WS: I’ve been around “the SRP family” for a lot longer than most folks here. Well before I was elected to SRP’s boards in 1964 and then president in 1994, my father served on SRP’s boards and councils for 16 years. So, you can say I’ve seen just about everything. When I was mayor of Scottsdale in the early 1960’s, SRP and the Phoenix area were just starting to take off. (Phoenix is now the fifth-largest city in the nation, shooting right by Detroit, Dallas and Philadelphia.) And, while our electric service territory is stable and bound by territorial agreement, SRP has grown to serve more than 825,000 customers and is now the third-largest public power utility in the nation.
What I’m most proud about is the way the people at SRP have been able to make the changes needed to grow and adapt with a booming area that has now made the nearly complete transformation from agriculture to urban. After celebrating our centennial last year, SRP is poised for bigger and better things in the future.
KD: SRP is always experimenting with new technologies, always leading the pack in incorporating them as well. To what do you attribute that technological leadership?
WS: I think that one big reason that we have been at the forefront of technology gains among electric utilities is that we have a very progressive leadership team at SRP. When it comes to new ways of doing things, our team has an ability to ask “why not” rather than “why.” We are fortunate to have a team that is eager to try new approaches to business, to experiment with new technologies. One example is our M-Power prepaid metering program, which is now the largest of its kind in North America.
I also think you could say that SRP has always had a certain optimism about technology, and today that is reflected in our efforts to integrate renewable-energy technologies into our resource mix. This is reflected not only in our willingness to do R&D and to experiment, but also in our willingness to effectively deploy new technologies as a part of our operating system. For example, in the early 1970s, we committed to a combined-cycle generating station at our Santan site in Gilbert, and that was a significant step forward in the efficiency of gas- and oil-fired generation. It was the first, and for several years the only, combined-cycle plant in the western U.S.
KD: In your opinion, how important is technological innovation and incorporation to the health and well being of a power utility?
WS: We think innovation is critically important at SRP. We are, after all, a capital-intensive, technology-driven industry. While our technology may not be changing as rapidly as “high-tech” industries, the challenges of continuing the electrification of our economy along with protecting our environment require significant creativity and innovation.
We are strong believers in the Electric Power Research Institute and what it means to our industry. One of our former SRP general managers served on the founding EPRI board of directors, and two others also served on the board-one of whom who was an EPRI chairman. Maintaining a focus on technology and innovation enhances the “intellectual content” of our work and allows us to attract and retain the best talent available to SRP.
KD: SRP has thermal, nuclear, and hydro stations on top of the more typical gas/coal mix for our industry. What does such unique fuel diversification bring to the table for SRP?
WS: We got into the power business nearly 100 years ago because we needed to get a reliable power source to construct the first dam on the Salt River that provides a majority of the water for the Salt River Valley. How times have changed. As the largest provider of power to the metropolitan Phoenix area, we have to continue staying ahead of the curve today and in the future. In just the last 13 or 14 years, our generating output has jumped from 15 million MWh in 1991 to 23 million in 2001; by 2021, we estimate energy sales of 37 million MWh.
Hydroelectric power used to be our staple, but now it accounts for less than 5 percent of our generating resources. With the extreme summers we have here in Phoenix as well as the volatility of today’s energy markets, a diverse fuel mix is almost as important to us as the ability to import power into the booming Phoenix area during our hot months. It is critical that our planners have essentially all of our resources purchased, planned or committed for the next 10 years. To keep pace with our growth, we have invested millions of dollars in expanding urban residential power facilities, and we are currently at the front end of a major transmission expansion that will be finished around the year 2011.
The future also holds great promise in the field of renewable-energy technologies, and while solar, wind and biomass all present great challenges, they also present great promise for SRP and our customers.
KD: SRP has an extremely generous donation program. Please tell our readers a little more about that.
WS: SRP’s corporate philanthropy is driven by our customers’ expectations of us. We know from the variety of ways SRP customers measure our performance, that they expect us to contribute to the community. We also know they place a priority on education and family-support services. In particular, they believe that financial support be given as well as employee volunteers. And they want to know that we impact a large number of students. In fact, more than 200,000 Arizona students benefited from SRP education programs last year. And, that involves curriculum support, teacher training and scholarships. Of course, SRP also provides significant support to heath and human service organizations and arts and culture, especially those for which SRP employees serve as volunteers or board members.
Overall, SRP’s corporate philanthropy budget is about $2.2 million a year, which places us among the major corporate contributors in central Arizona. In addition-and we’re particularly proud of this-this past year, our employees contributed another $1.5 million to health and human service organizations in Arizona. And finally, the commitment of our employee volunteers is well known. Each year, they and their families and friends put in more than 700,000 hours of volunteer time representing SRP in the community. We estimate that about 85 percent of our employees volunteer in some way or another.
KD: Why is giving back to the community so integral to SRP?
WS: As you may know, “community” is a part of SRP’s mission statement. That’s because SRP was formed more than 100 years ago as a community partnership to ensure the vitality of this area when it was a small farming community. We did that first by building the water system, and later we added the power side of our business. Securing the future of the community and helping it to grow and thrive was always the central reason for how SRP grew and evolved. Today, we consider our businesses to be water, power and community. And, we consider our role to be particularly important because of our history of involvement and commitment. Of course, Arizona is also our home. And, community means not only our customers, but also the places our employees live and businesses and organizations we continue to work with for the benefit of the quality of life here.
KD: You’ve been at the top of J.D. Power’s customer satisfaction list-for your region and for the entire country as well-for years. What are you doing that’s eliciting such kudos from customers?
WS: We try our best to focus on the customer and to develop and promote programs and services that are responsive to the needs they have expressed to our employees and through customer surveys. As a result, we have very high participation levels in budget billing, direct debit and web bill-pay programs. We’re very proud to offer our customers the SRP M-Power program, now the largest prepaid electric program in the nation and North America, and we are also among the few electric utilities that offer bills in Spanish and bills in large print for the vision-impaired. And, we are fanatical about billing accuracy and service levels in our phone center to minimize the number of customers we inconvenience by holding them in a queue. Last but not least, we continually communicate with our customers to ensure they understand our pricing and to help them manage their energy usage and electric bill.
KD: What advice would you give other U.S. power utilities to improve their customer satisfaction numbers?
WS: There’s nothing quite like hearing from your customers that they appreciate what we’re doing. In surveying our customers, J.D. Power & Associates has twice cited SRP not only the top electric utility in the West but also in the nation for customer satisfaction. A lot of that, I believe, has to do with our belief that SRP is about enhancing customer satisfaction, not just about issuing bills and answering phones. We like to think that at SRP, we take a much broader view of opportunities than others might.
We believe that the most important thing is to listen to your customers. Evaluate all of your business practices that touch the customer. Are they in place for administrative convenience? Are they in place to guard against abuse by a small minority of your customers? If they are, re-engineer your practices until they will appear friendly to your customers.
KD: Summarize SRP’s “culture” for me. How would you describe working at SRP to an “outsider” like myself?
WS: The tradition and legacy that SRP has created in the community for more than a century has long been a source of pride for those of us associated with SRP. Our employees are members of the community and are proud of the role SRP has played in the continuing development and well being of the Salt River Valley. In fact, our employees’ attitudes are reflected in the appreciation our customers have for the company’s performance as evidenced by our recognition from J.D. Power for customer satisfaction.
While we’ve certainly garnered our share of customer accolades, SRP has also been noted as a wonderful place to work. We have been praised for our work environment by Working Women magazine and recognized by several publications for our excellent safety record.
KD: What’s in the immediate future for SRP-the five-year plan to stay on this successful track, let’s say?
WS: We have seen multiple restructuring efforts in our industry in recent years that have not realized their anticipated results. At SRP, we chose not to divert from our core mission of providing reliable, affordable power and water services. Combined with extensive community involvement, these define the foundation of SRP’s legacy and success. As we look to the future, we will continue to manage our own destiny in an uncertain world. We will continue to conduct market research, which together with technology will provide new levels of service to ensure that our customers’ interests come first. We will grow our diversified asset base and manage volatile fuel prices to preserve a stable, low-cost pricing structure for our customers. We will build new infrastructure and improve our delivery systems in preparation for continued growth as our service territory prospers. We will expand our transmission system to ensure reliability and access. And, we will continue to deliver a reliable water supply to the areas we serve.