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Water and Power: Inextricably tied to Arizona’s Growth

Richard Rushforth

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Abstract

The nexus between power and water is undeniable. In semi-arid and arid regions, the generation of power holds much controversy because of its dependence on water. In 2000, thermoelectric generators in Arizona consumed 113,000 acre-feet per year of fresh water and this number will surely rise as Arizona’s population increases. With such large volumes of water, the trade off between water for consumption and water for power becomes a contentious issue. In Arizona, scarce water resources, an increased demand for power due to rapid population growth, and the politics behind Central Arizona Project (CAP) allocations compound this trade off. Simply put, CAP water allocated to an electricity generator cannot be used for human consumption and as the population rapidly increases this trade-off—water for power or water for human consumption—becomes more stressed.

Since 1996, twenty-one proposed electrical power plants have been reviewed by the Arizona Corporation Commission (ACC), the government entity that approves the construction of power plants in Arizona. Of these proposed generators, the Big Sandy power plant was the first power plant application denial in ACC history. Three other power plants—the Toltec, Montezuma and Signal Peak power plants—either followed suit or had its application withdrawn. Many of the approved generators, however, were ‘merchant generators’ or privately owned and operated power plants. The majority of the electricity generated by these merchant generators is intended for sale on the wholesale electricity market, not solely for the electricity needs of Arizonans. Meaning, by proxy, these power plants will transmit the water so precious to Arizona’s economic growth and survival out of state for the growth and development of other Western states. Given the history of water rivalry between Arizona and California, this is a very contentious policy issue.

For this paper, I would to explore the ACC’s power plant approval process. In particular, the reasons for the application denial of the Big Sandy power plant. If I can find information on the other denied or withdrawn power plants, I will include that information in my paper. Furthermore, I want to look at the Arizona Power Plant and Transmission Line Siting Committee’s process of granting a Certificate of Environmental Compatibility (CEC) for proposed power plants larger than 100 MW. The approved power plants are water-cooled (‘wet’ power plants), rather than air-cooled (‘dry’ power plants) that use much less water. Therefore, I want to explore why ‘dry’ power plants are not the norm in Arizona and explore the future of ‘wet’ power plants in Arizona. In general, I would like to find out how much of the electricity generated in Arizona is transmitted to other states and correlate this wattage to water use

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Introduction

A popular image of the American Southwest is the tumbleweed slowly tumbling over the

dry, uninhabited desert terrain pushed along by a lazy afternoon breeze. However, within this

pacific image lies a subtle undertone that often goes unnoticed: the tumbleweed is not a native

species. The tumbleweed, like many of the millions of people that now call Arizona home, came

from far away to establish residence in Arizona’s warm, arid climate. Unlike the tumbleweed,

the nearly 6 million people that now call Arizona home require houses to live in and electricity to

power the conveniences of modern lives (“Population of Arizona”). Where the tumbleweed once

gently rambled over open desert, it now crisscrosses through the advance of suburban

neighborhoods and across sprawling metropolitan areas such as Phoenix and Tucson.

Arizona, while rich in beauty and open land, is generally characterized by a scarcity of

water resources. The majority of Arizona’s population resides in areas that receive a foot or less

of rainfall each year. The Phoenix metropolitan area, now home to more than 3.5 million people,

on average receives only 6 to 8 inches of rain annually (“Population of Arizona”). As a result,

the need for water in a rapidly growing water scarce region has historically had profound effects

on the desert landscape. Most notably, the rivers that once ran through Arizona’s metropolitan

areas are now dry largely due to damming rivers upstream of cities or unsustainable groundwater

pumping. Furthermore, land subsidence and cracking has also resulted from the unsustainable

over-reliance on groundwater—and all this was before 1980 (“Water Conservation”). Without

another large, reliable source of water for the Arizona’s metropolitan areas, the population

growth seen today in Arizona would have never been possible.

The completion of the Central Arizona Project (CAP) transformed the water resources

paradigm in Arizona. The 336 mile long CAP snakes its way 2,400 feet uphill through the desert

to deliver 1.5 million acre-feet per year of water to thirsty spigots in Central Arizona, including

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the Phoenix and Tucson metropolitan areas (Central Arizona Project). The CAP, which was

initially built to assuage a 2.5 million acre-foot per year groundwater overdraft, now provides

water to numerous municipalities, agricultural lands, industrial facilities and Indian nations

(Central Arizona Project). The CAP has provided these water users with the ability to

supplement, or replace, their water supply with a renewable source and alleviate massive

groundwater overdraft. It is not surprising that much of Arizona’s rapid population growth has

taken place after the completion of the CAP—the threat of no water is enough to keep people,

businesses and an abundance of affordable housing at bay.

For Arizona’s residents the CAP has heretofore provided reliable water to supply

population growth as well as existing users. During the 1990’s, Arizona was the second fastest

growing state in the United States, only lagging behind Nevada (“CensusScope”). No change in

the 21st century has occurred; Arizona and Nevada annually vie for the title of fastest growing

state in the United States (“Top 10”). Between 2000 and 2006 Maricopa County, Arizona—

home of the Phoenix metropolitan area—numerically, has been the fastest growing county in the

United States, adding approximately 696,000 new residents in that time (“US Census Bureau).

To put that into a digestible metric, the Phoenix metropolitan area grows by a small city each

year. However, this unprecedented growth causes logistical problems. How does one provide

access to adequate public facilities such as water, electricity, sewerage, police and fire protection

to a region that annually grows by the city, not to mention the rest of the state? This paper will

explore electrical generation in Arizona and how it relates to population growth and Arizona

water policy.

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More People, More Water, More Power

The realization of an assured water supply for Arizona’s metropolitan areas has resulted

in a population boom; however, this boom is not without its costs. Foremost is that a growing

population demands more water. The water that is needed to support rapid population growth

must come from the water budgets of existing water users, namely agriculture, or from

groundwater wells. Agriculture currently is the largest consumptive water user in Arizona and is

feeling the pressures of urban and suburban development (Jacobs and Colby 4). August and

Gammage, point this out in Shaped by Water: An Arizona Historical Perspective: “[f]armers […]

have not been at odds with the conversion of their water to urban purposes because their land is

simultaneously being converted to the highest value crop: a housing subdivision” (August Jr.

and Gammage Jr. 14). Therefore, much of the rapid population growth has occurred in areas

where agricultural land is easily converted into residential properties. However, this does not

preclude the conversion of Greenfield desert lands to housing subdivisions, as seen by the rapid

development of the northeast and far northwest valleys of the Phoenix metropolitan area. While

overall, the conversion of agricultural land to residential housing results in a net reduction in

water demand and consumption, this situation may ultimately push a development past the

physical carrying capacity of the land, resulting in deleterious consequences for the environment,

economy and people of Arizona.

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It takes more than water to sustain and maintain population growth in Arizona: a reliable

and low-cost source of electric power is necessary to cool homes, pump water and power the

conveniences of modern life. Furthermore, water does not flow 2400 feet uphill for 336 miles on

its own. The CAP is one Arizona’s largest, and by far most important electricity customers in

Arizona: each year the CAP consumes 546.7 megawatts of power, equivalent to the annual

output of a medium sized power plant (“Colorado River Basin Project”). While assured, reliable

water supplies may allow Arizona’s population to grow, an assured, reliable and low-cost supply

of electricity powers much of Arizona’s water supply and in large part keeps residents in

Arizona.

However, the converse is true: large volumes of water are required to generate electricity.

This aspect of Arizona’s population growth, represented in Figure 1, creates an interconnected

relationship where reliable electricity is needed to supply water and water is needed to supply

electricity, and both are

required to maintain and

sustain population

growth. Unfortunately,

the unique uphill

topography of the CAP

inhibits the generation of

hydropower on the canal

to offset the electricity

demands to pump water

uphill and provide

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wholesale electricity therefore this power must come from a regional power plant. The Bureau

of Reclamation owns 24.3% of the Navajo Generating Station near Page, Arizona to provide this

power (“Colorado River Basin Project”).

As the population of Arizona has grown, so to has per capita electricity consumption

(Hojjati and Battles). As shown by a report published by the Energy Information Administration

entitled, “The Growth in Electricity Demand in U.S. Households, 1981-2001: Implications for

Carbon Emissions” the authors found that between 1981-2001 there was a 29% increase in the

number of houses in the United States and a 23% increase in electricity use per household (2).

The increased electricity use per household over time is in large part due to the increasing

popularity and reliance on electrical household appliances (3). In Arizona, much of this reliance

is on air conditioning and evaporative coolers, which many people consider necessary during

Arizona’s hot summers. Concomitant to the increased demand for cooling in Arizona is the

increased size of new homes. Not only are there more houses to cool, but due to larger floor

plans, houses with two air conditioners and the

popularity of vaulted ceilings, there is more square

footage per house to cool. This relationship is shown

in Figure 2.

With the increased demand for electrical power

needed to accommodate population growth, there is a

need for new sources of electricity in Arizona.

Utilities and merchant generators (non-utility electric

service providers) have proposed to build twenty

power plants in Arizona over the last decade (State of

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Arizona). Unlike the 34 existing power plants in Arizona prior to 1998, these proposed power

plants entered into an era of competitive electricity markets, not monopolized utility markets

(Walls 6). A competitive electricity market affords the consumer more choices “to spend their

energy dollars” thereby “shifting [the electricity] marketplace control from the government to

consumers” (1). A consumer controlled electricity marketplace, in theory, should result in

lowered electricity bills. The structure of Arizona’s deregulated electricity marketplace is

complex and diverges from the intended topic of this paper, so it will not be analyzed further.

However, the key points will be summarized in the following paragraph.

Deregulated electricity markets are currently limited to certain service areas that have

worked out agreements with the Arizona Corporation Commission (ACC), the regulatory body

that oversees privately owned electricity utilities. Many utility service areas have instituted

competitive marketplaces, these include:

Ajo Improvement Company, Arizona Electric Power Cooperative, Arizona Public

Service Company, Citizens Utilities Company, Duncan Valley Electric Cooperative,

Graham County Electric Cooperative, Mohave Electric Cooperative, Morenci Water and

Electric Company, Sulphur Springs Valley Electric Cooperative, Navopache Electric

Cooperative, Trico Electric Cooperative, and Tucson Electric Power Company (TEP) as

well as Salt River Project [This deregulation had to be through the legislature] (“A

Brief”).

Instead of a lump-sum electricity bill, after deregulation, consumer electricity bills are split into

four categories: generation, transmission, distribution and metering (Walls 1). Additionally, it is

important to note that not all aspects of the electricity market are deregulated. “The competitive

portion of consumers’ bills […] includes generation, metering and billing. Since companies to

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transmit and distribute electricity will share existing electricity lines, these two functions will

remain regulated” (1).

Customers within deregulated service areas can choose their electric service provider,

however as the ACC points out: “Although the Arizona Corporation Commission has granted

certificates to several providers, none of these providers are offering competitive residential or

small commercial service in Arizona yet. So for all practical purposes, consumers do not yet

have a choice of providers” (“Frequently Asked Questions”). Non-utility electricity service

providers, or merchant generators, are privately owned electrical service providers that do not

provide electrical services to an intended service area; rather they provide electricity to the

wholesale market and are not tied down to a specific service area or state (Mundell). Merchant

generators in Arizona can generate electricity intended for use by customers in other states.

Given Arizona’s water scarcity a dilemma arises: since merchant generators will, by proxy,

transmit thousands of acre-feet of Arizona’s water per year to other states, what benefit does this

provide Arizona?

Of the twenty proposed power plants since 1998, fourteen proposals were from merchant

generators (one of these twenty power plants was proposed for tribal lands and was not subject to

the ACC's jurisdiction) (State of Arizona). Currently, the operational merchant power plants

contribute 15% to 20% of Arizona’s annual electrical generation and the electricity generated at

these power plants, for the most part, stays in state due insufficient transmission capacity (EIA).

However due to uncertainty and a lack of data, it cannot be distinguished how much of this

electricity generated in Arizona is transmitted out of state. While it is important to know how

much of Arizona’s water is being used to generate electricity for out-of-state customers, it cannot

be overlooked that a percentage of Arizona’s power is generated in other states using their water,

labor and natural resources, shown by Table 1. With fourteen new merchant power plants

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coming online, this may change. Since merchant generators are required to offer Arizona a first

right of refusal (Mundell), the trend in the near future may be that Arizona electric utilities will

relinquish their ownership of out-of-state power plants opting to purchase the capacity of in-

state merchant power plants instead. This trend may already have started with APS’s purchase

of the Redhawk and Sundance power plants, which were initially proposed and built by merchant

generators (“APS :: Power Plants – Generation”).

Table 1. Sources of Electricity for Major Arizona Electric Utilities Utility Total Capacity (MW) Non AZ Capacity (MW) Percent

SRP 5793 528 9.11 APS 6575 782 11.89 TEP 2194 622 28.35

Arizona 14562 1932 13.27 *Data gathered from SRP, APS and TEP websites

The Power Plant Approval Process

For a power plant to be built, the application must pass through a two-step approval

process. The first step in this process is approval by the Arizona Power Plant and Line Stitng

Committee (LSC), which grants a Certificate of Environmental Compatibility (CEC) (Mundell).

After this step, the application is heard by the ACC, which then makes the final decision on the

fate of the proposed power plant. This final decision can be to accept the LSC’s decision as is,

modify it, or reject it. However, it should be noted that even if the LSC does grant a CEC to a

proposed power plant, the ACC could deny the power plant outright due to environmental or

other concerns. For example, according to Tom Wray the lead developer of the Toltec Power

Plant, the ACC denied the Toltec Generating Station in large part due to proximity to the

Ironwood National Monument and visual impacts (Wray). If the ACC decides to accept the CEC

as is, or modify it, there may be stipulations put onto the application that the applicant must

adhere to in order to build the proposed plant. Utilities and merchant generators have five years

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to commence construction. Once this is done the CEC lasts in perpetuity, but if construction is

not commenced by this time the CEC becomes void (Wray).

The Arizona Power Plant and Line Siting Committee Application Review

The LSC is charged with the duty to resolve “all matters concerning the location of

electric generating plants and transmission lines in a single proceeding to which access […] [is]

open to interested and affected individuals, groups, county and municipal governments and other

public bodies to participate in these decisions” (Laws 1971, Ch. 67, § 1). This committee is

composed of representatives from various state governmental offices and the public. The

members of the LSC are as follows:

1. State attorney general or the attorney general's designee. 2. Director of environmental quality or the director's designee. 3. Director of water resources or the director's designee. 4. Director of the energy office of the department of commerce or the director's designee. 5. Chairman of the Arizona corporation commission or the chairman's designee. 6. Six members appointed by the commission to serve for a term of two years of which three members shall represent the public, one member shall represent incorporated cities and towns, one member shall represent counties and one member shall be actively engaged in agriculture. (ARS 40-3601.01).

Of these members, the attorney general’s designee is always the chairperson of the LSC (ARS

40-3601.01).

The LSC application must detail “the proposed type of facilities and description of the

site, including the areas of jurisdiction affected and the estimated cost of the proposed facilities

and site.” (ARS 40-3601.03). Ninety days before a application is filed the following information

must be submitted in the form of a ten-year plan: the size of the proposed plant; the purpose of

the proposed plant; the expected operation date; the average maximum power output of the

proposed plant in megawatts; the expected capacity factor for each pant; the type of fuel to be

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used by a proposed plant; and technical reports detailing the power flow and stability, the

proposed plant’s effect on the Arizona electric transmission system, and analysis and basis for

serving customer load growth (ARS 40-360.02). Notably, applicants are not required to disclose

water demand or water sources.

When granting a CEC the LSC must deliberate upon a number of factors. These factors,

listed in ARS 40-360.06, are as follows:

1. Existing plans of the state, local government and private entities for other developments at or in the vicinity of the proposed site. 2. Fish, wildlife and plant life and associated forms of life upon which they are dependent. 3. Noise emission levels and interference with communication signals. 4. The proposed availability of the site to the public for recreational purposes, consistent with safety considerations and regulations. 5. Existing scenic areas, historic sites and structures or archaeological sites at or in the vicinity of the proposed site. 6. The total environment of the area. 7. The technical practicability of achieving a proposed objective and the previous experience with equipment and methods available for achieving a proposed objective. 8. The estimated cost of the facilities and site as proposed by the applicant and the estimated cost of the facilities and site as recommended by the committee, recognizing that any significant increase in costs represents a potential increase in the cost of electric energy to the customers or the applicant. 9. Any additional factors which require consideration under applicable federal and state laws pertaining to any such site.

Other factors that the LSC considers during its deliberation of an application are “areas of

unique biological wealth”, areas inhabited by rare and endangered species, and compliance with

existing air and water pollution control standards (ARS 40-360.06). While there are factors such

as the “total environment of the area” and other environmental factors, the LSC cannot deny a

CEC due to constraints on water resources imposed by the proposed plant. However, if the

proposed power plant falls within an active management area (AMA) the power plant must

adhere to the water regulations placed upon the AMA by its management plan (ARS 40-360.13).

Constraints placed on water resources imposed by the proposed plant only become a factor in the

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deliberation process if these constraints impact one of the deciding factors or if the proposed

plant is located within an AMA. Water use is not an explicit concern of the LSC.

An outright denial of a CEC based solely on substantial water use is not legal (Mundell).

However, the LSC can impose stipulations while approving a CEC, which set regulations for

water use and source. Many CEC applications are granted approval on the condition that the

applicant performs certain tasks. These tasks often include mandatory groundwater monitoring

programs, land subsidence monitoring programs, entering into groundwater impact mitigation

trust funds and performing numerous other community service oriented tasks (Arizona

Corporation Committee Decisions). These stipulations placed upon a specific power project by

the LSC are the closest form of regulating or mandating a proposed power plant’s water usage.

It seems foolhardy that in such a water scarce state, the LSC, which grants approval of a

Certificate of Environmental Compatibility, is not required to consider a proposed plant’s impact

on existing water resources. While some proposed power plants do use CAP water, many

proposed power plants rely on groundwater as the main source of cooling and process water

(State of Arizona). Consequently, power plants proposed outside of an AMA, using primarily

groundwater, do not have to prove that there will be an adequate water source for the power plant

during its operational life. Since the goal of a proposed power plant is to provide a reliable

source of electricity to consumers, it is reasonable to request that the applicant should have to

prove an adequate water supply exists for a power plant during its operational lifetime. A

thermoelectric plant requires large volumes of water to produce electricity (Wray). Therefore, if

an applicant has to prove that a plant will have adequate water supplies (including a backup

water supply in case of prolonged regional drought) over its operational lifetime this ensures that

the plant will be able to provide reliable, black-out free electricity for consumers even during

times of drought.

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Due to the CAP’s junior status on the Colorado River, proving an adequate supply of

water for electrical generation is especially important if a water shortage were to be declared on

the Colorado River. While this may entail the pumping of groundwater until normal river flows

return, this ensures that CAP water dependent power plants are able to generate electricity during

times of drought thereby reducing the risk of drought-induced black outs and avoiding the ethical

issue of power plant water needs superseding human water needs in times of extreme scarcity.

Arizona Corporation Commission Application Review

After the LSC’s decision, the application goes to the ACC for further deliberation and a

final ruling. The ACC is not required to review an application in regards to a statutorily required

list, instead the ACC bases its decision on public testimony by interested parties, the LSC’s

recommendation, and any other factors the ACC deems necessary (Mundell). Therefore, the

ACC can consider the impact that a proposed power plant will have on an area’s water resources.

In regards to groundwater use, the rule of thumb that Corporation Commissioner William

Mundell adheres to is that a proposed power plant’s groundwater consumption ought to be less

than the existing land use’s groundwater consumption (Mundell). Water conservation is inherent

to this approach in power plant approval, if previous land uses exist, as seen in ACC Decision

#63232. In this decision, an existing 15,000 af/yr agricultural water right was converted into an

8,000 af/yr Type I industrial groundwater right for use at the Mesquite Generating Station.

Therefore, the Mesquite Generating Station, nominally, will result in the conservation of 7,000

af/yr of groundwater. However, this approach does not mandate a set water conservation goal or

seek to have power plants use primarily non-potable water. It simply seeks to have the new land

use’s groundwater demand be less than the groundwater demand of previous land uses.

Unfortunately, if a prior land use’s water policy was the planned depletion of groundwater, the

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rule of thumb does not seek to rectify or actively remediate past instances of unsustainable water

policies.

Overall, according to Commissioner Mundell, the ACC seeks to ensure that new power

plants use as little groundwater as possible and new power plants use renewable sources of

water, such as CAP deliveries and reclaimed or recycled water, when available. This statement

carries precedence.

• ACC Decision #61582, the Desert Basin power plant will use reclaimed wastewater and water from a local plant with CAP allocations.

• ACC Decision #62324, the Red Hawk power plant will use 90% recycled wastewater from the Palo Verde Nuclear Generating Station, and less than 1,000 af/yr of groundwater.

• ACC Decision #65654, the Harquahala power plant will use CAP surface water with a ground water backup.

• ACC Decision #62989, the Kyrene power plant expansion will use SRP surface water and City of Tempe effluent.

• ACC Decision #63611, the Santan power plant will use City of Gilbert SRP and CAP surface water, or a groundwater backup.

• ACC Decision #63863, the Sundance Energy Project will use CAP surface water, or a new groundwater well, or a combination of both

• ACC Decision #66196, the Wellton-Mohawk Generating Facility will use Colorado River surface water

• ACC Decision #64717, the Arlington power plant expansion will use groundwater but purchase the amount used from the CAP to recharge into an endangered aquifer. (Source: Power Plant Proposed for Arizona since 1998)

The shift towards minimized groundwater use and the endorsement of renewable water

use ensures lessened environmental impacts on the surrounding areas. However, in the instance

of CAP water use it creates the ethical choice of providing water for human consumption or

water for power. Furthermore, due to location many proposed power plants do not have access

to renewable sources of water and consequently cannot replace groundwater with renewable

water without a fundamental change to the plant’s design.

For proposed power plants within AMAs, or areas where CAP water is accessible,

groundwater is not needed as a water source. However, this approach is biased toward

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metropolitan areas and provides those residents the assurance that power generation will not

result in power plant induced overdraft. If the proposed area for a power plant has no access to

CAP water or other renewable sources, it must fulfill its needs with groundwater, or, if available,

surface water from a local river or stream. However, this too places stress on whether water

should be used for human consumption or to generate power. Furthermore, power plants and

area residents utilizing the same groundwater source can cause rapid depletion and subsequent

environmental problems. Therefore, water conservation practices ought to be incorporated into

the design of proposed power plants, regardless of the availability of renewable sources, to

reduce instances where water for power generation supersedes water for human consumptive use

and to reduce the impact of power plants on water resources.

Dry-Cooled Power Plants

Traditionally, fossil fuel power plants are cooled using a wet cooling system, which is

essentially a large evaporative cooler (Wray). In this process, water that has been transformed

into steam by the combustion of fossil fuels circulates through a cooling tower in order to

condense back into water and then recirculates through the power plant. In contrast, dry cooled

power plants do not have large cooling towers; rather they utilize large air-cooled radiators to

condense steam back to water (Wray). However, for a radiator to do this it has to be very large.

Dry cooled power plants require large radiators housed in large structures to cool water, a very

noisy process with a huge visual impacts (Wray). Unfortunately, according to Wray “people

don’t want to see it.” Therefore, a power plant may employ several crucial water conservation

techniques, if it is large and ugly it will not garner public support.

According to the Arizona Water Resource, dry cooled power plants have the potential to

demand 90% less water during the cooling process (“Dry”). Typically, closed loop wet-cooling

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systems, which are the most water efficient wet cooled power plants, require 200-250 gallons of

water per MWh generated (“PIER Project”). Therefore, a 1000 MW closed-loop wet cooled

power plant operating at full capacity water demands 6,050 af/yr annually. The same plant if it

were dry cooled would demand tenfold less water. Clearly, dry cooling systems have huge

potential in Arizona. Unfortunately, the reduction in water demand comes at a price: dry cooling

technology is expensive, power generation is less efficient and there is an increase in parasitic

load, or the consumption of power plant generated power by a power plant (Wray). This does

not mean that dry cooled power plants are not viable alternatives in Arizona, but it does mean

that utilities and merchant generators will most likely not propose to build such plants because of

the tradeoff of between costs incurred and benefits accrued and since there is no cost to using

excessive water.

In rural areas, where proposed power plants use mostly groundwater, dry cooled power

plants have the most potential. Dry cooled plants conserve water for municipal needs, avoiding

situations where municipalities and power plants vie for, or deplete, the same water resource.

Ultimately, in such areas this decision is an environmental justice issue. While the water used in

wet-cooling systems may be the best economical use of the water, it potentially places electrical

generation above the human need for water. Furthermore, the reduction in water reasonably

ensures that there will be a reliable water source for electrical generation over the plant’s

operational life. While the plant may produce power less efficiently, the consumer is protected

against rate spikes due to water scarcity during times of drought.

The topic of dry cooled power plants is especially germane in light of the 20 proposed

power plants over the last decade: there are no dry-cooled power plants in Arizona. The issues

surrounding electrical generating efficiency are valid, but many other western states, including

Mexico, already have operational dry-cooled power plants:

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dry-cooled power plants are located in Nevada, parts of Texas and Northern Mexico, in

areas without access to water supplies for a cooling system. On a 110° F day, these plants

accept an energy production penalty of approximately five percent overall (including

turbine and steam cycles), compared to a plant equipped with a wet-cooling system

(“Dry”).

A five percent reduction in electrical generation and a large building is a small concession

compared to 90% reduction in water demand and consumption. This five percent reduction

occurs when electricity demand peaks in Arizona in the months June, July, August and

September, however, which may create supply problems (Wray). However, this does not

preclude dry-cooled plants as reliable sources of electricity. It means that dry-cooled power

plants are ideal for supplementary power production or must be “over built” to recoup lost net

generation (Wray).

Hybrid wet/dry cooling systems do exist. These systems utilize wet cooling only when

the ambient temperature is above the 85-90° F thus avoiding the 5% loss in energy production

that plague dry cooled power plants above this threshold (“Dry”). These systems do not suffer

from production loss during peak summer usage and conserve substantial amounts of water

during the fall, and winter and parts of spring. However, despite being the middle-of-the-road

option—offering both full operation during peak summer hours and conserving water in off

hours—there has never been an application for this type of power plant in Arizona

Dry-Cooling and the La Paz Generating Facility

Although there are no operational dry cooled power plants in Arizona, dry cooling has

been explored as an option by the ACC on merchant power plant applications. Allegheny

Energy’s proposed La Paz generator could have been the first dry-cooled power plant in Arizona,

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but the Corporation Commissioners voted down three dry cooling amendments to the La Paz

application introduced by then Corporation Commission Chairman William Mundell (Mundell).

Subsequently Mundell did not approve the La Paz generating facility’s CEC, however the

application still received a majority vote. The power plant, which is yet to be built, is a 1,080

MW generating station reliant on groundwater (Mundell). The amount of groundwater that

power plant will demand is uncertain as there is no mention of water demand in the CEC (ACC

Decision #64718). However, Allegheny Energy supply is required to retire and recharge

100,000 acre-feet of water, which may give a proxy for water demand (ACC Decision #64718).

The La Paz power plant further complicates the issue of dry cooling in Arizona since La

Paz County is very rural. The power capacity of this facility far exceeds La Paz County’s

electricity demand and, due to its proximity to the Palo Verde-Devers #1 transmission line (ACC

Decision #65476), the question arises, “How much of this power is intended for Arizona’s use?”

To safe guard against this, the ACC typically requires that merchant generators give Arizona

utilities and ratepayers the right of first refusal before merchant generators can sell electricity on

the wholesale market (Mundell). But only a few regions in Arizona have deregulated electricity

and with so many other new power plants, La Paz power may be unneeded in Arizona. Except

for APS who services the inhabited areas of La Paz County and neighboring parts of Yavapai,

Maricopa and Yuma Counties, there are no deregulated Arizona electricity markets nearby

(http://www.aps.com). The remaining deregulated markets are hundreds of miles away and

much of Arizona’s intra-state transmission is under capacity (Mundell, Wray). Furthermore,

nearby transmission lines already transmit electricity generated at the Palo Verde Nuclear

Generating Station to California and wholesale markets. Therefore, it is reasonable to assume

that much of the power at the La Paz facility would be sold on the wholesale market at the

expense of Arizona’s water resources.

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It is illegal to deny electricity sales to the wholesale market, so no power plant in Arizona

can generate solely for Arizona’s electricity demands (Mundell). But the effect that merchant

generators, intending to sell electricity on the wholesale market, have on Arizona’s water

resources should be mitigated to provide more water to other economic sectors in Arizona or to

protect sensitive environmental areas.

Additionally, since the population has grown so rapidly in Arizona during a prolonged

drought and since the CAP has junior status on the Colorado River, this policy in effect would

help ensure adequate water supplies for Arizona and power generation. Of the 19 proposed

power plants, the overwhelming majority utilize groundwater as the primary water source, as

shown by Figure 3. Therefore, the adoption of dry cooled power plants, or hybrid wet/dry

power plants, would reduce the need for land subsidence and groundwater monitoring programs

and translate into huge reductions in groundwater use. If within an AMA, the Arizona Water

Banking Authority could bank this water. Overall, these power plants would reduce the

depletion of groundwater resources attributable to power plants, reduce land subsidence, reduce

wastewater and help mitigate its impacts on the environment, and provide Arizona the ability to

diversify the use of scarce water resources.

The Big Sandy

The Big Sandy power

plant, a 720 MW generating

facility that would have required

3,200 af/yr, proposed by

Caithness Big Sandy LLC

21

(Caithness), was the first power plant to be denied a CEC in Arizona history (Mundell). This

landmark decision took place because there was question about whether the power plant would

negatively affect the habitat of the Southwestern Desert Willow Flycatcher, an endangered

species (Mundell). Interestingly, the power plant’s impact on the Flycatcher was not due to air

emissions, or the physical location of the plant, rather it was due to the plant’s reliance on

groundwater and the effect it would have on the Big Sandy River, the Flycatchers habitat

(Mundell). Drawdown of the Big Sandy due to nearby groundwater pumping would have

impaired the Flycatcher’s habitat, thus precluding the application from fulfilling the requirements

set forth in the LSC’s mandate. Despite the endangered species, Caithness was willing to go to

extreme lengths to protect the riparian habitat for the Flycatcher (ACC Decision #64217). But

the problem with the Big Sandy application was more than the Flycatcher; the Big Sandy

application carried with it the stigma of transforming Arizona into a power farm (Mundell).

The intent of the Caithness’ Big Sandy power plant was clear in the written arguments for

CEC approval:

What is better for Arizona: a state-of-the-art electric generating facility with

water use strictly regulated to ensure that flow in the nearby Big Sandy River and

associated riparian habitat is protected – or some other, unregulated agricultural or

industrial user of the same land and water that could destroy this area without

consequence? […] The answer is clear: protection of riparian habitat, clean and efficient

electric power, and economic benefit to a depressed community (ACC Decision #64217).

Caithness, a New York based company, makes a simple charge: if the ACC wants economic

recovery in the Wikieup area, they must approve the Big Sandy power plant. The influx of

workers into the area for the power plant's construction, operation and maintenance would

provide economic stimulus to the town’s service economy, but this stimulus would only be

22

temporary. This economic stimulus for the community cited by Caithness would, most likely,

exist only for the operational lifetime of a power plant. While this is not necessarily a bad

outcome—40 years of economic stimulus—what would become of Wikieup after the power

plant closes? After the plant’s lifetime is complete, the jobs would leave, along with the area’s

economic stimulus. Like the mining towns of the old west before it, Wikieup would have been

transformed into a boomtown with no long lasting economic stimulus.

Furthermore, massive infrastructure upgrades would be needed in the Wikieup area to

accommodate the influx of population. However, since this would take years of construction and

millions of dollars in investments, power plant workers would most likely live in nearby cities

such as Wickenburg and Kingman. Both these cities offer the conveniences of living in a

moderately sized city—such as hospitals and high schools—and a manageable 60 to 90 minute

commute. While some workers may want to live in Wikieup, the majority would probably live

in nearby cities and commute.

As for the power plant’s effects on the surrounding environment, Caithness claimed the

power plant would actually enhance both riparian and Flycatcher habitat (ACC Decision

#64217). To further mitigate the impact of the power plant, construction would only take place

at certain times of the day and during certain parts of seasons to abate effects on wildlife and

vegetation (ACC Decision #64217). Furthermore, Caithness performed conservative

groundwater models at 4,850 af/yr—instead of the estimated use of 3,200 af/yr—to analyze

potential drawdown due to groundwater pumping. While the results of this model found that

drawdown would be less 1-foot per year (ACC Decision #64217), cumulatively over the lifetime

of the plant (assuming a 40 to 50 year operational life) drawdown in the area could be as much as

40 to 50 feet. It is unknown how this would have affected sensitive riparian areas and Flycatcher

habitat. Furthermore, this model does not take into account the projected growth of Wikieup as a

23

result from the power plant. It is reasonable to assume that if Caithness claimed that the Big

Sandy plant would revive the Wikieup economy, there would be concomitant growth in

population and water demand in Wikieup. The sum of the increased water demand would most

likely increase the rate of drawdown near the Big Sandy beyond the 1 foot per year estimate and

thus further endanger riparian and Flycatcher habitat.

Endangered species and riparian areas were not the only issues complicating the Big

Sandy power plant application. While the Flycatcher ultimately killed the application, the

application carried implications of Arizona turning into a power farm for the Southwest. As

stated before, water is scarce in Arizona and rapid population growth increases demands for

electricity and water. Caithness claimed that the Big Sandy power plant would help Arizona

meet its future power demand, but is this true? Commissioner Mundell felt that it was

questionable how much of Big Sandy’s power would actually go towards meeting Arizona’s

needs (Mundell). The Big Sandy plant would have been located near the transmission lines that

once connected the Mohave Generating Station in Laughlin, NV to the Phoenix metropolitan

area (ACC Decision #64217). In other words, there would be direct access to the wholesale

market while Arizona power needs are, by and large, met by existing merchant generators.

Arizona utilities and consumers would have had the right of first refusal, but with 11 power

plants already approved in the previous three years the necessity of the Big Sandy power plant

for Arizona users comes into question. At the time of application, other power plant applications

were pending in much less sensitive areas that would provide Arizona with a more direct benefit

than the Big Sandy power plant.

Instead, the Big Sandy power plant sought to capitalize on cheap groundwater in a

biologically sensitive area with easy transmission to the Western wholesale electricity market.

Furthermore, the remedial actions proposed by Caithness, which would be to convert nearby

24

stream flow rights to in-stream water rights in order to dump treated wastewater back into the

river only accounted for a fraction of the water the power plant would pump annually (ACC

Decision #64217). In this case, the power plant’s effect on surrounding water resources became

a contentious issue because it was uncertain as to the extent to which endangered species habitat

would be impaired. Regardless of the many concerns surrounding the Big Sandy power plant

proposal, without the Flycatcher habitat the Big Sandy power plant would have had no legal

hurdles.

Conclusion

The ACC and LSC do not have to consider water consumption while deliberating the fate

of a power plant application. This approach to approving power plants is shortsighted because it

does not require the approving bodies to take into account alternative uses for the water that

would otherwise be used for electrical generation. This places no impetus on the utilities and

merchant generators to adopt more water efficient technologies because it is not cost effective.

Since water is such a limiting factor in Arizona, it does not seem wise that power plants are not

as water efficient as possible, since Arizona is dependent on abundant electricity to maintain and

sustain growth. However, it is illegal to deny interstate electricity flow and it is hypocritical of

Arizona to slight power farming since a percentage of Arizona’s electricity is generated out of

state using another state’s water, labor and clean air. Furthermore, many power plants are

natural gas fired and no such resources are available in Arizona (Wray). Therefore, new policies

must balance electrical generation for in-state and out-of-sate purposes while minding Arizona’s

water resources and Arizona’s dependency on other states for electrical power and natural gas.

Technologies such as dry cooling systems and hybrid wet/dry cooling systems ought to

be the norm for new power plants in Arizona. These technologies hold the potential to reduce

25

power plant water demand for cooling ten-fold, or even eliminating demand altogether. These

power plants can generate electricity economically and reliably while freeing up water resources

for other economic uses, such as water banking, environmental uses and human needs. These

power plants pose no threat to cause groundwater depletion and land-subsidence in areas where

no renewable water resources are available. Furthermore, since many new power plants in

Arizona are merchant generators that sell electricity to the wholesale market, dry-cooled and

hybrid wet/dry cooled power plants ensure the economic benefit of interstate trade, while

allowing Arizona to do more with its water resources in-state.

The ACC should require proposed power plants to prove an adequate, reliable supply of

water for a plant’s operational life. However, since the ACC does not have the authority to

regulate water use outright such a policy is unlikely. Therefore, the ACC or the Arizona

Legislature should adopt policies that state a power plant's water demand should be less than the

water demands of previous land uses due its to de facto water conservation.

Implementing these two policies in concert will provide many benefits to ratepayers. (1)

Alternative cooling technologies will protect electrical generation against drought and shortages

declared on the Colorado River. (2) An assured water supply ensures that power generators will

be able to survive droughts blackout free and that electrical generators obtain water from

renewable sources, if available. (3) If renewable water sources are not available for electrical

generation the least groundwater intensive method of power generation is implemented. (4)

Jurisdictions avoid problems resulting from groundwater depletion and land subsidence due to a

power plant’s reliance on unsustainable amounts of groundwater. (5) These policies avoid the

dilemma of water for power superseding water for human needs.

In Arizona, growth, electricity and water resources are inextricably tied. However, the

relationships between these three are known and can be equitably balanced through proactive

26

land, electricity and water policies. Water is by far the most limiting factor in Arizona and it is

needed for human consumptive uses as well as electrical generation. Conversely, electricity

poses the problem of limiting water availability. To balance these three factors, power plants

must generate electricity in the most water efficient manner possible to provide for continued and

increased municipal and industrial water and electrical demand. This will have the effect of

liberating thousands of acre-feet per year to be used for municipal, industrial and environmental

uses while still allowing room for growth.

27

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