The Water-Energy Nexus Dimension of the Central Arizona ... · 1 The Water-Energy Nexus Dimension...
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TheWater-EnergyNexusDimensionoftheCentralArizonaProjectSystemUse
Agreement
BethKleiman
September14,2016
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TableofContents
Abstract……………………………………………………………………………………………………………………………….4
Introduction…........................................................................................................................5
CAPSystemUseAgreement...................................................................................................7
CauseforAgreement…………………………………………………………………………………………………………….7
ApplicationofAgreementforExchanges………………………………………………………………………………8
Water-EnergyNexus.............................................................................................................12
NavajoGeneratingStation………………………………………………………………………………………………….13
KayentaMine………………………………………………………………………………………………………………………15
Repayment…………………………………………………………………………………………………………………………18
AirQuality………………………………………………………………………………………………………………………….19
NitrogenOxideEmissions……………………………………………………………………………………………………19
CarbonDioxideEmissions……………………………………………………………………………………………………21
FutureEnergySources...........................................................................................................22
Water-EnergyNexusDimensionofCAPSystemUseAgreement............................................25
Conclusion.............................................................................................................................28
WorksCited...........................................................................................................................30
AppendixA:CAPBackground................................................................................................32
AppendixB:CAPSystemUseAgreementTerms...................................................................33
ProjectWater………………………………………………………………………………………………………………………33
Non-ProjectWater………………………………………………………………………………………………………………33
Wheeling……………………………………………………………………………………………………………………………..33
Exchanges…………………………………………………………………………………………………………………………….35
Firming…………………………………………………………………………………………………………………………………36
Recharge………………………………………………………………………………………………………………………………36
Recovery………………………………………………………………………………………………………………………………39
SchedulingPriority……………………………………………………………………………………………………………….44
AppendixC:ListofAcronyms.................................................................................................45
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FiguresandTables
Figure1 CAPSystemMap………………………………………………………………………….6
Figure2 WaterStorageinCAPRechargeProjects…………………………………….38
Figure3 TucsonAMAUndergroundStorageFacilities………………………………41
Figure4 PhoenixAMAUndergroundStorageFacilities…………………………….42
Figure5 PinalAMAUndergroundStorageFacilities…………………………………43
Figure6 NGSOwnershipPieChart…………………………………………………………..14
Figure7 NaturalGasPriceFluctuationsOverTime…………………………………..23
Figure8 BreakdownofEnergySourceforTucsonWaterUtility2015…………..28
Table1 RechargeProjects………………………………………………………………………39
Table2 TucsonWaterEnergyExpendituresatClearwaterRechargeFacilities…………………………………………………………………………………………………………………………………..27
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Abstract
WaterstorageandexchangesarekeycomponentsofwaterresourcesmanagementinArizona.
WaterutilitiesfromtwomajorArizonacities,PhoenixandTucson,haveestablishedInter-Governmental
AgreementstoallowforstorageofPhoenix’sCentralArizonaProject(CAP)allocationsinTucson.More
recently,multipleagencieshavebeencollaboratingtoimplementanewandunprecedentedagreement
toenablepoliciesallowingfortheexchangeofCAPwaterbetweentheActiveManagementAreaswithin
thestate(AMAs,asdefinedbythe1980GroundwaterManagementAct,asamended).Thesepolicies
wouldhelpmitigateimpactsonCAPcustomersintheeventoffuturewatershortages.Thispaper
examinesawater-energynexusdimensiontothisuniqueagreementandthemulti-agencylegal
frameworkfortheagreement,knownastheCAPSystemUseAgreement.
TheCentralArizonaProjecttransportsColoradoRiverwateracross336milesandmorethan
2,000feetuphilltosupplydrinkingwatertoitslargemetropolitancitiesindifferentAMAs,makingitthe
biggestenergyuserinArizona.Currently,therearenopoliciesinplacetofacilitatetheexchangeofCAP
allocationsbetweenAMAs.However,aformalagreementofthistypecouldenablestorageofhundreds
ofthousandsofacre-feetofCAPwater,whichcouldbeusedintheeventofafutureshortage.
TheframeworkfortheagreementisbeingdraftedbytheUnitedStatesBureauofReclamation,
ArizonaDepartmentofWaterResourcesandCentralArizonaProject.TheCAPSystemUseAgreement
willresolvelegal,financialandobligatoryissuesrelatedtowheeling,firmingandexchangesofCAP
waterallocations.Whenimplemented,thisagreementwillallowwaterutilitiesinTucsontostore
portionsofPhoenix’sunusedCAPallocationintheTucsonAMArechargefacilities,whichcanlaterbe
exchangedforCAPwaterorderedbyTucsonbutdirectedtoPhoenixintimesofshortage.Thenexus
approachwilladdresslimitsandopportunitiestofirming,wheeling,andexchanges,specificallythrough
energyuserequiredineachoftheseareas.
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Introduction
Arizona,locatedintheSouthwesternUnitedStates,isoneofthedrieststatesinthe
country.InSouthernArizona,Tucsonreceivesanaverageofonlyabout12inchesofrainfall
annually.Forward-thinkingwaterpolicyandmanagementlawsarethetoolsthathaveallowed
thestate’spopulationandeconomytoboom.Withouteffectivewatermanagement,there
wouldnotbesufficientwatersuppliesforthepopulationandthus,therewouldbeno
economicdevelopment.Yet,Arizona’scitiesarethrivingwithclosetosevenmillionresidents
whichincludea6.8percentriseinpopulationbetween2010and2015(QuickFacts:Arizona).
TucsonandPhoenixarethemostpopulatedcitiesinArizona.Withnosurfacewater
bodiesinthesouthandlimiteddistributionoftheSaltRiverProjectsysteminPhoenixsuburbs,
thesemunicipalitiesneededareliablesourceofdrinkingwater.Asthecommunities’
populationsgrew,groundwatersupplieswererapidlybeingdepleted.TheCentralArizona
Project(CAP)fillsthewaterresourcegapforArizona’sswiftlygrowingpopulation.
CAPhasbeenoperatingsince1993,ensuringthatArizonahasfullaccesstoitsColorado
Riverentitlement(SeeAppendixAformorebackgroundandhistoryofCAP).Bringing60%of
Arizona’sshareofColoradoRiverWatertothethirstycitiesofSouthernArizona,Municipal,
Industrial,AgriculturalandIndiancustomersallrelyheavilyonCAPfortheirwater(Cooke,
2016).Itisthesinglelargestsourceofrenewablewatersuppliesinthestate(CAP,2015).Figure
1showstheentiretyoftheCAPsystemalongwithallitscomponentsincludingpumpingplants,
rechargefacilities,anditsenergysource,theNavajoGeneratingStation(NGS).
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CAPSystemUseAgreement
CauseforAgreement
ThemostcurrentdevelopmentwithregardtoCAPpolicyinvolvesthemovementof
wateronthecanal.Recentdiscussionshaveoccurredastowhetherornotcitiesandutilities
entitledtoCAPallocationsmayexchangeportionsoftheirallocationswithoneanother.For
example,waterutilitiesfromTucsonandPhoenixwouldliketocometosuchanarrangementin
thehopesofmaintainingflexibilityinsecuringwatersuppliesinthefaceofashortage.
Discussionssuchasthesebecomecomplex,primarilybecausetheownerandoperatorofthe
canalwhichdeliversthewaterisnottheentityentitledtothewater.Questionsarebeingraised
byvariouswaterinstitutionsastowhatispermittedandwhatisprohibitedregarding
movementofwaterontheCAPcanal.
Inresponsetothesequestions,anagreementisbeingdraftedbyCentralArizonaWater
ConservationDistrict(CAWCD)andUnitedStatesBureauofReclamation(USBOR)withinput
fromArizonaDepartmentofWaterResources(ADWR)andArizonaWaterBankingAuthority
(AWBA)(CAP,2015).ThisagreementwillformallybeknownastheCAPSystemUseAgreement
(Agreement).Asuiteofissuesexists,whichtheAgreementattemptstoaddress,including
firming,wheeling,andexchangesofwateronthecanal(SeeAppendixBfordefinitionsofthese
terms).ThecommonattributeoftheseissuesiswatermovingwithintheCAPsysteminanon-
traditionalway.TheAgreementwillserveasanoverallframeworkessentialtomaximizing
projectbenefits,fosteringflexibility,andreducingpotentialconflict(Seasholes,workshop).
Morespecifically,theAgreementwillactuallydefinethetermsfirming,wheeling,and
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exchanges.InaguestopinionarticleinArizonaCapitolTimes,TedCooke,GeneralManagerof
CAP,referredtodraftingtheagreementasa“processtoenhancetheflexibilityoftheCAP
systemandhelpensurethereliabilityofthewateronwhichwealldepend”(Cooke,2016).CAP
hopesthatthedraftAgreementwillbefinalizedbytheendof2016(Block,2016).
TheMasterRepaymentContract(MRC),originallywrittenin1972andrevisedmultiple
timessince,definesCAP’srepaymentobligationtothefederalgovernmentforitsconstruction.
TheMRCaddressesmanypotentialconflictsonthecanal,butaccordingtoKenSeasholesof
CAP,“Notallofthecontractuallanguageisperfectlyclearandsomethingswerenotfully
contemplated…inparticular,certainaspectsofArizona’srechargeandrecoveryprogram.There
isanurgentneedtoidentifyhowtousethesystemformaximumprojectbenefit;particularly,
aswethinkaboutthingslikeloomingshortageandreally,theneedtotakeadvantageofthe
investmentswe’vemadeinwaterbankingandtheneedfornewsuppliesultimatelytocome
intotheservicearea”(Seasholes,workshop).
ApplicationofAgreementforExchanges
ExchangesthatdonotinvolvewheelingareanimportantaspectoftheCAPSystemUse
Agreement.Currently,therearevarioustypesofexchanges,recognizedindifferentframeworks
includingtheMRC,theBasinProjectAct,individualdeliverycontracts,andinArizonaStatelaw.
TheexchangesproposedintheAgreementinvolveaMunicipalandIndustrial(M&I)
subcontractorexchangingwaterwithanothersubcontractorontheCAPsystem.Forexample,
TucsonwouldstoreaportionofPhoenix’sallocationinitsundergroundstoragefacilities.The
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water,intimesofshortage,wouldbeexchangedwithdirectdeliveriestoPhoenixoffofthe
canal.
Thisisanewvariationonexchangesbecauseitinvolvestwosubcontractors;ithasnever
beendonebefore.Thisnewconcept(alsoreferredtoasInter-AMAFirming)wasproposedby
CityofPhoenix,TucsonWater,andMetropolitanDomesticWaterImprovementDistrict
(District),locatedinMarana.ThesethreeutilitiescreatedtwoseparateInter-Governmental
Agreements(IGAs)thatallowedforthefirstphaseoftheexchangeprocess:storage.The
secondphaseoftheexchange(recoveryandtheexchangeitself)cannotbecompletedwithout
theimplementationoftheAgreement.TheseIGAshavesinceraisedquestionsaboutsystem
capacityissuesrelatedtodownstreamrecharge.
TheAgreementwillfacilitateInter-AMAFirming,duetothefactthatProjectWaterwill
beexchangedandfirmedacrossdifferentActiveManagementAreas(AMAs).TucsonWaterand
DistrictarepartoftheTucsonAMA(TAMA),whiletheCityofPhoenixisinthePhoenixAMA.
OthermunicipalitiesandutilitiesmaysignontotheAgreementinthefuture.TheInter-AMA
FirmingthattheCityofPhoenix,TucsonWaterandDistrictarelookingtoimplementwould
workasfollows:
PhoenixwouldhaveaportionofitsCAPallocationdeliveredtoDistrict’sandTucson
Water’sfacilities.TAMAutilitieswillrechargethatwaterintheirrespectiveunderground
storagefacilities.WhenPhoenixdecidesitwantsitswaterback,thecitywillreceiveitviathe
canal;notfromTucson,butupstreamofPhoenix.InsteadofhavingTucsonutilitiesrecoverthat
portionandpumpitbacktoPhoenix,theseutilitieswillsimplykeepthewatertorecoveras
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theydesire,whiledivertingtheequivalentvolumefromtheirCAPallocationstoPhoenix
instead.ThetwoCAPsubcontractors(eitherCityofPhoenixandTucsonWater,orCityof
PhoenixandDistrict)areexchangingwater,whilealsofirming.
CityofPhoenixwouldpayafeeforTAMAutilitiestostoreitswater.Thecurrent
discussionforTucsonWater’sfeeisbetween$35.00and$50.00peracre-foot.Districtand
TucsonWaterarenotrequiredtochargethesameamount.Inthefuture,ifmorerecharge
basinsareneededinTucsontostoreevenmoreofPhoenix’sallocation,Phoenixwouldalsopay
fortheirconstruction.PhoenixisnotlookingtorechargeitsallocationinitsownAMAdueto
thechallengesassociatedwithrechargingwaterinthatarea,suchashighsalinityandthe
inabilitytorecoverthewater.ThecostofinfrastructureforPhoenixtoimplementitsown
recoverysystemwouldbemuchhigherthansendingthewatertoTucsonforrecharge.
Thebackendofthewatertransactioniswheretheactualexchangetechnicallytakes
place;whenPhoenixdecidesitwantsthewaterback.Thisisoneparticularcircumstancethat
helpedspurthediscussionofcreatingtheAgreement.WithouttheAgreement,ifthereisan
outageonthecanalorareductionindeliveryduetoadeclaredshortageontheColoradoRiver,
Phoenixmightbeshorted,sinceitreliesonsurfacewater.Tucson,ontheotherhand,would
notbeindangerofanimmediatewatersupplyreductionbecauseitcouldsimplyrecover
storedCAPwaterfromitsrechargefacilities.
Todate,CityofPhoenix,TucsonWaterandDistricthavealreadybegunapilotproject,
or“proofofconcept,”totestthefeasibilityoftheProjectWaterexchanges.In2015,peran
IGA,TucsonWaterreceived850acre-feetofPhoenix’sallocationtorechargeinitsClearwater
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RenewableResourcesFacility(Clearwater).Clearwateractuallyconsistsoftwofacilities:Central
AvraValleyRechargeProject(CAVSARP)andSouthernAvraValleyRechargeProject(SAVSARP)
(SeeAppendixBformoreinformationonthesefacilities).In2016,TucsonWatertookanother
4,000acre-feettorecharge.PeraseparateIGA,Districttook150acre-feetofPhoenix’s
allocationin2015torechargeinitsAvraValleyRechargeProject(AVRP)andwilltakean
additional1,500acre-feetin2016(Block,2016).Theactualexchange,orphasetwo,hasnotyet
takenplace;thatis,the“return”ofPhoenixwatertoPhoenixviatheCAPcanal,andthe
recoveryoftheequivalentamountatTAMArechargefacilities.
Thereareplanstocompletephasetwoofthispilotprojectinthenearfuture,though
notuntiltheAgreementisactuallyimplemented.AccordingtoWaterResourcesManagerfor
District,MichaelBlock,averbalagreementwasmadebetweenDistrict,TucsonWater,andCity
ofPhoenixstatingthat“noexchangewilltakeplaceuntiltheCAPSystemUseAgreementand
otheragreementsarefinalizedandexecuted.”Blockcontinuedtostatethatitisnotlikelythat
thoseagreementswillbeexecutedintimeforplacing[CAP]ordersbyOctober1,2016for2017
deliveries(Block,2016)).
IftheAgreementisimplemented,TucsonWatercouldreceiveupto40,000acre-feet
peryearofPhoenix’sallocation,andDistrictcouldreceiveupto3,500acre-feetperyear.
Expansionsofcurrentrechargefacilitieswouldbenecessaryinordertomeetthisprojected
capacity,allofwhichwouldbepaidforbyCityofPhoenix.Theseexpansionswouldbenefit
TAMAgreatly.Withcontinualrecharge,thewatertablewillcontinuetorise,savingonpumping
costsforeachutility.TucsonWaterandDistrictwillhaveinfrastructuretomeetfuturerecharge
capacitydemandswithoutspendingthecapital.“Ifpossible,youalwayswantmorecapacity
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thanyouneed,”saysDickThompson,LeadHydrologistatTucsonWater.Withanexpansion,
therewouldbemorebasinsandequipmenttomaintain;thestoragefeespaidbyPhoenixwill
coverexpensesandhelpmaintainthesefacilities.Withouttheexpansion,only5,000to10,000
acre-feetofPhoenix’sallocationcouldbestoredatTucsonfacilities.
Water-EnergyNexus
Theconceptofawater-energynexusisgrowinginpopularityandusage.Itisnosecret
thattheenergysectorrequireslargeamountsofwaterandthatthewatersectorrequireslarge
amountsofenergy;hence,thenexus.Thisapproachisprovingusefulinwatermanagement
andpolicy.Itwouldbenearlyimpossibletosuccessfullymanageonesectorwithoutconsidering
theother.
TheCentralArizonaProjectisoftencitedasthelargestenergyuserinthestateof
Arizona,supplying80%ofthestate’spopulationwithwater.In2014,CAPused2.8million
megawatt-hoursofenergytodeliver1.6millionacre-feetofColoradoRiverwater(Basefsky,25
April2016).Theendelevationofthe336-mile-longcanalis2,800feethigherthanthestartof
thecanal,atLakeHavasu.Thewaterispumpeduphillforalmosttheentiretyofthecanal,using
14pumpingstations,withthebiggestliftof800feetatLakeHavasu(Seasholes,interview)“We
aretheenergy-waternexusbecauseofwhatwedo,”saysSeasholes,“Wehavedirect
responsibilitiestomanagetheportfoliofromNGS”(Seasholes,interview).
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NavajoGeneratingStation
Inordertounderstandthewater-energynexus,itisimportanttounderstandwhereCAP
receivesitsenergyfrom.Therearemanycomplexitiesassociatedwiththispower.Almostall
(90-95%)ofthepowerusedtopumpCAPwateruphillcomesfromtheNavajoGenerating
StationlocatedontheLeCheeChapteroftheNavajoNationinNortheasternArizona(Seefigure
1)(NGS,2011-2016).NGSwasconstructed,primarilytoprovidepowertoCAP,underspecial
permissionfromCongress(The1968ColoradoRiverBasinProjectAct),inordertoavoid
buildingmoredamsalongtheColoradoRiver,specificallyneartheGrandCanyon(Modeer,
2010).Theplantbeganproducingpowerin1974andhasa“ratedlife-span”of70years,putting
itsclosurein2044(Basefsky,2May2016).
NGSisacoal-firedplantwhichreceivesitscoalfromnearbyKayentaMine,located78
milestothesoutheast(seefigure1)(NGS,2011-2016).Themine,ownedbyPeabodyEnergy
Corp.,transportsthecoaltotheplantviaadedicatedelectrictrain.Thepowerplant’s
productioncapacityis2,250megawattsfromthree750megawattunits(NGS,2011-2016).NGS
employsnearly500people;theplantandminecombinedemployapproximately900people
(Randazzo,2015).SincebotharelocatedontheNavajoNation,morethan90%ofemployees
areNativeAmerican,makingthesefacilities“criticalsourcesofemployment”fortheNavajo
Nation,addinglaborandsocial-equitychallengestothiswater-energynexus(NGS,2011-2016).
TheownershipofNGSisrathercomplex.Energygeneratedthereisownedbyelectricity
providersinthreedifferentstates,withthelargestshareownedbyUSBOR(figure6).The
specificbreakdownofownersisasfollows:FromArizona,14%isownedbyArizonaPublic
ServiceCo.,7.5%isownedbyTucsonElectricPowerCo.(TEP),and21.7%isownedbySaltRiver
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Project(SRP).FromCalifornia,theLosAngelesDepartmentofWaterandPower(LADWP)owns
21.2%.FromNevada,NevadaEnergy(NVEnergy)owns11.3%.Theremaining24.3%isowned
byUSBOR(Randazzo,2015).ThoughtheplanthasmultipleownersitisoperatedbySRP,the
“largestproviderofelectricityandwaterintheGreaterPhoenixmetropolitanarea”(NGS,
2011-2016).
RecentdevelopmentshaveoccurredregardingtheownershipsharesofNGS.InMayof
2015,SRPofficialsapprovedthe$10millionpurchaseofLADWP’sshareofNGS.Anadditional
$2.88millionwillbeneededfromSRPtoprepayforcoalexpensesandtotransferLADWP
NVEnergy11.3%
LADWP21.2%
AZPublicServiceCo.
14.0%TEP7.5%
SRP21.7%
USBOR24.3%
OwnershipofNavajoGenera^ngSta^on
BethKleman2016
Figure6
NGSOwnershipPieChart
Source:GraphcreatedbyBethKleimanwithinformationcompiledfromMitchBasefskyandRandazzo,14May2015.
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assets(Randazzo,2015).AccordingtoExternalCommunicationsRepresentativeforCAP,Mitch
Basefsky,LADWPwantsoutbecauseCaliforniahasastatelawthatprohibitspowerutilities
frominvestinginfossilfuels.TheimplicationsofthislawwouldmeanLADWPwouldbeunable
topayforanyupgradestoNGS,causingthemtobeindefaultwhichcouldcausealawsuit.In
addition,bydivestingfromNGS,theyautomaticallyimprovethepercentageofrenewable
powerintheirportfolio(Basefsky,2May2016).
NevadaEnergyalsoplanstoleavetheplantandwithdrawownership,thoughnot
necessarilyinthesamemannerasLADWP(saleofsharestoanothercurrentowner).According
toBasefsky,NVEnergymostlikelywantsoutoftheirownershipofNGSbecausetheywantto
buildnewnaturalgasplantsinNevada,butthestatelegislaturewillnotallowthatunlessthey
divestfromotherfossilfuelplants.NVEnergydeterminedthatNGS“wouldbeagoodtrade-off
forthem,giventhecostofcomingcoalplantregulationsbeyondCPP[CleanPowerPlan],”
(Basefsky,2May2016).
KayentaMine
PeabodyEnergy,ownerofKayentaMine,filedbankruptcyonApril13,2016.Themine
suppliesNGSwiththecoalneededtoruntheplant.PeabodyEnergyCorp.isthenation’s
largestcoalminer,withownershipstakesin26minesinAustraliaandtheU.S.(Randazzo,
2016).Despitethebankruptcyfiling,officialsarenotexpectingclosureofKayentaMine.
Theminehasa35-daysupplyofcoalonsite,whichcanbeused,andevenincreased,as
abufferinthecaseofacoalshortage.Inaddition,thecontractbetweenKayentaMineandNGS
ownersallowstheownerstostepinandoperatethemineintheeventthatPeabodycan’t
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meetthecontract(Randazzo,2016).Itisforthesereasonsthatofficialsaren’tpredictinga
closureofthemine.“SincetheKayentamineisamoney-makerforownerPeabodyEnergy,
theyareunlikelytoclosethatoperationinresponsetotheirrecentbankruptcyfiling,”says
Basefsky(Basefsky,25April2016).
ThePeabodybankruptcyfilingissignificantbecauseitexposesalargerissue.Peabody
makesmostofitsmoneybysellingitscoaltoutilitycompanieswhothenusethecoalto
generateelectricity.Manyutilitiesareshiftingawayfromusingcoal,andmovingtoward
naturalgas.Naturalgascostslessandproducesmuchlesspollution.Ifutilitiesstopusingcoal
forenergy,thecoalplantswilllikelybeforcedtoshutdown.InthecaseofNGS,thiswouldput
hundredsofworkersoutofthejob,cripplinganentirecommunity.Ifthereisnocoalto
generateinexpensivepowerforCAP,therewillbeimplicationsforallCAPcustomers.
Ifthemineweretoclose,BasefskysaysthatthemultipleownersofNGSwouldneedto
evaluatewhetheranalternativesourceofcoalwasavailableandatwhatcost.“Dependingon
theresultsofthatanalysis,eithertheoperatingcostofNGSwouldriseortheplantwouldshut
down”(Basefsky,25April2016).TheriseinoperatingcostforNGSwouldinevitablyleadtoa
riseincostforCAP,whichwouldthenleadtoariseincostofwatertoallCAPcustomers.
“Assumingthatrecentenergymarketpricefluctuationsreflectfuturemarketvariability,this
wouldrequirea50to300percentincreaseinCAPenergycharges”(Impact,2010).
CurrentlyCAPpaysNGSsolelyforthecostoftheenergyproduction.Accordingto
Basefsky,theCAPenergybudgetfor2016isintherangeof$30.00permegawatthour(MWh).
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CAPwillpayforabout4.2millionMWhinayear,totalingabout$120million(Basefsky,28June
2016).ThisisthelargestexpensecategoryforCAP.
IfNGSweretoclose,forcingCAPtofindanewenergysource,itwouldlikelyhavetopay
marketvalue.Itisimpossibletopredictwhatmarketvaluemightbeifandwhentheclosure
takesplace.Regardless,thecostwouldmostcertainlybehigherthanitiscurrently.Withthe
highercostofenergytorunCAP,waterpriceswouldrise;eitherintheformofincreased
servicecapitalchargesforM&Iusers,orincreasesinadvaloremtaxrates,orboth(Impact,
2010).Basefsky,states,“IfNGSweretoshutdown,itwouldsignificantlyimpactwhatCAPpays
forenergy.CAPwouldhavenochoicebuttopurchaseenergyontheopenmarket,atleast
initially”(Basefsky,25April2016).Thecostofpowerfluctuateswiththecostofnaturalgas,
whichhasahistoricallyvolatilemarket.Thepricefornaturalgashasbeenashighas$14per
millionBritishThermalUnits(MMBTU)inthelate2000stolessthan$2/MMBTUearlierthis
year.Itiscurrentlyintheupper$2/MMBTU(Basefsky,28June2016).
AhighercostforpowerwouldhaveeffectsonhowCAWCDisabletorepaythefederal
governmentfortheconstructionofCAP.TheclosureofNGSwouldcauseCAPtoloseatleast
$50millioninannualrevenuesfromthesaleofsurpluspower(Impact,2010).Thesurplus
energyissoldatmarketvalueforthatparticularday/hour.“Powerthatissoldcanvarywidely
fromthelow$20/MWhrangetoasmuchas$100/MWh”(Basefsky,28June2016).Inaddition,
theU.S.andIndiancommunitieswithwatersettlementswouldlosetensofmillionsofdollarsin
revenueseachyear(Impact,2010).
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Repayment
TheCentralArizonaProjectcostapproximately$4billiontoconstruct.Pursuanttothe
MasterRepaymentContract(MRC),$1.65billionmustberepaidtothefederalgovernment
(CAP,2015).AccordingtoKenSeasholesofCAP,theannualrepaymentofthatsumbyCAPis
$50millionwithfullrepaymentscheduledby2044.ThemeansbywhichCAPhasbeen
producingthefundstorepaythefederalgovernmentisthroughthesaleofexcesspower
generatedbyNGS.
CAP’sshareofpowergeneratedbyNGSisabout4.3millionmegawatt-hours,yetonly
2.8millionmegawatt-hoursareusedbyCAPtodeliverColoradoRiverwater.Thisexcess,
unusedpoweristhensoldbyWesternAreaPowerAuthority(WAPA)onCAP’sbehalf(Basefsky,
28June2016).Inadditiontorepayingthegovernment,thatmoneyisalsousedtohelpfundthe
ArizonaWaterSettlementsActwithvarioustribes(Basefsky,April252016).
WithoutNGS,thecostofCAPwaterwouldrisesignificantly,jeopardizingIndianwater
rightssettlementsandcausingincreasedgroundwaterpumping(NGS,2011-2016).“Weshape
ourpowersothatwecansellasmuchaspossibleatpeakseason,”saysSeasholes(Seasholes,
interview).SeasholesstatesthatCAPhasbeenontracktohavethefullamountofrepayment
paidbythesaleofexcesspower;however,recentlythat“doesn’tcoveranywherenearasmuch
ofthat$50millionasitusedto…[we]needtograduallyincreasecapitalchargetomakeup
someofthedifference”(Seasholes,interview).
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AirQuality
DuetothefactthatthegeneratingstationisinsuchcloseproximitytoGrandCanyon
NationalPark,airqualityconcernsplayaroleintheenergymattersrelatedtoCAPandNGS.In
1999,theEnvironmentalProtectionAgency(EPA,2016)issuedtheRegionalHazeRule,applied
to156nationalparksandwildernessareas,forthepurposeofimproving“visualairquality”and
visibility.Stateswereimposedwithdevelopinglong-termstrategiestoimprovevisibilityin
thesenationalparks,primarilybyreducingemissionsofairpollutants(EPA,2016).TheGrand
CanyonisoneoftheseparksandNGS,acoal-firedplant,islocatedinverycloseproximity.
NitrogenOxideEmissions
InFebruaryof2013,EPAproposedamethodforanypowerplantviolatingtheRegional
HazeRuletoreduceemissionsofnitrogenoxides(NOx).Thismethod(whateveritmaybe)is
referredtoasBART,BestAvailableRetrofitTechnology.InorderforNGStocomplywiththis
rule,itwouldneedtoinstallatechnologycalledSelectiveCatalyticReduction(SCR).This
technologywouldcostupwardsof$500million,andpossiblymuchmoreifadditionalairfilters
arealsorequiredtoremoveairborneparticulatescreatedbySCR.SCRwouldneedtobe
installedandoperationalatNGSby2023(CAP,2015).
CAP’sportionofthecostsforimplementingSCRwouldbebornebyitscustomers(CAP,
2015),adverselyaffectingCAP’staxpayers,M&IsubcontractorsandIndiancommunities.The
highcostcouldleadtoCAPwaterratestwoorthreetimeshigherthantheywouldbe
otherwise.Accordingtoa2010CAPdocument,theinstallationofSCRswouldrequire“an
increaseinCAPenergychargesofatleast$9.85peracre-foot,a20percentincreaseoverthe
2010energyrate”(Impact,2010).ThiswouldaffectanyonewhogetswaterfromCAP,butthe
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“increaseinenergycostswouldbeespeciallyharmfultoCAP’sIndianandNon-Indian
Agriculturalwaterusers”(Impact,2010).Infact,thehigherenergycostswillhitalmost
everyoneinthestate(NGS,2011-2016).Inreality,installingSCRforallthreeunitswouldbefar
tooexpensiveforNGStobeabletoimplement,forcingtheclosureoftheentireplant.“This
wouldbeaneconomicdisasterfortheNavajoandHopipeople”(NGS,2011-2016).
TheEPAdidleavetheoptiontoconsideralternativeplans,shouldtherebeany,“in
recognitionoftheimportanceofNGStoArizona’swatersustainabilityandthemajorrolethe
plantandassociatedcoalmineplayintheeconomiesoftheNavajoNationandtheHopiTribe”
(CAP,2015).Inresponse,anewgroupwascreatedtofindthatalternative.TheTechnicalWork
Group(TWG)consistsofCAP,theGilaRiverIndianCommunity,theNavajoNation,SRP,the
EnvironmentalDefenseFund,theUSDepartmentofInteriorandWesternResourceAdvocates
(CAP,2015).TWGcalleditsplan“BetterthanBART,”andofferedtwoalternativestoSCRthat
wouldactuallyincurevengreaterreductionofNOxemissionsoverthelifespanoftheplant
thantheproposedEPAplan.
TheEPAacceptedTWG’sproposedalternative,makingittheBARTinthefinalRegional
HazeRuleforNGS.TheplanistoshutdownoneofthethreegeneratingunitsatNGSby2020
andimplementeitherSCRoranotherNOxreductiontechnologyontheothertwounitsby2030
(Basefsky,3May2016).Thiswillallowtheplanttoremainopen,tocontinuetosupplyCAP’s
energy,tocontinuetoemploytheNavajoNation,andtomeetallEPAguidelines.Despitethis
accomplishment,thereareanumberoflawsuitsfiledbyenvironmentalgroupswhowantthe
EPAtoreversetheirdecisioninordertoforceNGStoclose(Basefsky,2May2016).
21
Inadditiontothelawsuits,thereisanEnvironmentalImpactStatement(EIS)process
currentlytakingplaceovertheleaseofNGSonNavajolandsandtherightsofwayforwater
andelectrictransmissiononthereservation.Theseleasesexpirein2019ifnotrenewedbefore
then.AccordingtoMitchBasefskyofCAP,“EveryoneexpectstheNEIStopass,althoughthere
maybesomemitigationthattheNGSownerswillhavetofund”(Basefsky,2May2016).Once
theEISprocessiscomplete,itmustbeapprovedandsignedbytheSecretaryoftheInterior.If
theEISdoesnotpass,NGSwilllosetheleaseforthelandwhichtheplantsitson,aswellasthe
rightsofwayforthetrainthattransportscoalfromKayentaMinetotheplant.Inotherwords,
NGSwillloseitsrighttooperateonNavajoland(Basefsky,2May2016).Ifthishappens,there
wouldbenoneedtoimplementBARTbecausetheplantwouldnolongeroperate.“That’swhy
thesuccessorfailureoftheEISandthesubsequentleaseandrightofwayagreementscould
impactthefateofNGSandthetimingoftheRegionalHazeRuleimplementation,”says
Basefsky(Basefsky,3May2016).
CarbonDioxideEmissions
WhiletheRegionalHazeRuleaimstocurbNOxemissions,anotherofEPA’splansaims
tocurbcarbonemissions.TheCleanPowerPlan(CPP),finalizedonAugust3,2015,aimsto
reducethenation’scarbonemissionsby32%below2005carbonlevelsbytheyear2030.More
specifically,theCPPmandatescarbondioxideemissionguidelinesforexistingfossilfuel-fired
electricgeneratingunits(EGUs)(NGS,2011-2016).TheEPAissuedacarbonrulespecificallyfor
existingfossilfuel-firedEGUsontriballands;NGSfallsinthiscategory.ThetargetforEGUson
triballandsistoreducecarbonemissionsby38%(Basefsky,2May2016).UndertheCleanAir
22
Act,theCPPsetsacarbonemissionsreductiongoalforeachstateandgivesstatesflexibilityto
meettheirgoalsinthewaythatworksbestforthem.
Despiteeverything,duetoarequestby27statestoblocktheCPP,astaywasputonthe
planonFebruary9,2016.TheCPPregulationswillnotbeineffectwhilelegalproceedingsin
regardtothischallengearetakingplace(NGS,2011-2016).“ThefateoftheCPPisnowinthe
handsoftheDCCircuitCourt,”saysBasefsky,“Theywillruleonthemeritsofthestatesand
otherlawsuitsopposingtheCPP”(Basefsky,2May2016).Thecircuitcourtisscheduledto
reviewthesemeritsinSeptemberof2016.“SomeformofCO2limitswilllikelybeset
eventually,butwhatandwhenaredebatable,”Basefskyadds(Basefsky,2May2016).
Allofthesefederalguidelinestoimproveairqualityandslowclimatechange,whether
officiallyimplementedyetornot,willhaveeffectsonenergyproduction.Asdemonstratedby
theinformationabove,theseguidelineswillalsohaveeffectsonwater;specifically,oncostand
delivery.Moreprecisely,theseairqualityguidelineswilldeterminethefateoftheNavajo
GeneratingStation,whichwillhavegreatimpactsonCAPanditscustomers.
FutureEnergySources
TheentireU.S.ismakingitsmoveawayfromfossilfuels,asevidencedbytherecent
CPP.ClimateChangehastakenthemainstageinenvironmentaldiscussions.Fossilfuels
contributetoawarmingclimate,whichscientists,activists,andpoliticiansalikearetryingto
curb.Thenextdecisionswillbetochoosewhatwillreplacecoaltoproduceenergy.Naturalgas,
nuclearpower,andrenewableenergiessuchaswindandsolarareallalternativestocoal.As
statesdeveloptheirplanstoreducecarbonemissions,theywillneedtoevaluatetheseoptions
23
andmakekeydecisionsthatwillaffecttheirelectricitygenerationandcosts.“Statesmust
carefullyevaluatetherisksofsubstantiallyshiftingtowardnaturalgasagainstthebenefitsof
rampinguprenewableenergysourcesandenergyefficiency”(TheCleanPowerPlan).
Thepriceofnaturalgashasbeendecreasingrecently,makingitacosteffective
alternativetocoal.Naturalgasemitscarbon,thoughconsiderablylessthancoal.However,due
tothevolatilepricehistoryofnaturalgas,somewarnthatrelianceonthisresourceforenergy
couldbedangerous.“Over-relyingonitforelectricitycreatesseriouseconomicandpublic
healthrisksforconsumersandstatesandfailstoprovidealong-termsolutiontoclimate
change”(TheCleanPowerPlan).Figure7showsNaturalGaspricefluctuationssince1989.
Figure7
NaturalGasPriceFluctuationsoverTime
NOTE:Citygateisapointormeasuringstationatwhichadistributinggasutilityreceivesgasfromanaturalgaspipelinecompanyortransmissionsystem.TheCitygateisnotonespecific,physicallocation,butavirtualtradingpointonthe
system.(EIA,2015)
24
Theuseofrenewableenergyforpowerproductionwoulddecreasecarbonemissions
drastically.Onesourcenotesthatelectricitygeneratedfromrenewableenergysourceswould
providesteadyenergyprices(TheCleanPowerPlan).Thisisduetothefactthatonceafacility
isconstructed,theonlycostwouldbemaintenanceandoperation,notthewindorsunitself.
Evaluatingpotentialfutureenergysourcesiscomplex,particularlyfromautility’spoint
ofview,makingitextremelydifficulttocomparecostsofutilizingdifferentresourcesinorder
todeterminewhichwouldbemostfavorabletoimplement.Therearefixedcostsandvariable
coststoconsider,aswellasconstantmarketfluctuations.Autilitymustconsiderinitialcostof
implementation,ontopoftransmissionrequirementsandcostsassociatedwithdistribution,
operationandmaintenance.U.S.EnergyInformationAdministration’s‘AnnualEnergyOutlook
2016’explainsvariousfactorsinvolvedinprojectingcostsofdifferentsourcesofelectricity
generation.LevelizedCostofElectricity(LCOE),forexample,isusedtosummarizeoverall
competitivenessofdifferentgeneratingtechnologies(EIA,AnnualEnergyOutlook,2015).
AccordingtoCAPPowerProgramsManager,RonaldLunt,“IfCAWCDweretobuilda
naturalgasfiredcombinedcyclepowerplant,thecostsareestimatedtobeinthe$60/MWh
range”(Basefsky,28June2016).ThiscostestimateistwiceashighaswhatCAPiscurrently
payingforpower,mostlyduetothecapitalcostsassociatedwithbuildinganentirefacility.Of
course,themarketpriceofnaturalgasatthattimewouldalsobeafactor.Moreover,CAP
wouldstillhavetocontinuetopayitsshareofrepaymentcostsforNGS,ifitwerestillrunning
(Basefsky,28June2016).
25
Water-EnergyNexusDimensionofCAPSystemUseAgreement
HowwilltheproposedCAPSystemUseAgreementaffectenergyuseandcostsonthe
canal?Asmentionedabove,itisdifficulttoprojectwhatfutureenergycostsforCAPmightbe,
particularlyifNGSwereforcedtoshutdown.AsBasefskypointsout,therearetwobasic
variablesinvolvedintheAgreement’seffectonenergyuse:1)howmanypumpingplantslay
betweenthewatersourceandthedeliverypoint,and2)whetherthedeliveriesareinaddition
toorinlieuofregularCAPdeliveries.
Ifwater,pertheAgreement,isbeingtransportedonthecanalinadditiontotheregular
CAPProjectWaterdelivery,thenthevolumeoftotalwaterwillbegreater,requiringmore
energy.CAPsystemcapacityisapproximately1.8millionacre-feet;underpresentconditions,
1.6millionacre-feetisdelivered(Buschatzke,2015).Ifashortageisdeclared,therewillbea
reductioninregularCAPdeliveriesofProjectWater.IfAgreementwateriscarriedonthecanal
alongwithareducedregulardelivery,thenthetotalvolumeonthecanalmightnotbeany
greaterthanwhentherewerenoreductionsandnoagreement.Thiswould,inturn,requireno
additionalenergy.
TopographyplayedalargeroleinthedesignofCAP.Thecanalisnotperfectlystraight
becauseitfollowsgeographicfeaturestoallowfortheuseofgravitytocarrythewater,
whereverpossible.Thepumpingstationswereconstructedwherenecessitydictated;inother
words,whenthewatercouldnotbegravity-fed.Thepumpingstationsliftthewatertothe
higherelevationsalongthecanalandtheyarewhatrequiretheenergy.ThisiswhyBasefsky
believesthatthequantityofpumpingstationsbetweenthesourceofwaterandthedelivery
26
pointwillfactorintoeffectsonenergyusecausedbytheAgreement.Therearesevenpumping
plantsbetweenPhoenixandTucson.
Fromageneralperspective,theenergyusecouldremainfairlybalancedovertimewith
theAgreement’simplementation.Initially,moreenergymightberequiredtopumpahigher
volumeofwaterfromPhoenixAMAtoTucsonAMAforthefirstphaseoftheexchange.
Conversely,whenimplementingphasetwooftheexchange,alowervolumeofwaterwillflow
southofPhoenixdownthecanal,requiringequallylessenergy.Consideringthefactthatenergy
priceswillriseinthefuture,spendingtherequiredmoniesonmoreenergynowcouldendup
savingCAPmoneyinthelongrun.AsfarasCAPcustomersareconcerned,(particularlyTucson
WaterandDistrict)theywillnotpayforthisincreaseinenergyusesinceCAPchargesa
“postagestamprate”todeliverwater;regardlessofhowfarthewatertravelsonthecanal,or
atwhatelevationoflift,allCAPcustomerspaythesamerate.Ofcourse,thisrateissubjectto
changeinthefuture.
Recoveryoftherechargedwateralsorequiresenergy,andthus,money.In2015Tucson
Waterspentatotalof$7,205,883onenergyatCAVSARPandSAVSARP(table2).Acombination
ofNaturalGasandElectricpowerareusedtooperatethewellsandboostersatthesefacilities.
Figure8showstheratioofnaturalgastoelectricpowerpaidforbyTucsonWater.Thelower
thewatertableis,thehigheritmustbepumpedinordertorecoverit.Likewise,thelongerthe
distancethatthewatermustbepumped,themoreenergythatisrequired.IfTucsonWater
andDistrictarerechargingthousandsofacre-feetofPhoenix’sallocationperyear,thewater
tableinTAMAwilllikelyrise,requiringmuchlessenergytoeventuallypump.Rechargingthe
27
waterinthefirstplacedoesnotrequireanyenergy(oncethewaterisintherechargebasins).
ThistheoreticallyamountstoenergysavingsduringrecoveryforTucsonWaterandDistrict.
However,therearecostsassociatedwithre-equippingwellsinordertopumpfroma
higherwaterlevel.Everypumphasadifferentpumpcurvewhichindicatesatwhatwaterlevel
eachpumpwilloperatemostefficiently.Insomecases,ahigherwaterlevelmightreducethe
pump’sefficiency,necessitatingareplacementpumporraisingthecurrentpump.Bothofthese
solutionsincuradditionalcosts.
Table2
Electric Gas
CAVSARP $4,440,060 $1,114,194 TotalCAVSARPEnergyCosts:
$5,554,254
SAVSARP $1,442,704 $208,925TotalSAVSARPEnergyCosts
$1,651,629
TotalElectricCosts:
TotalGasCosts:
$5,882,764 $1,323,119
Source:CompiledbyBethKleimanJune2016withenergyexpenditurerecordsfromTucsonWater
TucsonWaterEnergyExpendituresatClearwaterRechargeFacilities
28
Conclusion
Undoubtedly,theuseofenergyiscriticaltothereliabledeliveryofCAPwatertoits
customers.CAPanditscustomersmustalwaysbeawareofnewdevelopmentsthatcouldaffect
CAP’senergysource(currentaswellaspotentialfuturesources).Changestotheseelectricity
producers,whetheritbeownershipof,managementof,orfederalregulations,willinevitably
haveaneffectonCAP.Since80%ofArizona’spopulationreliesonCAPwater,anoutageonthe
canalcouldhavetremendousconsequences.AreductioninCAPsupplydeliveryduetoa
declaredshortage,however,wouldnothavealarmingaffectsonwaterusersduetoproactive
watermanagementpolicies,suchastheAgreement.
TheCAPSystemUseAgreementdoesindeedhaveanexusdimensiontoit,mostsimply,
becauseitinvolvestheuseoftheCAPcanaltodeliverwater,whichusesavastamountof
Figure8
BreakdownofEnergySourceforTucsonWaterUtility2015
Source:EnergyCap
Note:Percentagesarebasedonenergyuseforeveryaspectofthewaterutility,notsolelyrechargeandrecovery.
29
energyderivedfrommultiplesources.Thesesourcesfaceuncertainfuturesduetoclimate
changeandairqualityregulations,inadditiontolocaljobsandeconomicdevelopmentfor
NativeNations.CAPwouldnotbeabletodeliverwateronthecanal’sinclinedelevation
withoutsomeformofenergy.TheAgreementmayincurtheuseoflessenergy;however,it
maynot.
Therearevariousfactorsinvolvedintotalenergyuse;mostofwhosefuturescannotbe
predicted.Naturalresourcepricefluctuation,unforeseengovernmentalregulationsand
changingtechnologywillallhaveimpactsonenergyuseandcost.ItwillbeimportantforCAP
andotherArizonawaterinstitutionstoattempttostrikesomesortofbalancebetweencurrent
andfutureenergyprices,theuseofcurrentandfutureenergysources,aswellasthequantity
ofacre-feetrechargedandrecoveredannuallysoastomaintainagroundwaterleveltoeffect
maximumpumpingefficiency.AccordingtoKenSeasholes,one“couldarguethatthereisan
energysavings”butitwouldbe“essentiallyenergyneutralovertime”(Seasholes,interview).
30
WorksCited
Basefsky,Mitch.“Re:CAPquestionsfortermpaper.”MessagetoBethKleiman.25April2016.E-mail.
Basefsky,Mitch.“Re:CAPenergyquestions.”MessagetoBethKleiman.2May2016.E-mail.
Basefsky,Mitch.“Re:CAPenergyquestions.”MessagetoBethKleiman.3May2016.E-mail.
Basefsky,Mitch.“Re:CAPenergyquestions.”MessagetoBethKleiman.28June2016.E-mail.
Block,Michael.“Re:CAPSystemUseAgreement.”MessagetoBethKleiman.23June2016.E-mail.
Buschatzke,Thomas.ArizonaWaterBankingAuthorityAnnualPlanofOperation.ArizonaWaterBanking
Authority.December2015.Print.28June2016.
CAP.CentralArizonaProject.2015.Web.30April2016.
CAP.“SummaryofDraftAgreement”.CentralArizonaProject.27Jan.2016.Workshop.
CAP.“ImpactofNavajoGeneratingStationRetrofitOptionsonCostofCentralArizonaProjectWater
andDevelopmentFundRevenues.”CentralArizonaProject.20Jan2010.Web.23June2016.
CAPH20.“CentralArizonaProject:RechargingWaterResourcesfortheFuture.”Onlinevideoclip.
YouTube.11Feb.2013.Web.26April2016.
CAPH20.“CAPSmartEnergy.”Onlinevideoclip.YouTube.21May2010.Web.26April2016.
Cooke,Ted.“Wheeling,RecoveringandExchangingWaterwillHelpSecureourFuture.”ArizonaCapitol
Times.24March2016.
EIA.ArizonaStateEnergyProfile.U.S.EnergyInformationAdministration.17Dec.2015.Web.21June
2016.
EIA.AnnualEnergyOutlook2016.“LevelizedCostandLevelizedAvoidedCostofNewGeneration
ResourcesintheAnnualEnergyOutlook2015.”U.S.EnergyInformationAdministration.3June
2015.Web.23June2016.
EPA.VisibilityandHaze.n.d.Web.1May2016.
Liberti,Michael.CAPMap.19May2016.
MasterRepaymentContract.CentralArizonaProject.web.9March2016.
Modeer,DavidV.“ConfrontingtheIntersectionofWater,Energy,andAirQualityattheCentralArizona
Project”.Journal(AmericanWaterWorksAssociation)102.6(2010):46–49.Web.11Feb.2016.
NGS.SRP.2011-2016.web.26April2016
“QuickFacts:Arizona.”UnitedStatesCensusBureau.USBureauofCommerce.n.d.Web.30April2016.
31
Randazzo,Ryan.“SRPagreesto$13Mdealtoshutcoalplant.”TheRepublic.14May2015.
Azcentral.com.13April2016.
Randazzo,Ryan.“NoDisruptionsExpectedatNavajoCoalPlantDespitePeabodyBankruptcy.”The
Republic.13April2016.Azcentral.com.13April2016.
Seasholes,Ken.“WorkshoponFirming,WheelingandExchanges.”CAP.CAPHeadquarters.1Feb.2016.
PowerPointpresentation.
Seasholes,Ken.PersonalInterview.28April2016.
Tenney,Warren.MetropolitanDomesticWaterImprovementDistrict.“ApprovalofRightofEntry
AgreementforWellMonitoringbytheCentralArizonaWaterConservationDistrictandthe
District.”BoardofDirectorsMeeting.13Jan2014.Web.23June2016.
“TheCleanPowerPlan:AClimateGameChanger.”UnionofConcernedScientists.UnionofConcerned
Scientists,n.d.Web.2May2016.
Thompson,Dick.PersonalInterview.1May2016.
32
AppendixA
CAPBackground
Itallbeganin1922whentheColoradoRiverCompactwascreatedbythesevenColorado
RiverBasinStates:Arizona,California,Colorado,NewMexico,Nevada,Utah,andWyoming.The
CompactdividedtheColoradoRiverBasinstatesintoanUpperBasinandaLowerBasin.The
UpperBasinincludedNewMexico,Colorado,UtahandWyoming,whiletheLowerBasin
consistedofArizona,CaliforniaandNevada.Eachbasinwasallotted7.5millionacre-feetof
ColoradoRiverwatertobedividedamongitsstates.IntheLowerBasin,Arizonawasgiven
rightsto2.8millionacre-feetofColoradoRiverwaterannuallyandCaliforniabecameentitled
to4.4millionacre-feet,leavingNevadawithrightstoonly300,000acre-feet(CAP,2015).
In1946,theCentralArizonaProjectAssociationwasformedforthepurposeofeducating
thecitizensofArizonaabouttheneedfortheCentralArizonaProject,aswellastolobby
Congresstoauthorizeitsconstruction(CAP,2015).Itwasn’tuntil1968thatabillwassignedby
PresidentLyndonB.Johnson,authorizingtheproject.TheColoradoRiverBasinProjectActof
1968becamethecatalystfortheUSBureauofReclamation(USBOR)tobuildtheCentral
ArizonaProject.In1971,theCentralArizonaWaterConservationDistrict(CAWCD)wascreated
toprovideameansforArizonatorepaythefederalgovernment(USBOR)fortheCAPsystem,in
additiontomanagingandoperatingtheCAPsystem.Constructionfinallybeganin1973,atLake
Havasuandfinished20yearslater,14milessouthofTucson.
33
AppendixB
CAPSystemUseAgreementTerms
InordertounderstandwhatisbeingproposedintheAgreement,itisessentialtodefine
thetermscontainedwithinit.ColoradoRiverwaterontheCAPcanalisotherwisereferredtoas
“ProjectWater.”ProjectWateralsoincludescertainAguaFriainflowsintoLakePleasant
(Figure1).Allothersourcesofwateronthecanalarereferredtoas“Non-ProjectWater;”the
Agreementwilldistinguishbetweenthetwotypes.SomeexamplesofNon-ProjectWater
includeimportedgroundwaterandColoradoRiverwaterthatwaspreviouslyunavailableto
CAP(SummaryofDraftAgreement,2016).
InadditiontoProjectWater,theAgreementwillauthorizeCAWCDtodeliverother,
evenmorespecifictypesofwater.RecoveryExchangeWateristhewaterCAWCDdelivers
pursuanttoaRecoveryExchangeAgreement.ReplenishmentExchangeWateristhewater
CAWCDdeliverswhenCentralArizonaGroundwaterReplenishmentDistrict’s(CAGRD)sub-
contractisexchangedforlong-termstoragecreditsusedforreplenishment.Non-ProjectWater
forFirmingandOn-RiverFirmingwillalsobeaddressedintheAgreement.OtherNon-Project
WaterdeliveriesrequireafederalCAWCDwheelingagreement.TheAgreementwillapprovea
standardformofCAWCDWheelingAgreement,whichistobeattachedasanexhibittothe
Agreement(SummaryofDraftAgreement,2016).Inshort,theAgreementwillallowCAPto
offercontracts“forlong-termreliabledeliveryofNon-ProjectWater,whileprotectingtherights
oftheUStohavewatertransportedundersection8.17ofMRC,andwithoutinterferingwith
ProjectWaterdeliveries”(CAP,2015).
34
Wheeling
WheelingprovidesreliabledeliveryofNon-ProjectWaterthroughtheCAPsystem.
Wheelingwasauthorizedbythe1988MasterRepaymentContractbetweenCAPandthe
USBOR.TheMRCincludesspecificprovisionsrelatedtothewheelingofNon-ProjectWater,
includingdevelopmentofastandardformofwheelingcontract(CAP,2015).Articles8.17and
8.18oftheMRCaddresstheWheelingofNon-ProjectWater,bothbythefederalgovernment
(USBOR)andbyCAP(CAWCD),respectively.WheelingisanimportantuseoftheCAPcanal.In
fact,thefirstrequestforwheelingwasmadein1983,longbeforethefirstCAPdeliveryin1985
(Seasholes,workshop).A1983CAWCDPositionStatementreads,“…[CAWCD]endorsesthe
conceptoftransportingwatersurplustooutlyingareasofthestateintotheDistrictforuse
withinitsboundaries.SuchtransportationshallbelimitedtootherwiseunusedcapacityofCAP
works…”(Seasholes,workshop).
Article8.17oftheMRCistitled,“RightsReservedtotheUnitedStatestoHaveWater
CarriedbyProjectFacilities;”Inotherwords,wheelingbytheU.S.BureauofReclamation.
Article8.18istitled,moresimply,“WheelingNon-ProjectWater.”Itstates,“Non-projectwater
maybewheeledthroughprojectfacilitiespursuanttowheelingagreementsbetweenthe
Contractorandtheentitydesiringtouseprojectfacilitiesforwheelingpurposes…The
ContractorandtheContractingOfficershalljointlydevelopastandardformofwheeling
agreementincludingtheratestructureforwheelingnon-projectwater”(MRC).
The“standardformofwheelingagreement”referredtointheMRCiswhattheCAPSystem
UseAgreementwilladdress.Inotherwords,theMRCsimplystatesthatthewheelingofNon-
35
ProjectWaterwouldbeallowed,providedthereisanotherformalagreement;theCAPSystem
UseAgreementwillbethatformalagreement.CAPistryingtomoveawayfromthe
terminologyof“Article8.17”and“Article8.18”andmoveinsteadtowards“wheelingbythe
federalgovernment,”and“wheelingbyCAWCD”respectively(Seasholes,workshop).
Asmentionedabove,wheelinghasbeenproposedsince1983,intheCAPPosition
Statement.Itwasn’tuntil2012thatCAPcameoutwithaStaffProposalforwheeling.This
proposalwouldactuallyimplementtheproposedStandardFormWheelingContractfromthe
MRC.Thecontractswouldbeissuedonthebasisofincreaseddeliveryandcapacity,andwould
beopentoallparties,includingtribes(Seasholes,workshop).
Exchanges
ExchangesthatdonotinvolvewheelingareanotherimportantaspectoftheCAPSystem
UseAgreement.Currently,therearevarioustypesofexchanges,recognizedindifferent
frameworksincludingtheMRC,theBasinProjectAct,individualdeliverycontractsandin
ArizonaStatelaw.TheexchangesproposedintheAgreementinvolveaMunicipalandIndustrial
(M&I)subcontractorexchangingwaterwithanothersubcontractorontheCAPsystem.For
example,TucsonwouldstoreaportionofPhoenix’sallocationinitsundergroundstorage
facilities.Thewater,intimesofshortage,wouldbeexchangedwithdirectdeliveriesfrom
TucsontoPhoenixoffofthecanal.Thisisanewvariationonexchangesbecauseitinvolvestwo
subcontractors;ithasneverbeendonebefore.Thisnewconcept(alsoreferredtoasInter-AMA
Firming)wasproposedbyCityofPhoenix,TucsonWater,andMetropolitanDomesticWater
36
ImprovementDistrict(District),locatedinMarana.Ithassinceraisedquestionsaboutsystem
capacityissuesrelatedtodownstreamrecharge.
FirmingandRecharge
RechargeisalargecomponentofArizona’swatermanagement.Largequantitiesofwater
canbestoredundergroundviarechargebasins.Firmingistheuseofonewatersupplyto
increasereliabilityofanothersupply,primarilythroughrecovery.InthecaseoftheAgreement,
TucsonwillincreasethereliabilityofitsgroundwatersupplybyrechargingPhoenix’sunused
CAPallocation.FirmingwillsatisfythereducedportionofaCAP(sub)contractintheeventofa
shortageoranunplannedoutageonthecanal.
Thebenefitstofirmingandrechargearenumerous;theyincluderaisingthewatertable,
naturallyimprovingthewaterqualitythroughSoilAquiferTreatment(SAT),diminishingimpacts
ofgroundwateroverdraftsuchassubsidence,andpreparingforshortage.SATisanatural
treatmentwhichallowsphysical,chemicalandbiologicalprocessestotakeplaceasthewater
percolatesintothegroundandmixeswithgroundwater,therebyimprovingwaterquality.In
somecases,itcancompletelyeliminatetheneedforcostlywatertreatmentplants.Inaddition,
storingwaterundergroundeliminatestheneedforlargereservoirsabovegroundwhichcanbe
verycostly,takeuplargelandareas,andfacewaterlossduetoevaporationandleakage.
Rechargealsoallowsforgreatersystemflexibility;TucsonWaterisnotdependentonwater
comingdownthecanalinordertodelivertoittocustomersonthesameday.Recharge
enhancesandreinforcesArizona’swatersupply,providingreservesincaseofshortageor
drought.“Rechargeisalong-establishedandeffectivewatermanagementtoolthatallows
37
renewablesurfacewatersupplies,suchastheColoradoRiver,tobestoredundergroundnow,
forrecoverylaterduringperiodsofreducedwatersupply,”(CAP,2015).
CAPoperatessixrechargeprojects:PimaMineRoad,LowerSantaCruz,AguaFria,
HieroglyphicMountains,TonopahDesertandSuperstitionMountains.Allbuttwoarelocatedin
PhoenixAMA;PimaMineRoadandLowerSantaCruzarelocatedinTucsonAMA.PimaMine
Roadrechargefacility,locatedintheSantaCruzRiverFloodPlain,wasbuiltin1999andis
capableofstoring30,000acre-feetperyear.TheLowerSantaCruzrechargefacilitywasbuilt
thefollowingyear,in2000.Thisfacilityiscapableofstoring50,000acre-feetperyear,spread
over3basinscoveringnearly30acres.AguaFriarechargeprojectwasbuiltthefollowingyear,
in2001,andiscapableofrechargingatotalof100,000acre-feetperyear.TheHieroglyphic
MountainsProjectalsoconsistsofsevenbasinsover38acres.Builtin2003,thisprojectis
permittedtorecharge35,000acre-feetperyear.TonopahDesertRechargeProjectwas
completedin2006andcovers207acresusing19basinstorechargeupto150,000acre-feet
peryear.SuperstitionMountainsRechargeprojectbeganoperationin2011andisdesignedto
store25,000acre-feetperyear(CAPH20,2013).Figure2showshowmuchwaterhasbeen
collectivelyrechargedatthesesites.
38
InAvraValley(WestofTucson),TucsonWateroperatestwomainrechargefacilities,
togetherreferredtoasClearwaterRenewableResourcesFacility.CentralAvraValleyStorage
andRecoveryProject(CAVSARP)wasbuiltasapilotstudyin1997andbecamefullyoperational
in2003(Thompson,2016).CAVSARPconsistsof11rechargebasinscovering317acres.The
currentpermittedannualstorageis75,000acre-feet.SouthernAvraValleyStorageand
RecoveryProject(SAVSARP)beganconstructionin2008andbecamefullyoperationalin2009.
Itconsistsof9basins,totaling226acres.Thefacilityiscurrentlypermittedtorecharge75,000
acre-feetperyear(Thompson,2016).
TheDistrictoperatesonerechargefacilityconsistingoffourbasins.TheAvraValley
RechargeProject(AVRP),originallyownedbyCAWCD,becameoperationalin2006andis
permittedtostoreupto11,000acre-feetannually.In2010,Districtassumedownershipand
Figure2v
CAPRechargeProjects
Source:http://www.cap-az.com/departments/recharge-program
Figure2
WaterStorageinCAPRechargeProjects
Source:http://www.cap-az.com/departments/recharge-program
39
operationofthefacility,whichislocatedjustonemilesouthwestofanotherofCAWCD’s
rechargeprojects,theLowerSantaCruzReplenishmentProject(Tenney,2014).
Table1
RechargeProjects
ProjectName AMA Year
completePermittedcapacity Permitee acreage #of
basinsWaterType
AvraValley Tucson 1996-97 11,000 District 11 4 CAP
SAVSARP Tucson 2008 75,000 CityofTucson 226 9 CAP
CAVSARP Tucson 2007 75,000 CityofTucson 317 11 CAP
PMR Tucson 1998-99 30,000 CAWCD 37 5 CAP
LowerSantaCruz
Tucson 2000 50,000 CAWCD 28 3 Effluent
AguaFria Phoenix 2001 100,000 CAWCD 102 7 CAP
HieroglyphicMountains
Phoenix 2002 35,000 CAWCD 38 7 CAP
TonopahDesert
Phoenix 2006 150,000 CAWCD 207 19 CAP
SuperstitionMountains
Phoenix 2011 25,000 CAWCD 39 2 CAP
Recovery
Ontheotherendofwaterrechargeisrecovery.Itisessentialtobeabletorecoverthe
rechargedwaterwhenandwhereitisneeded.CAPisalreadyresponsibleforrecoveringa
portionofstoredwaterinsupportofvarioussubcontractsandagreements.TheseincludeM&I
subcontractswhenthereisashortageinColoradoRiverwatersupplies,inadditiontothe
Source:TablecreatedbyBethKleiman,compiledwithinformationfromCAPwebsiteandDickThompson
40
SouthernNevadaWaterAuthorityAgreementandtheMohaveCountyWaterAuthority
Agreement(CAP,2015).
Asmentionedabove,therearemultiplestorageand/orrecoveryentitiesinArizona.
Figures3,4,and5showallundergroundstoragefacilitiesinTucson,PhoenixandPinalAMAs,
respectively.TheArizonaWaterBankingAuthority(AWBA),createdin1996,storesexcessCAP
waterinvariousGroundwaterSavingsFacilities(GSF)andUndergroundStorageFacilities(USF).
ThereisalsoanInteragencyRecoveryPlanningGroupconsistingofstafffromCAP,AWBA,and
ADWR.Thisgroup’sfocusisondraftingarecoveryplan(CAP,2015).Similarly,thereisanAd
HocRecoveryPlanningGroupconsistingofindividualsrepresentingCAP,AWBA,ADWR,Arizona
MunicipalWaterUsersAssociation(AMWUA),SouthernArizonaWaterUsersAssociation
(SAWUA),SaltRiverProject(SRP)andPinalwaterusers.Thisgrouphelpsserveasavenuefor
stakeholderfeedbackandguidance(CAP,2015).
OnMay1,2014,theCAPboardvotedtoimplementtheJointRecoveryPlan.Thisplan
advancesthejointobjectiveamongCAWCD,AWBAandADWRto“developacoordinatedand
cooperativeplanningprocessthatincludesdistributionandrecoveryofwaterstoredbyAWBA”
(CAP,2015).
42
Source:http://www.azwater.gov/azdwr/WaterManagement/Recharge/documents/Phx_AMA_USFs_2009.pdf
Figure4
PhoenixAMAUndergroundStorageFacilities
Source:TucsonWater
43
So urce:http://www.azwater.gov/azdwr/WaterManagement/Recharge/documents/Phx_AMA_USFs_2009.pdf
Source:TucsonWater
Figure5
PinalAMAUndergroundStorageFacilities
44
Schedulingpriority
Inordertoreconcileanyconflictsoverdeliverycapacityonthecanal,ascheduling
priorityisenacted.WiththeauthorizationoftheAgreement,potentialdeliverypriorityconflicts
couldarise.UndertheAgreement,theschedulingprioritywilldefinehowcompetitionfor
monthlydeliverycapacityisresolved.Duringshortage,FirmingWatercarriesthescheduling
priorityofthesupplyitreplaces(SummaryofDraft,2016).TheAnnualOperatingPlan(AOP)for
theAgreementwilluseCAWCD’sexistingAOPprocessastheimplementationmechanismfor
schedulingpriorities.
45
AppendixC
CommonlyUsedAcronyms
ADWR-ArizonaDepartmentofWaterResources
AMA-ActiveManagementArea
AMWUA-ArizonaMunicipalWaterUser’sAssociation
AVRP-AvraValleyRechargeProject
AWBA-ArizonaWaterBankingAuthority
BART-BestAvailableRetrofitTechnology
CAVSARP-CentralAvraValleyStorageandRecoveryProject
CAWCD-CentralArizonaWaterConservationDistrict
CAGRD-CentralArizonaGroundwaterReplenishmentDistrict
CAP-CentralArizonaProject
CPP-CleanPowerPlan
CWAC-Citizen’sWaterAdvisoryCommittee
EGU-ElectricGeneratingUnit
EIS-EnvironmentalImpactStatement
EPA-EnvironmentalProtectionAgency
GSF-GroundwaterSavingsFacility
IGA-Inter-GovernmentalAgreement
M&I-MunicipalandIndustrial
MRC-MasterRepaymentContract
NGS-NavajoGeneratingStation
NOx-NitrogenOxides
SAT-SoilAquiferTreatment
SAVSARP-SouthernAvraValleyStorageandRecoveryProject
SAWUA-SouthernArizonaWaterUser’sAssociation
SCR-SelectiveCatalyticReduction