CAP and the Navajo Generating Station
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Transcript of CAP and the Navajo Generating Station
CAP and the Navajo Generating Station
Presentation to NGS Stakeholder Discussions
January 21, 2011
Central Arizona Project
• 336-mile aqueduct stretches from Lake Havasu to Tucson
• 14 pumping plants lift water nearly 3000 feet
• 8 siphons, 3 tunnels
• Lake Pleasant/New Waddell Dam
• Delivers 1.6 million acre-feet of Colorado River water annually to Maricopa, Pinal and Pima counties
Central Arizona Project• Federal project, title held by the United States• Constructed by U.S. Bureau of Reclamation
Construction began in 1973, first water delivered in 1985Delivers Colorado River water to replace use of mined
groundwater in Central and Southern ArizonaTotal cost $4+ billion
• Central Arizona Water Conservation District
Authorized by state legislation and formed by Maricopa, Pinal and Pima Counties in 1971
Operates CAP system and repays federal debt
Governed by 15-member Board of Directors elected from three-county service area
7%33%
25%
35%
M&I Agricultural I ndian Recharge
Total = 1,610,237 acre-feet
2009 Water Deliveries
CAP Customers
• Cities, towns and water companies include:City of PhoenixCity of TucsonCity of ScottsdaleCity of MesaTown of EloyArizona-American Water Company
• Agricultural districts include:Central Arizona Irrigation & Drainage DistrictMaricopa-Stanfield Irrigation & Drainage District
CAP Customers
• Native American communities include:Ak-Chin Indian CommunityYavapai-Apache TribeFort McDowell Indian CommunityGila River Indian CommunityPascua Yaqui TribeSalt River Pima-Maricopa Indian CommunitySan Carlos-Apache TribeTohono O’odham NationTonto-Apache Tribe
Power for CAP
95% of the energy used by CAP is produced at the Navajo Generating Station (NGS)
The Colorado River Basin Project Act authorized the US to participate in a coal-fired power plant to provide power for CAP pumping as an alternative to building additional dams in the Grand Canyon (the Udall Compromise)
CAP and NGS
• CAP uses about 2.8 million megawatt hours per year of NGS power to deliver CAP water to Indian and non-Indian water users in Central and Southern Arizona.
• The remaining 1.5 million megawatt hours per year of the CAP share of NGS power is sold, generating revenues that are credited to the Basin Development Fund and used: to meet CAWCD’s annual obligation to repay the costs of
construction of the CAP, and to fund the costs of Indian water rights settlements in
Arizona.
NOx Controls
• EPA is currently evaluating controls on nitrogen oxide (NOx) emissions from NGS under EPA’s Regional Haze rules to protect visibility in nearby “Class I” areas.
• Two types of controls are under consideration to reduce NOx emissions at NGS: low NOx burners with separated overfire air (LNB/SOFA),
which are being installed voluntarily right now, and selective catalytic reduction (SCR).
• A third option would require the use of polishing baghouses, in addition to SCRs, to control downstream particulate emissions.
Impacts on CAP Energy Charges
• The current estimate for the cost of LNB/SOFA is $45 million. CAP energy charges would increase by about $0.54 per
acre foot.• Salt River Project estimates that SCRs would cost $544
million, plus $11.9 million in added annual OM&R costs.CAP energy charges would increase by about $8.33 per
acre foot – a 17% increase.• SCRs and polishing baghouses would cost $1.131 billion, plus
$21 million in additional annual OM&R expense – double the cost of SCRs alone. CAP energy charges would increase by $16.30 per acre-
foot – a 33% increase over our 2010 rate of $49 per acre-foot.
Impact on Basin Development Fund Revenues
• Basin Development Fund revenues are credited first against CAWCD’s annual repayment obligation, then used to fund Indian water rights settlements, including fixed OM&R for water deliveries.
• Installation of SCRs would reduce Basin Development Fund revenues by about $149 million between 2016 and 2036 and $1.1 million per year thereafter.
• SCRs plus polishing baghouses would reduce revenues by about $289 million between 2016 and 2036 and $1.9 million per year thereafter.
• Under current conditions, revenues are expected to exceed the repayment obligation by 2015, so loss of these revenues would directly affect Tribes with water rights settlements.
SummaryCOST IMPACTS OF BART CONTROL OPTIONS
CONTROL TECHNOLOGY
INCREASED ENERGY CHARGES ($/AF)
LOST BASIN DEVELOPMENT FUND REVENUES
December 2009 Estimate
Current Estimate
December 2009 Estimate
Current Estimate
LNB/SOFA $0.51 $0.54 – –
SCRs $9.85 (20% increase)
$8.33 (17% increase)
$175 million(2016-2036)
+$1.2 million
per year thereafter
$148 million(2016-2036)
+$1.1 million per year thereafter
SCRs + Baghouses – $16.30 (33% increase)
– $289 million(2016-2036)
+$1.9 million per year thereafter
Impacts of Potential Plant Closure on CAP Energy Costs
• Plant closure is not an acceptable outcome of the BART rulemaking process or of any other near-term regulatory process.
• CAWCD would have to acquire a substitute source of pumping power at market rates.
• CAWCD estimates that, by 2017, CAP pumping energy costs would increase by 50 to 300 percent (rising from $65/acre foot to $95 to $180/acre foot).**
**From forecasts of electricity prices by Navigant (2007) and Black and Veatch (2009)
Increased Cost of Pumping Power
0
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180
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2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Market Cost of Pumping EnergyDollars per AF
Then Year $ per AF
NO CARBON TAXNO SCRs
Medium Water Year
Navigant 2007 Market Forecast
Black-Veatch 2009 Market Forecast
Projected Cost of NGS
300% increase
50% increase
Impacts of Potential Plant Closure on Development Fund Revenues
• CAWCD would also have to replace $50 million or more in annual revenues that would have been applied against its repayment obligation each year, forcing substantial increases in CAWCD tax rates, water service capital charges, or both.
• Indian tribes would lose the benefit of additional Development Fund revenues that could total as much as $60 to $90 million a year between 2016 and 2023 alone.
Lost Development Fund Revenues
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
$110
$120
$130
$140
$150
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Net Proceeds from Sales of Navajo SurplusThen Year $ Millions
Black-Veatch 2009 Market Forecast
NO CARBON TAXNO SCRs
Navigant 2007 Market Forecast
CAP Repayment
Amount NOT going to water rights
settlements
New water service capital charges of
about $80 per acre-foot
QUESTIONS?