Cutting air pollution will cost CAP users

Energy prices rise with plant upgrade
2013-02-04T00:00:00Z 2013-02-04T08:11:10Z Cutting air pollution will cost CAP usersTony Davis Arizona Daily Star Arizona Daily Star
February 04, 2013 12:00 am  • 

An expensive upgrade to slash air pollution from a power plant would boost Central Arizona Project water costs nearly 12 percent for Tucson and other major Arizona cities, the CAP says.

A much bigger bite - between 32 and nearly 40 percent - would hit farmers, including farmers on the Tohono O'odham Nation.

The costs would rise because the proposed upgrade of the coal-fired Navajo Generating Station in Northern Arizona near the Utah border would mean higher energy bills for the CAP - Tucson's main drinking water supply. Navajo furnishes more than 90 percent of the power that pumps Colorado River water uphill to Tucson.

But it will be years before the higher costs kick in - and other complex issues related to the plant make it uncertain whether it will even survive.

The U.S. Environmental Protection Agency has made this proposal as a way of reducing haze blocking views of the Grand Canyon and 10 other Southwestern national parks and wilderness areas. The public gets 90 days to comment, starting next month.

Under this proposal, Navajo's operator, the Phoenix-based Salt River Project, would have a decade, five more years than originally thought, to install the controls. They resemble automobile catalytic converters. They would cut nitrogen oxide emissions by 84 percent and improve visibility at the national parks by 73 percent, the EPA says.

CAP rate increases would likely kick in by about 2018, when the Salt River Project would start making the needed investments.

Environmentalists in the Sierra Club and other groups call this proposal long overdue to cut pollution from the West's largest coal-fired power plant in generating capacity. They aren't happy the plant gets five more years to clean up.

While the SRP has reduced Navajo's nitrogen oxide emissions 40 percent since 2009, Sierra Club organizer Andy Bessler said the EPA's proposed improvements "are what the Clean Air Act demands. It's what science calls for."

But the proposal has triggered concerns among the CAP and the SRP, an electric utility, about its impacts on ratepayers. They say the EPA has dramatically overestimated the proposal's pollution benefits.

The emission limits imposed on this plant are among the country's most stringent, the SRP says.

"While they give us flexibility on one side, they would be reducing it on the other" with these limits, said SRP spokesman Scott Harelson.

The SRP says the upgrades would cost nearly $600 million to $1.1 billion, depending on whether catalytic converters will be enough or whether filters will also be required.

Here are CAP's cost estimates:

• Urban users, including those in Tucson, would pay $8.40 per acre-foot more for water under the $600 million upgrade, and $16.80 per acre-foot at $1.1 billion. This year, Tucson will pay $144 per acre-foot for 140,000 acre-feet of CAP water. A $16.80 increase would boost the city's charge by nearly 12 percent. An acre-foot serves three households for a year.

Similar percentage increases would hit suburban Oro Valley, which buys 10,500 acre-feet of CAP water annually, and Metro Water, a northwest-side Tucson-area water district. It has bought 11,000 acre-feet for this year, and will buy 13,000 next year.

• Native American farmers who use CAP now pay only $53 an acre-foot to cover the energy costs. The feds pay the rest. At $16.80 more, their CAP cost rises nearly 32 percent.

• Non-Indian farmers - mainly irrigation districts in Pinal County - are supposed to pay only the $53 energy charge. But they have incentive programs that hold down their rates further. The Maricopa-Stanfield Irrigation District pays $45 an acre-foot. A $16.80 increase raises its tab 37 percent.

The unknowns

Some key uncertainties persist:

• It's not clear if the SRP will feel these investments are worth the expense, partly because of their cost and partly because other issues cloud the Navajo plant's future. For one, the power plant's lease on Indian tribal land expires in 2019, and the utility and the tribe must agree on new terms. A full-scale federal environmental review must be conducted for the lease renewal, which could last five years.

SRP is at least five years from deciding whether to upgrade the plant, said Kelly Barr, the utility's director of environmental management, policy and compliance.

• It's not clear if water users would feel the rate increases in one bite or if CAP could boost customer rates over time by selling bonds, project spokesman Mitch Basefsky said. CAP would do everything possible to avoid rate shock, he said.

• If Navajo closes, CAP and other electricity users would have to find other power on the open market. Such power, mainly from natural-gas-fired plants, is no more expensive than what comes from Navajo, CAP's Basefsky said, but that could change over time. Closing would also wipe out 1,000 jobs at the plant, at least 80 percent of which go to Navajos.

Since the EPA normally gives power-plant operators five years to cut back on their emissions, the CAP is encouraged by the agency's flexibility, Basefsky said. But it's disappointed that the EPA is proposing a pollution standard that can be met only with expensive catalytic devices, he said.

Tucson Water had no immediate comment on the proposal. Metro Water General Manager Mark Stratton wasn't thrilled about it, but he said that today, higher water and power costs "are kind of the nature of the beast."

A $16.80-per-acre-foot increase would not put Oro Valley's generally affluent water customers in the poorhouse but would still be significant, said Town Councilman Joe Hornat, the council's liaison with the town's advisory Water Utility Commission.

Brian Bettler, Maricopa-Stanfield's general manager, said an immediate, 37 percent CAP cost increase could force district farmers to leave the project and resume pumping groundwater. He couldn't say if farmers could live with a gradual rate increase.

"Crop prices are reasonably stable now, but we may not be able to afford something in the way of a rate increase in five or 10 years that we could afford now," Bettler said.

Did you know?

Navajo Generating Station co-owners:

24.3%

The U.S. Bureau of Reclamation, which owns the Central Arizona Project

21.7%

Salt River Project

21.2%

Los Angeles Department of Water and Power

14%

Arizona Public Service

11.3%

Nevada Power

7.5%

Tucson Electric Power

The Associated Press contributed to this report. Contact reporter Tony Davis at tdavis@azstarnet.com or 806-7746.

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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