Water and Energy

Aug. 25, 2009

Transcript:

Ted Simons:
Good evening and welcome to "Horizon." I'm Ted Simons. State lawmakers adjourned their special session this afternoon. That gives the governor another 10 days to consider a budget very similar to the one she previously vetoed. Earlier today, in a bipartisan meeting, Democrats offered up a budget that Republican lawmakers said was too expensive. But House Speaker Kirk Adams says he's willing to negotiate with Democrats over what he describes as a more realistic spending plan. In a growing state like Arizona, Water is needed to produce energy, and energy is needed to treat and transport water. Both are precious resources and here in the desert southwest, water is especially scarce. So we rely on policymakers, along with water and power managers, to ensure that Arizona has a sustainable supply of both water and electricity. There's a lot to consider. For example, are we using the most water-efficient methods of energy production? Can new technologies slow the consumption of thirsty power plants? And does it make sense to export energy generated by Arizona's water? Those questions and many more will be explored later this week at a water conference in Tucson sponsored by the Arizona Investment Council. Joining me now to talk about water and energy are three participants in the conference. Kris Mayes, chairman of the Arizona Corporation Commission which regulates energy and water utilities. Gary Yaquinto, president of the Arizona Investment Council which represents utility investors. And Mike Pasqualetti, a professor at ASU's School of Geographical Sciences and Urban Planning. Good to have you on "Horizon." Thanks for joining us.

Kris Mayes:
Good to be here.

Ted Simons:
Kris, let's start with you. Energy and water, how are they related?

Kris Mayes:
They're incredibly related. They're intertwined and really can't be separated and I think we're only starting to understand the degree to which one impacts the other and the degree to which it takes one to do the other. And I -- and I think that the coverage we have coming up is going to be -- the coverage is going to shed light on this issue, with the exception of Dr. Pasqualetti's work, hasn't been studied a lot in the state of Arizona. It takes a lot of water to produce electricity and energy to produce water.

Ted Simons:
It seems to make sense now that it's mentioned but doesn't seem to get mentioned that often.

Mike Pasqualetti:
No, it doesn't and I think it's a nice entrée to the water -- the way it's viewed in Arizona. It happens that we use energy all the time and we're conscious of that consumption and then define it with the need for water; everybody is getting the idea that this is something that needs to be looked at. It's happening at the international level and nationally as well and clearly needs to be looked at in Arizona.

Ted Simons:
Are we looking at it enough right now?

Gary Yaquinto:
I don't think so. I think the focus needs to be on water. It is an important resource for us in Arizona. We live in an arid state and too long, our water has been undervalued. We need to take greater stewardship of this important natural resource and as Kris mentioned, we need to understand how water use and energy use are related.

Ted Simons:
Let's talk about that relationship. Let's go with solar and nuclear. Compare and contrast water needs.

Kris Mayes:
Well, Dr. Pasqualetti would be better to tell you exactly what the differences are in the water uses, but my understanding as a regulator of utilities is that most forms of solar, with the exception of one form, use a lot less water than nuclear does. And nuclear power, while it can be very inexpensive after you've built the plants and is carbon free, uses a lot of water. And so the idea of building new nuclear in the desert southwest will probably be controversial from that standpoint. But the Palo Verde plant uses -- we need to focus on renewable. Don't use water. It's a good thing.

Ted Simons:
Indeed, if you've got a -- a water cost here and saving electricity here with nuclear, where is the balance? What are we looking at here?

Mike Pasqualetti:
In terms of the amount of water you need for nuclear, it's considered to be the highest water user of all the sources of electricity. 750-gallons per megawatt hour. I use -- you can multiply it out and see how much I'm responsible for. Geothermic does use water but there's some nice aspects of solar that we can talk about. Some use water and some don't use water.

Ted Simons:
Is there enough water? Let's say Arizonans and the country decides another nuclear plant is needed and we're going to put it in Arizona. Do we have enough water for such a project?

Gary Yaquinto:
The answer is it depends. We know we have sufficient water supplies in some places of Arizona and other areas that are water-deficient and if you look at the counties of Cochise, Yavapai and Coconino, they're water short, and GILA. And to do any large scale facility there without securing new and additional water supplies.

Ted Simons:
So it makes a difference where a solar or nuclear plant is put?

Gary Yaquinto:
Absolutely does. Because of water supply and delivery and those things. Right.

Ted Simons:
The idea that hydro -- and I want to go with you on this one. I know this is something you're interested in. This is something you should have known, that we have these massive hydroelectric reservoirs and give us such wonderful power that a lot of water is simply evaporating. And you've got to put that into the cost, don't you?

Mike Pasqualetti:
I think you do. The Hoover dam, Lake Mead, another lake. Combined, there's feet that are evaporated or go into what we call bank storage into the ground. 175 million-acre feet per year and it's comparable to what's delivered on the CIP.

Ted Simons:
For Arizona, hydroelectric, all of this evaporation, and nuclear, all of this water requirement. Most forms of solar, not so much, but still you need water. What's going to work best?

Kris Mayes:
The cheapest is not necessarily what uses the least water which is what makes some of this debate interesting. The cheapest is probably concentrated solar power, CSP projects, the big troughs solar projects which actually uses water as part of the process of creating the energy from the sun. The form of solar that uses the least amount of water is photovoltaic. That might be in our favor going forward, but you raise an interesting point, Ted. We really have to start taking a look at these issues when asking our utilities to do their forward planning and that's one thing that we're doing. We have rule-making going on integrated resource planning and one of the questions we're going to ask is how much water are the generation plants you're planning on building going to use? What is the amount of water that you're going to use? What's the best most optimal mix, not just from a price standpoint, which is important for ratepayers, but also from the state standpoint. Because we're in Arizona, an arid environment.

Ted Simons:
Should we be getting some of our power from areas that aren't in such an arid environment? Does that make sense?

Gary Yaquinto:
I think it does. And if you look at renewables, there are places outside of Arizona that are going to be better equipped to provide wind power into the state and so ventures like that are going to come from places like Wyoming and Montana and probably be wheeled into Arizona and save on our water as well.

Ted Simons:
And talk about trading, virtual water comes up. What is virtual water?

Kris Mayes:
It's basically, sort of depends on the context, but basically an arrangement in which, you know, you can count water that is produced in another place toward the water needs you might have in another place. And it's controversial, and again, it depends on the context, but I think you have to be careful when talking about virtual water because it's just virtual. And Gary was talking earlier and you were talking about the impacts that a specific plant can have on a specific region and one of the things I think we've done wrong in the state, allowed development to occur in a region and told developers, all you've got to do is prove you've retired water in another part of the state and that will count to you being able to develop in this part of the state and the chickens could come home to roost big time on that down the road.

Mike Pasqualetti:
I might jump in. In a study I did for the Arizona Water Institute, we realized there was energy coming into the state from places like New Mexico and Colorado and electricity going out to places like California and Texas and other places and we're importing electricity some water. Takes water to make electricity. And we're exporting electricity and, therefore, exporting water and at a net deficit. Which is enough for the city of Tempe. It's not an insignificant amount. Doesn't sound like a lot when you compare it to the CAP. But it's water going out and it's -- a lot of that water is going out through the unregulated wholesale merchant plants that we allow to be sited in Arizona. So the policy question would be do we allow those plants to be placed in Arizona?

Kris Mayes:
And I would add as a follow-up to that, it's going to be interesting. I think we're going to see an increasing tension between two public policy goals in Arizona. Especially when it comes to solar energy. One is we want to be the solar energy capital of the world. And we want to go out and brand Arizona as the solar energy capital and what we want to do is encourage solar energy projects to be built here and I think they will be. But increasingly you're going to see states like California which can't manage to build anything and can't get anything through their permitting process coming to us and saying, would you allow us to build our solar plant in your state? And you're going to see a lot of friction over those ideas because some might object to having our water used for the production of energy to go to California.

Ted Simons:
And underneath is the cost of water. Is the era of cheap water in Arizona -- adios?

Gary Yaquinto:
I think it is. For too long, as I said, we've undervalued this resource in our state and I think it's important that because it is an essential commodity for life, and everybody needs water to live and survive, there has to be some water made available to families on a low-cost basis. But if you're a high user, I think it's now time for us to be evaluating and pricing that water properly. And as it increases in price, then I think consumers will use water more efficiently.

Ted Simons:
As it increases in price, what happens to energy?

Kris Mayes:
Well, what happens to energy is when it increases in price, the water, and people use less of it, then we have to -- we use less energy to pump that water and so that's a good thing. But to Gary's point, you know, we do need to value water differently and I think Arizonans are ready to do that. Ready to step up. But our utilities and water companies, electric companies, natural gas companies, they need to step up too. We need a statewide effort on both of these issues. And I think we need a statewide, frankly, marketing campaign around this to generate a dialogue about how we use our energy and how we use our water. And then I think we can all come together around this idea that maybe the price needs to go up.

Ted Simons:
Is Arizona ready to hear that the price of water needs to go up?

Mike Pasqualetti:
I think -- [Laughter] I don't know that I can answer it. I'll tell you its high enough now that it's got my attention. I did a calculation, I said how much energy does it take -- get me the water I use. A 10% increase. Hidden in my water bill is another 10% of my energy bill. Let's say I use $1,000 a year for the delivery of electricity, I'm using another $100 a year of electricity or other kinds of energy to get me the water I want. That's a hidden cost. I live in Tempe. The price of my water now per month is exceeding the price of my electricity. Now, the reason for that is, of course, full disclosure, I have solar panels on my roof. But it's exceeding it and I'm thinking now that I've done the solar part, I need to do the water part and cut back on the water use.

Kris Mayes:
I think it depends on where you live in Arizona. We've seen places where the cost is $10 a month. Crazy low and that's where you're not seeing conservation if we give the tools to people that allow them to conserve, I think people do conserve. You know, we need to be offering the utility that is Gary represents, need to offer consumers the tools like energy efficiency measures and water conservation measures.

Gary Yaquinto:
I think more and more companies are moving in that direction and that's a good place to be.

Ted Simons:
And that's a good place to stop. Great discussion.

Gary Yaquinto:
Thank you.

Mike Pasqualetti:
Thank you very much.

In this segment:

Kris Mayes:Arizona Corporation Commission Chairman;Gary Yaquinto, Arizona Investment Council President;Professor Mike Pasqualetti, ASU'S School of Geographical Sciences and Urban Planning;