Navajo Generating Station

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The EPA may force the Navajo Generating Station to install expensive emission controls on the coal-fired power plant located in Page, Arizona. The plant has long been criticized for contributing to haze in the Grand Canyon. Central Arizona Project Board President Susan Bitter Smith explains how new emission controls could impact the price of water.

Ted Simons: The Navajo generating station is a coal-fired power plant located about a dozen miles east of the Grand Canyon in Page, Arizona. The plant has long been criticized as a source of pollution that causes haze at Grand Canyon national park. The environmental protection agency is considering a rule to force the plant to install new, expensive emission controls. But are the costs worth the benefits? Here to talk about that is Susan Bitter Smith, president of the central Arizona project board of directors. We invited Rob Smith of the sierra club to join us but he wasn't able to make it. Thank you for being here tonight on "horizon."

Susan Bitter Smith: I'm so glad to be here.

Ted Simons: Why is this not the best way to control emissions and haze at the Grand Canyon?

Susan Bitter Smith: Well, as you mentioned, the EPA has a proposal to look at a couple of different ways to control with visibility -- not health related but visibility emissions. Proposal range from a $40 million solution to $1 billion solution. Our issue is which is best? And quite frankly, which is the most cost effective for a return on the investment that doesn't result in building unending water rate increases.

Ted Simons: what they're proposing are the scrubbers that are expensive but apparently according to the EPA effective and needed for that plant. Why are they wrong?

Susan Bitter Smith: They're wrong because there are other technologies that are at the $40 million increment than the $1 billion increment, that will make improvements to the visibility issue. There has already been $40 million dollars invested to eliminate the haze components. That component is not done yet. It won't be done until 2011. We have time yet to see whether we do have a problem. The differential between the two different technologies and what the naked eye will see in visibility is minimal. In fact, it's not even clear there's a difference. So for that cost differential, it's not clear it makes sense to have it done.

Ted Simons: The law from what the critics will say is that the law states is that no impaired visibility should be over national parks and protected lands. If that's the law, don't you do as close as you can to reach that goal?

Susan Bitter Smith: As close as you can, absolutely. Um, with a cost benefit analysis. That's our issue at the C.A.P. C.A.P. Receives 95% of its power source from Navajo generating station. In fact, Navajo was built to power the C.A.P. It was done by an act of congress to make the C.A.P. Function. If we find that to be so cost evasive and the cost goes up so much incrementally that the cost of water goes up four or five times, the dominoes that hit Pinal county and pima country are beyond belief. That's really the issue. Yes, we need to be looking at other alternative supplies. We need to be conscious of is whopping to the environment. But we need to be rationale about what will happen to water.

Ted Simons: How much could water increase? Before -- check that question. Let's go back to where why it's so important to have power associated with the central Arizona project. Power for what?

Susan Bitter Smith: When I got elected to the board, this was a question I asked. I thought we were talking about water. We spent a great deal of time talking about the power. You can't move the water from the Colorado River down to the areas where it needs to be without a significant amount of power. Water is flowing uphill, down hill and uphill again. The power and water nexus is inescapable.

Ted Simons: Some people are thinking if the emission control system goes through, water prices could as much as quadruple. Really?

Susan Bitter Smith: Absolutely. Reason for that is if in fact the EPA gets their way and we're forced and the operating entity for the plant is forced to install $1 billion of investment, the $1 billion gets rolled off back into power rates which gets rolled off back into water rates. That's an astronomical amount of money it to absorb. On top of that, what could happen is the cost of operating that plant could become so beyond belief that the plant could shut down then we have to buy alternative sources of power from California and other places. We have no bargaining authorities that could be a huge hit to water rates in the valley.

Ted Simons: Yet I know the EPA itself, sources there, are saying that the costs are being exaggerated, the benefits are being underestimated, that it's not as dire and it could be much better than critics are saying. How do you respond?

Susan Bitter Smith: I think they're wrong. And I think folks at the EPA that are sitting and watching in D.C. Need to come to the plant and look at the implications and look at the data. C.A.P. and the operating partners for Navajo advocates for a positive environment. We understand at some point we need to look at alternative supplies but that can't be done overnight. In fact, there's lots of scientific data, data we're very confident in, that says that the solution the EPA is advocating to deal with visibility emissions doesn't really provide a return on that investment. There's an alternative solution at the $40 million price tag, the $1 billion price tag.

Ted Simons: The $40 million price tag is the SRP alternative. More efficient burners?

Susan Bitter Smith: Correct.

Ted Simons: How does that work? What's it mean?

Susan Bitter Smith: It means that it's on top of the existing burners that have already been installed under the current retrofit program which has already been ordered by the EPA and SRP is putting in place. We have a first level of incremental scrub that's have been put in place that'll be up and operational by 2011. Then on top of that, SRP is suggesting there could be some additional opportunities to erase visibility problems but the cost benefit between the most expensive version, the Cadillac version versus the Ford version are incrementally not significant to the naked eye.

Ted Simons: Is there a lower model of the Cadillac version? Can you use the scrubbers and ammonia and what the EPA wants to do, can you get a compact model of that?

Susan Bitter Smith: I think that's what SRP's plan operators are proposing. That's the compact model that they're advocating as the alternative, $40 million solution rather than the $1 billion solution. That's what we're advocating the EPA lock look at. There are other issues of the jobs in the Navajo and the Hopi nations. They're dependent upon the plan plant for the jobs and the economic issues that would result if in fact water becomes less available and much more expensive.

Ted Simons: Will the generating plant not though vulnerable to those kinds of price increases and outside effects should climate change legislation go through and cap and trade go through? Isn't that coming down the pike any way?

Susan Bitter Smith: Absolutely. This issue is a much bigger stab at a broader issue. C.A.P. And SRP as a plant operator clearly understand that in the future we need to continue to look for alternative supplies. The future of the coal-generated station may not be for the next 100 years. But here's the issue. Are there are no alternative supplies now? Nuclear may be an opportunity there maybe other opportunities. None of those are in existence today and can't rev up in an instant. There are 50 or 20 or 25 years of leap time necessary to put other kinds of sources in place that could meet the demands of the C.A.P..

Ted Simons: Environmental groups have offered the idea of combining Colorado River water with solar panels, to the point of actually covering canals and/or the river, parts of the river with solar panels to get that renewable energy source going. Realistic?

Susan Bitter Smith: No. And the reason it isn't is obviously is we're off-peak pumpers. We pump at night. Solar package, unless you can control and contain that in the high volume that is used, there's simply not enough power that could be contained. Solar power requires a lot of water. Why would we use water we're trying to move for consumption in urban areas, using that water to create a power source?

Ted Simons: EPA should go ahead and approve this? Are you going to go to court?

Susan Bitter Smith: It's highly unlikely. C.A.P. Isn't the plan operators. We as the -- the C.A.P. Board think this is the most serious crisis since the inception of C.A.P. We'll have to view it as that.

Ted Simons: It seems underlying this is the idea that if it means water is more expensive, that may not necessarily be such a bad thing because water is a precious resource here in the southwest especially and there are those that think water right now is too cheap that because the price is what it is, people aren't compelled to conserve. How do you respond?

Susan Bitter Smith: Well, C.A.P. and other water providers spent a lot of time and energy talking about conserving water. We agree with the environmentalists on conserving water and that being an important idea. That being said, water at a three or four or five time incremental price increase could make the ability for us to survive in this valley almost impossible. That hit would be very hard to absorb. We know that water rates will rise on their own as we speak from ongoing things that are happening as the cost of power becomes a little bit more expensive over time, but to make that automatic quantum leap jump to that price increase overnight would certainly be injure impossible for the valley already struggling to survive.

Ted Simons: Could so when, again, we hear that you could have the economy, the reservation up there, it could collapse because of lost jobs, when you're saying that the plant could close, literally close because of something like this, when you're saying the results aren't worth the price, and the other side says, this is just an exaggeration, let's see how it works. Let's see what happens here and adjust from there, again, what do you say?

Susan Bitter Smith: We can't run that risk. If the plant shuts down or we have water rates go incrementally up overnight, the valley could collapse. We're the primary water source. We believe the better opportunity here is to look at the alternative that SRP proposed. Let's evaluate that and see how that works and if there is something beyond that that makes some sense, we have incremental time to continue to work in visibility issues. We again are environmentalists in our own right as well and want to make sure the plant operates efficiently and appropriately but not at the cost of eliminating the water source.

Ted Simons: What kind of time table are we looking at by a decision from the EPA?

Susan Bitter Smith: EPA is moving rapidly we anticipate if they're going to do public hearings, we which hope, sometime in January. It's moving on a rapid pace.

Ted Simons: Susan, thank you for joining us.

Susan Bitter Smith: Thank you for letting me be here.

Susan Bitter Smith:President, Central Arizona Project;

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