The Future of Navajo Generating Station and Potential Implications for Arizona
Water
John F. Sullivan Salt River Project
July 29, 2014 National Water Resources Association – Western Water Seminar
J.F. Sullivan, 07/29/14
NGS Background
¨ 3 coal-fired units, 2,250 megawatts (MW)
¨ Located on Navajo Nation
¨ Operated by SRP on behalf of six participants
¨ Over 520 employees, 85% Navajo
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NGS Participants
J.F. Sullivan, 07/29/14
Importance of NGS
¨ Built as alternative to dams at ends of Grand Canyon
¨ Provides over 90% of power for Central Arizona Project
¤ CAP delivers over 1.5 million acre feet of water to Central Arizona counties
¤ CAP accounts for 32% of the Active Management Area water supply
¨ Provides funds for Indian water rights settlements
¨ Supports local economy
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J.F. Sullivan, 07/29/14
Challenges Facing NGS
¨ Future ownership uncertain
¨ Coal supply agreement must be extended beyond 2019
¨ Lease and rights-of-way must be extended (requires Federal environmental reviews)
¨ May be impacted by potential future EPA carbon rule for tribal sources
¨ Subject to Regional Haze Rule (costly additional emission controls required as Best Available Retrofit Technology; “BART”)
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J.F. Sullivan, 07/29/14
Regional Haze Rule
¨ Goal to achieve natural visibility conditions by 2064
¨ Progress measured over 10-year planning periods
¨ First planning period 2008-2018
¨ First planning period requires analysis of BART for older coal-fired power plants
Low NOx Burners
Selective Non-Catalytic Reduction
Selective Catalytic Reduction
NOx Control Options
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J.F. Sullivan, 07/29/14
EPA’s Initial BART Proposal
¨ BART Determination Requires Selective Catalytic Reduction (SCR) by 2018
¨ BART Alternative EPA also proposed a BART alternative requiring SCR in 2021-2023
¨ Potential Cost = $650 million - $1.5 billion
¨ EPA also invited other “better than BART” alternatives that achieve the same or greater emission reductions
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J.F. Sullivan, 07/29/14
Timing Constraints
Proposed EPA BART Compliance Deadline
Proposed EPA BART Alterative
Compliance Deadline
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J.F. Sullivan, 07/29/14
Technical Work Group (TWG)
¨ Central Arizona Project (CAP)
¨ Environmental Defense Fund (EDF)
¨ Gila River Indian Community (GRIC)
¨ Navajo Nation (NN)
¨ SRP/ NGS Owners
¨ U.S. Department of the Interior (DOI)
¨ Western Resource Advocates (WRA)
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J.F. Sullivan, 07/29/14
TWG BART Proposal
¨ Alternative A (if certain ownership changes occur) ¤ Shut down one unit or reduce generation by 2020 ¤ SCR or equivalent on two units by 2030
¨ Alternative B (all other circumstances) ¤ NOx reductions equivalent to shutdown of one unit
from 2020 to 2030 (virtual unit closure)
¤ Submit annual plans with potential future operating scenarios beginning in 2020
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J.F. Sullivan, 07/29/14
Emission Reductions
Scenario NOx Reduc0ons
3 Units with SCR by 2018 (EPA BART) 735,000 tons
1 Unit Shutdown, 2 Units with SCR by 2030 (TWG Alterna0ve A)
794,000 tons
Virtual Unit Shutdown, Annual Plans
(TWG Alterna0ve B) >735,000 tons
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J.F. Sullivan, 07/29/14
Value of TWG Alternative
¨ Best way to ensure continued operation of NGS
¨ Provides time to resolve outstanding uncertainties
¨ Maintains Arizona utility interests in NGS
¨ Defers significant cost of additional controls
¨ Reflects the interest of a broad spectrum of stakeholders
¨ Achieves greater emission reductions than EPA’s proposal
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J.F. Sullivan, 07/29/14
EPA’s Final Rule
¨ Final rule issued July 28, 2014
¨ Appears to incorporate the TWG Alternative
¨ Further review of the rule is in progress
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J.F. Sullivan, 07/29/14
Potential Water Implications
¨ CAP is single largest source of renewable water in Arizona
¨ Closure of NGS would cause substantial increase in CAP water rates ¤ Could adversely impact agriculture
in Arizona and Indian water rights settlements with central Arizona tribes
¨ Adoption of TWG Alternative will minimize impact on water rates versus initial BART proposal
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J.F. Sullivan, 07/29/14
Next Steps
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K. J. Barr, 07/29/14
Questions?
Additional Information:
www.NGSPower.com www.cap-az.com
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