Ted Simons: Water is needed to produce energy and energy is needed to treat and transport water. And a growing state like Arizona, the demand for water and energy is always on the rise. Both are precious resources and here in the desert southwest, water is especially scarce. What can Arizona do to make sure it has sustainable supply of both water and electricity? To find out, I spoke with Kris Mayes, chairman of the of 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 all on "Horizon." Thanks for joining us. 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. It takes a lot of water to produce energy, and it takes a lot of energy to produce water. Which is something I think we haven't really thought about much.
Ted Simons: Why haven't we thought about that much? It seems to make sense now that it's mentioned, but it doesn't seem to get mentioned that often.
Mike Pasqualetti: No, it doesn't. And I think it's a nice entree to the discussion of where water is used and everything in Arizona. It just so happens we use energy all the time, so we're very conscious of that consumption. And now when we combine that with our need of water as well, everybody is starting to get the idea that this is something that they need to be look at. It's certainly happening at the national level, it's happening internationally as well and clearly something we need to look 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 Alberto Rios arid state, and for too long our water has been undervalued. We need to take greater stewardship of this very 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: The doctor would be better to tell you what the differences are, 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. So the idea of building new nuclear in the desert southwest will probably be controversial from that standpoint, although I will add that the Palo Verde nuclear generating station outside Phoenix actually uses recycled water. So it's not groundwater. But most forms of solar energy, and I think this is why we need to focus on renewables, don't use water.
Ted Simons: So if you -- but if you've got a water cost here and you're saving electricity here with nuclear, where is the balance? What are we looking at?
Mike Pasqualetti: In terms of the amount of water that you need for nuclear, it's normally considered to be the highest water user of all the traditional sources of electricity. It's somewhere in the neighborhood of 750 or so gallons per megawatt hour. I use about 22 megawatt hours per year in my house. You can multiply that and find out how I'm responsible for. Geothermal does use water, but there's some nice aspects of solar that we can talk about, some use water, some don't use water.
Ted Simons: Is there enough water -- let's say that Arizonans and the country decides another nuclear plant is needed, 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've got sufficient water supplies and some places in Arizona, and we have other areas that are water deficient. If you look at the counties of Cochise, Gila, Yavapai, and Coconino, they're water short. So it would be problematic to do any large-scale facility there without securing new and additional water supplies.
Ted Simons: So it makes a difference where a solar plant or a nuclear plant is put.
Gary Yaquinto: Absolutely does.
Ted Simons: Because of water supply and delivery in those -- and those sorts of things.
Gary Yaquinto: Right.
Ted Simons: The idea that hydro-- I want to go with you on this, because I know this is something you're very interested in -- this was something that I should have known, but it just occurred to me after researching this, that when we have these big massive hydroelectric reservoirs, and they give us such wonderful power, that a lot of water is simply evaporating from these places. And you've got to put that into the cost, don't you?
Mike Pasqualetti: I think you do. The Glen canyon dam produces lake Powell, 250 square mile lake, Hoover dam, lake Mead, another big lake. Combined 1.3 million acre feet a year that are evaporated or go into bank storage, into the ground. Well, the CAP delivers 1.5 million acre feet per year. It's comparable in loss of water to what is delivered on the CAP.
Ted Simons: For Arizona, considering our water concerns, how Debbie Rowe electric, all this evaporation, nuclear, all this water requirement. Most forms of solar not so much, but still if you need water, what's the cheapest? 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 very interesting. The cheapest is probably at this point concentrated solar power, CSP projects, the big trough solar projects, which actually uses a water -- 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 basically photovoltaics, which is not necessarily cheapest, though I will say the price of P.V. panels is coming down. So that may be in our favor going forward, but you raise an interesting point, Ted, which is that we have really have to start taking a look at some of these issues when we are asking our utilities to do their forward planning. And that's one of the things the corporation commission is doing. We have rule-making going on integrated resource planning. One of the questions we're going to ask is, how much water are the generation plants that you're planning on building, going to use? What's 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 our ratepayers, but also from the state standpoint? Because we are 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. I think it does. 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. So ventures like that will come from places like Wyoming and Montana, and the part will be wheeled into Arizona, and that will save on our water as well.
Ted Simons: When we talk about trading and these sorts of things, virtual water comes up. What is virtual water?
Kris Mayes: Well, it's basically -- it depends on the context, but it's basically an arrangement in which you can count water that is produced in another place toward the water needs that 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 you're talking about virtual water, because it's just virtual. And Gary was talking about earlier, you were talking about the impacts that a specific plant could have on a specific region. And one of the things I think we've done wrong in this state is we've allowed development to occur in a region and we've told developers all you've got to do is prove you've retired some water in another part of the state, and all that will count toward your being able to develop in this part of the state. And I think what we -- the chickens could come home to roost big-time on that thing down the road.
Mike Pasqualetti: I might jump in here and say the study I did for the Arizona water institute, we realized there was energy coming into the state from other places like New Mexico, Colorado, there's also energy, electricity now going out of the state, places like California, Texas, and other places, and so we're importing in that electricity some water. It takes water to make electricity. We're importing some electricity, therefore we're importing water, and we're exporting electricity, therefore we're exporting water. But we're at a net deficit of about 30,000 acre-feet per year, enough for the city of Tempe. So it's not an insignificant amount of water. It doesn't sound like a lot when you compare it to the CAP, 1.5 million acre feet. But it's water that is going out, and it's a lot of that water is also going out through these unregulated wholesale merchant plants that we allow to be cited in Arizona. The policy question would be, do we allow those plants to be placed in Arizona?
Kris Mayes: 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. Quite frankly. And we want to go out and brand Arizona as the solar energy capital of the nation and the world. And so what's -- what we want to do is encourage solar energy projects to be built here, and I think they will be. But increasingly you're also 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, hey, would you build -- would you allow us to build our solar plant in your state? So you're going to see a lot of friction over those two ideas, because some people may object to having our water used for the production of energy to go to California.
Ted Simons: And underneath all of this is the cost of water. Is the era of cheap water in Arizona, is it adios?
Gar Yaquinto:I think it is. I think for too long -- as I said earlier, for too long we've undervalued this resource in our state. 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 that it's now time for us to begin valuing and pricing the water properly. And as it increases in price, then I think consumers will use water more efficiently.
Kris Mayes: We do need to value water differently. And I think Arizonans are ready to do that. I think Arizonans are 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 -- 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 that. I'll tell you that it is high enough now it's gotten my attention. In my own house -- I did a calculation. I said, how much energy does it take to get me the water that I use? And it's about a 10% increase. So hidden in my water bill is another 10% of my energy bill. So let's say I use a thousand dollars 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 that I want. That's a hidden cost you don't think of it that way. But also I've noticed that the price -- and 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 nevertheless, it is exceeding it, and I'm thinking Now that I've done the solar part, I need to do the water part. And I need to cut back on the water use.
Kris Mayes: It depends on where you live in Arizona. We see places in Arizona where the cost of water is $10 a month. Crazy low. And that's where you're not seeing confirmation. What I would say is, if we give the tools to people that allow them to conserve, I think people do conserve. We need to be offering the utilities that Gary represents need to be offering consumers the tools like energy efficiency measures and water conservation measures, that will allow them to conserve and do the things we're talking about.
Gary Yaquinto: Absolutely. More and more companies are moving in that direction. And that's a good place to be.
Ted Simons: All right. That's a good place to stop. Thank you for joining us. Great discussion.