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Palo Verde Wastewater Agreement is a Big Deal

In Tuesday's post ("‘Waste'water No More, Arizona Sees the Value in Effluent") I started to talk about the deal that APS and SRP just made with Phoenix, Mesa, Glendale, Scottsdale and Tempe to purchase their treated wastewater for Palo Verde through 2050.  Then I ran off talking about the need for treatment to match use, the need for truer-cost water pricing, and the opportunities effluent presents (and about my dogs).

So today I thought I should focus more diligently on the actual deal, which is really pretty huge.  It's a big win-win-win for everyone - for APS and SRP as owners of Palo Verde Nuclear Generating Station, for the 5 cities' bank accounts, and for the people who live in those cities and pay taxes and utility bills there.

"In terms of regional cooperation and positive economic and quality of life impacts, the new water agreement can be compared to other significant Valley-wide projects, including the Valley's freeways, light-rail transit system and regional fire-service agreements," said Phoenix City Manager David Cavazos in a press release.

The details of the deal

  • The price of the effluent Palo Verde gets will increase dramatically over the course of the contract, from about $53 per acre-foot today to $300 per acre-foot in 2025.  That makes sense, as the demand for this increasingly important resource rises (see Tuesday's post for more about the price of effluent).
  • The deal, which will total somewhere around $1 billion, includes $30 million to be paid over the next four years to repair and upgrade the 91st Avenue Wastewater Treatment Plant, which treats the effluent to send on to Palo Verde.
  • The other $970 million (give or take) comes from the price of the effluent Palo Verde buys (which increases nearly six-fold over the next 15 years, then more slowly after that).

The benefits

  • Under the old deal, Palo Verde had rights to 105,000 acre-feet of water a year.  Even though the plant only used about 80,000 acre-feet, the water was contracted, so the cities couldn't sell it to other users.  Under the new plan, the cities will retain the rights to the 25,000 acre-feet that Palo Verde doesn't need. That means the water can be put to beneficial use and will generate revenue for the cities.
  • According to city officials, consumers will benefit from the new deal almost immediately.  Cavazos told the Republic that now Phoenix won't have to increase its water rates next year.  "This is $1 billion less that we would have to charge ratepayers," he said.
  • Marty Shultz, vice president for government affairs for Pinnacle West Capital Corp. (which shares ownership of Palo Verde through its Arizona Public Service Co. subsidiary) told the Republic that using the treated effluent to cool Palo Verde's reactors is, "from an economic and environmental standpoint" the best use of the water.  "We're talking about a power plant that is zero emissions, a power plant that produces power at the lowest rate of any other source."
  • For APS and SRP, the deal means a reliable source of cooling water for Palo Verde through 2050, an important need for the largest nuclear power plant in the nation and the first not built on a major body of water.
  • "Treated effluent is becoming a valuable resource not just in the arid Southwest, but across the country," said Ben Grumbles, the Director of the Arizona Department of Environmental Quality, in a press release.  This deal recognizes that increasing value of treated wastewater. 

I really can't see any reason not to like this new deal: APS and SRP get a reliable source of critical cooling water for Palo Verde through 2050 - that's a win.  Phoenix, Mesa, Glendale, Scottsdale and Tempe get a couple new revenue sources - another win.  The citizens get lower utility rates - win #3.  Really, we all win, because the resource that some think of as "waste" is put to beneficial use.

Written on Thursday, 08 April 2010 00:00 by Gary Yaquinto

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