Clean Energy Offers Solution to Western Water Woes

As the federal government continues to dither on clean energy policies, western states are leading the transition to a cleaner energy future. And for good reason - traditional energy supplies use tremendous volumes of water, a scarce resource in the arid American West. Indeed, the West cannot afford the water costs of traditional energy sources, especially when transitioning to the region's abundant renewable energy sources can give us much of that water back.

How much water is at stake? In 2005, power plants in the six western states of Arizona, Colorado, Nevada, New Mexico, Utah, and Wyoming consumed an estimated 129 billion gallons of water, enough to meet the needs of Albuquerque, Denver, and Phoenix, combined.

Recent decisions by utilities in Colorado and Arizona serve as prime examples of how smart energy policies can benefit the region's water resources.

In 2010, Colorado approved a plan allowing Xcel Energy to replace the oldest, least efficient coal plants in the Denver-Metro region with cleaner burning natural gas, energy efficiency, and other resources. The air quality benefits of the Clean Air-Clean Jobs plan were widely hailed, but less well recognized were the water benefits. The plan will save almost 1.7 billion gallons of water each year, enough to meet the needs of 52,000 Denver residents. The water saved by this plan is worth upwards of $50 million today, and the future value will undoubtedly be higher, as urban demands continue to rise.

Last November, Arizona Public Service announced a plan to retire three of its oldest coal units at the Four Corners Plant in Northwestern New Mexico. This will free up 2.5 billion gallons of water annually for other uses.

The value of this "new" water supply is underscored by the cost water utilities, and their ratepayers, are planning to spend to develop new supplies. Municipal water providers in Las Vegas, Denver, Colorado Springs, Southern Utah, and Central Arizona propose to build new water supply projects with capital costs ranging from $175 million to $1.1 billion - per project.

And water in rivers and streams supports the growing recreation industry, a critical economic sector in the rural West. According to the U.S. Census Bureau, in 2006 fishing alone generated $2.9 billion in net revenues in the six states of the Interior West.

The price, or value, of water is only likely to rise in the future. In 2002 - 2003, when Colorado experienced severe drought, the average price cities paid for new water rights tripled relative to pre-drought prices. Similar trends are likely throughout the region in the future. Stark evidence of an increasingly dry West can be seen in the "bathtub rings" around the West's two largest reservoirs, Lake Powell and Lake Mead, left half-full by an 11-year drought in the Colorado River basin, the source of water for at least 30 million people.

Utilities and regulators in Colorado and Arizona are now evaluating the impacts of energy choices on water supplies. But in many states, water is still a hidden cost of energy, and is not valued in long-range planning. Whether deciding to phase out older, inefficient plants or to build new power plants, water must be part of the equation. We simply can no longer afford to ignore it.

These key messages are explained in new report by Western Resource Advocates, Every Drop Counts: Valuing the Water Used to Generate Electricity. The report provides a critical analysis of how electric utilities' can - and should -value water in their long-range planning.