The latest projections for spring–summer runoff into Lake Powell (a good measure of hydrologic conditions in the Colorado River Basin), indicate that 2013 flows will be among the lowest on record. Reclamation projects that storage for the entire Colorado River system will be less than 50 percent of capacity at the end of the year. Low water conditions of this magnitude would normally eclipse other factors that affect the availability of this water supply. However, energy is required to move water to users — and the main source of power for the CAP now faces unprecedented uncertainties.

The Navajo Generating Station, a 2250 MW coal-fired plant, provides nearly all the power required to operate the CAP. The plant’s future depends on the willingness of its partners / owners to invest in its continued operation. However, two partners recently announced their intent to terminate their NGS contracts. One is the Los Angeles Department of Water & Power. Earlier this year, the LADWP decided to terminate contracts on all coal-based power supplies and struck a preliminary deal to sell its NGS share to SRP by 2015. Then, last month, another partner, Nevada Energy, publicized that it too plans to divest its ownership in coal-fired plants. This leaves four remaining Arizona partners: Reclamation (on behalf of CAP), SRP, APS, and TEP.

The defections are, in part, a response to new regulations for coal-fired power plants. Earlier this year, the EPA published its proposed rule for NOx controls at NGS. This long-awaited rule will cost an estimated minimum of $600M to implement — a cost that presumably must be shouldered by NGS owners, who may be reluctant to increase investments in coal given the current (and likely future) regulatory environment.

Other uncertainties threaten NGS. The plant’s operator, SRP, must execute a new land / infrastructure lease with the Navajo Nation. The current lease, enacted in 1969, is set to expire in 2019. Water contracts between SRP and Reclamation must also be renegotiated; the current contract that supplies water to the power plant expires in 2014. Furthermore, coal supply contracts involving Peabody, the Hopi Tribe, and the Navajo Nation need to be renewed. And finally, the Navajo Nation and Hopi Tribe both have unsettled claims to Arizona’s 50,000 AF of water from the Upper Colorado River Basin, some of which is currently used to operate the plant.

Despite these uncertainties, Arizona’s NGS partners may be willing to invest in this critical facility for the future because of its importance to the state; indeed, leaders at CAP, SRP, and the Navajo Nation have publicly expressed their support for the plant. In any case, regardless of whether NGS shuts down or continues to operate, it will have a major impact on the price and availability of Colorado River water supplies in Arizona in the near future.

Juliet M. McKenna, MS, PG | Michele Robertson, PG

Each year, M&A sponsors the Montgomery Prize — a $2,000 cash award — for the best oral presentation at this event. This year’s winner was Isabel Fay, for her presentation, “Localized synorogenic remobilization of Cu-Co ores in the Central African Copperbelt.”

Currently in the third year of her Ph.D. program at the UA, Isabel is focusing her research efforts on sediment-hosted ore deposits — particularly, their distribution, mineralogy, and geochemistry.

Download her abstract here [94 KB].

The winner of the Montgomery Prize for best oral presentation was Joel Biederman, a Ph.D. student. His presentation, entitled “Compensatory Processes Dampen Impacts of Insect-Induced Forest Die-Off on Catchment Water Balance and Biogeochemical Fluxes,” described his research on how the mountain pine beetle is affecting hydrologic processes in mountain watersheds.

Download the abstract [74 KB PDF]

The EPA’s evolving efforts to set a standard for hexavalent chromium (chromium-6) may have profound implications for Arizona groundwater suppliers. Currently, public water systems are only required to meet the standard for total chromium (100 parts per billion [ppb], set in 1991), which includes both chromium-6 and its more benign counterpart, trivalent chromium (chromium-3). The California EPA adopted a drinking water goal of 0.02 ppb in July 2011 after determining that chromium-6 is likely a carcinogen.

The EPA began a rigorous review of the health effects of chromium-6 after the Department of Health & Human Services published toxicity studies in 2008. In September 2010, the agency released a draft of the human health assessment for public comment and external peer review. Once this draft is finalized, the EPA will use it, along with other relevant information, to determine if a new chromium-6 standard is warranted; this process is anticipated to take another year. In the interim, the EPA has required most public water systems to monitor for chromium-6 to gather more data on its distribution and concentrations.

So, why, after 5 years of investigation, are additional studies needed? One reason is that chromium has a Jekyll-and-Hyde personality in water: It may occur in either its trivalent (benign) or hexavalent (toxic) state depending principally on pH and oxidation conditions. Since EPA standards are risk-based, it’s important to understand which form of chromium is present in water supplies to evaluate how it will ultimately affect receptors.

Unfortunately, the conditions in Arizona’s deep aquifers — which tend to be alkaline and highly oxidized — favor the formation of chromium-6 over chromium-3. A 1975 USGS study found that chromium-6 concentrations in 436 samples in Paradise Valley ranged from 0 to 220 ppb. A more recent study by the Environmental Working Group looked at chromium-6 levels in tap water from 35 cities and found that it ranged from 0 to 12.9 ppb; chromium-6 levels were 0.19 and 0.05 ppb, respectively, in Phoenix and Scottsdale. In addition, chromium can partially or completely oxidize to chromium-6 when it occurs in water supplies that are subjected to chlorination or certain other disinfection processes.

If the EPA follows California’s lead in setting a low value for the new chromium-6 standard, it’s likely that many Arizona water providers will be required to treat their sources or develop new ones. The costs related to compliance and treatment may be similar to those for arsenic, which is now regulated under a standard established in 2006. In the short term, at least, this new standard has the power to impact both the availability and cost of municipal water supplies in Arizona — perhaps as much as any other market factor we have seen in a long time.

The conference will feature a paper by M&A’s Lyle Davis, a principal engineer and mining specialist, and Dr. Mark Thomasson, who will present it on April 16. The paper is entitled “Development and Transient Calibration of a Numerical Model for an Open-pit Mine Located in a Geologically Complex Fractured-rock Setting.”

Michele will be presenting a talk on the regulatory challenges associated with using alternative water sources (process wastewater, reverse osmosis reject, etc.) for dust control. Although such sources appear more environmentally responsible from a water resource management perspective, they can trigger the requirement to obtain a water quality permit. Michele will discuss an approach that has been successful with ADEQ to resolve this conflict, drawing from her experience as a former ADEQ Groundwater Section Manager. She currently leads M&A’s Environmental Permitting team.

For more information on the conference, click here.

To download a copy of Michele’s abstract, click here.

The training is organized by the AQUASEC Center of Excellence for Water Security, a collaboration between the University of Arizona, the Pontifical Catholic University of Chile, the Stockholm Environment Institute, and UNESCO’s International Hydrology Program, among others. To learn more, click here.

In 2001, a landmark agreement between the Arizona Water Banking Authority and the Southern Nevada Water Authority established interstate water banking. At the time, water banking offered important benefits for both states. Arizona, with rights to 2.8 MAF/yr of Colorado River water, lacked the demand to take its full allotment. Nevada, on the other hand, faced unprecedented population growth in Las Vegas but held rights to a meager 300,000 AF/yr of Colorado River water; consequently, it was willing and able to pay for additional supplies to buffer future shortages on the river. The agreement was a win-win: It provided additional water supplies for Las Vegas while preserving Arizona’s future ability to use its Colorado River allocation.

The original agreement and subsequent amendments called for Arizona to “bank” 1.25 MAF of Colorado River water in underground storage facilities. In exchange, Nevada would pay the full cost of water delivery and storage, plus an additional $100M that Arizona could use to develop new in-state supplies. To date, Arizona has stored almost 50 percent of the contracted 1.25 MAF, receiving $123M from Nevada.

Twelve years later in 2013, however, water banking is no longer advantageous for either party. In recent years, as Arizona’s demand for CAP water has increased, less water has become available for Nevada (Arizona customers have first priority for these supplies); in fact, since 2010, Arizona has had no surplus CAP water at all for Nevada, as shown in Table 1.

Hydrologic and economic conditions have created additional challenges. In 2011, water levels in Lake Mead approached the 1,075-foot trigger level for declaring a shortage. In addition, the SNWA faced financial difficulties related to the economic downturn, which hit Las Vegas particularly hard, affecting its need to stockpile water supplies in Arizona. Las Vegas is now focusing on obtaining groundwater supplies from northern Nevada.

Based on these developments, the parties are now looking to terminate future water banking obligations. Lessons from the past are not forgotten, however; the new draft agreement provides the flexibility to adapt to changing conditions. In fact, the parties can agree to resume storage at any point in the future. This adaptive approach will be important to managing the Colorado River as both states grapple with the potential impacts of climate change and future population growth.

The AWBA Commission is expected to vote on the final agreement at its next meeting on March 20, 2013.

Table 1: AZ–NV Interstate Storage Account

Juliet M. McKenna, MS, PG | Michele Robertson, PG

Last month, we noted that increasing costs and lower demand for coal-fired power might unleash an acceleration in rates for CAP water after 2013. Not only does the CAP’s late-January budget briefing to its Board of Directors confirm this speculation, but it also proposes immediate action to address the growing deficit.

The latest CAP projections show that financial reserves are currently 25 percent lower than the Board-established target, with little hope of recovery in the next few years. Furthermore, these projections do not appear to consider costs for implementing EPA regulations at Navajo Generating Station, the coal-fired plant that provides nearly all of the CAP’s power. On January 18, the EPA proposed new emissions-reducing requirements for the NGS that are estimated to cost a minimum of $500M. During this year’s rate-setting process, which continues until June, the Board will find it difficult to avoid the conclusion that the current revenue-water rate structure is unsustainable.

The January brief recommended adjusting water rates starting this year to begin to compensate for the shortfall. The proposed approach includes increasing energy rates for all customer classes, which will require increasing the subsidy for agricultural customers.

If the Board leaves rates alone this year, some customers may be temporarily satisfied. However, financial problems will persist and grow, adding to uncertainty for the future. The next few months will reveal whether the Board plans to endorse a wait-and-see approach or pursue a more aggressive course to address its long-term structural revenue deficit.

The Board brief from the January 24 Finance Committee meeting is worthy of review by anyone involved in budgeting for future CAP water use.

This workshop will be held on February 14 in Phoenix. It will feature presentations by industry experts, followed by panel discussions, on the technical and regulatory aspects of sustainable closure of tailings dams as well as possible applications to coal ash impoundments and other slurried wastes.

An environmental permitting specialist, Carrolette joined M&A in 2011. In addition to working for various environmental consulting firms in the Phoenix and Denver area, she spent 3 years managing ADEQ’s Aquifer Protection Permit Unit, where she was responsible for mining and industrial permits.

Agenda — Closure of Tailings Dams

Workshop: Thursday, February 14, 2013

Field Tour: Friday, February 15, 2013

Site visit to the Old Dominion and Miami mines (2-hr drive)