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ARIZONA HOUSE OF REPRESENTATIVES
Forty-ninth Legislature – First Regular Session
AD HOC COMMITTEE ON
ENERGY AND WATER DEVELOPMENT
Minutes of Interim Meeting
Monday, November 2, 2009
House Hearing Room 3 -- 9:00 a.m.
Co-Chairman Gowan called the meeting to order in House Hearing Room 5 at 9:12 a.m. and attendance was noted by the secretary.
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Senator Al Melvin, Co-Chairman |
Representative David Gowan, Co-Chairman |
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Senator Amanda Aguirre |
Representative Russ Jones |
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Senator Thayer Verschoor |
Representative Franklin Pratt |
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Senator Barbara Leff |
Representative Robert Meza |
Presentation by the Hopi Tribe on the Potential Impact of the EPA "Haze Rule"
Scott Canty, General Counsel for the Hopi Tribe, provided background (Attachment 1) about the Hopi Tribe, which numbers about 12,500, most of whom live in northern Arizona on a Reservation that is completely surrounded by the Navajo Reservation. The Tribe has a history of economic problems due to its remote location and high poverty and unemployment rates and is essentially a third world economy. The Hopi Tribe does have significant coal and mineral resources, which are the backbone of its economy. Coal mining began in 1970 on the Reservation; much of the coal can be surface-mined, but the remainder in deeper seams requires underground mining. This coal is jointly owned with the Navajo Nation and the two tribes share equally in the revenue from the coal. The Hopi Tribe does not have gaming and casinos as alternate sources of income, instead relying on its coal resources for health, education, and welfare services.
Mr. Canty explained that Hopi coal had been sold to two power plants: Mohave Generating Station (MGS) in Laughlin, Nevada, and Navajo Generating Station (NGS) in Page, Arizona. MGS was closed in 2005 due to air emissions compliance issues and the loss of the $8.5 million annual MGS coal revenues has greatly affected the Hopi economy and operations of the Tribe.
Mr. Canty stated that Federal regulations about visibility issues (“haze”) at the Grand Canyon now pose a threat to the NGS revenues, which comprise about 88 percent of the Tribe’s annual operating budget. Any retrofitting to comply with these regulations would cost about $1 billion, even though most of the visibility problems are not caused by mining operations and power plants, but by other contributors, including dirt roads and smog from California (Attachment 2). He added that proposed Federal carbon cap and trade legislation would eventually make Hopi coal worthless and would violate Federal trust obligation to protect the value of coal as a tribal trust asset.
Mr. Canty stated that renewables will not be a solution for the Hopi Tribe as there is not enough wind resource, and solar’s potential is far in the future. Solar stations and equipment will likely be located near load centers such as Phoenix, rather than in remote Hopi lands.
Mr. Canty addressed Members’ questions, explaining that most of the mining jobs are actually on Navajo land, although mining revenue is shared equally between the tribes. He explained that low nitrous oxide (NOx) burners will serve as a bridge to remediation for NGS. Mr. Canty explained that coal export outside the United States is something to consider, although a railroad must be built to get the coal to market. He explained that uranium deposits on the reservation are not considered by the Tribe to be commercially viable because of the history of contamination of the water supply by the Federal government during uranium mining operations during the Cold War.
Mr. Canty stressed the need to convince the Federal government and the Environmental Protection Agency of the importance of NGS and to support Indian water rights.
Nada Talayumptewa, Chairman, Hopi Tribal Council's Energy and Water Task Team, stated that if NGS were to be closed the Hopi Tribe would essentially become wards of the government. She asked the Members to provide whatever support they can for the continuation of NGS.
Presentation on Energy Options for Arizona – Coal
Tom Dorn, Peabody Energy, explained that Peabody, the largest private coal producer in the world (Attachment 3), is working with the Hopi Tribe to mine their coal. He stressed that coal mining in Arizona fuels low-cost electricity, jobs, and up to $3 billion in economic benefits. Peabody operates the mine on Black Mesa in a 40-year partnership with the Hopi and the Navajo. He described the successful reclamation efforts on the land when mining is completed.
He described carbon (CO2) capture and storage and how it dissipates into natural elements in the ground and helps development of other natural resources. He stated that coal should be a leading part of the energy mix in Arizona.
Discussion ensued about atomic energy and coal exports. Senator Aguirre inquired about what is driving energy costs in Arizona and why those costs are high.
Russell Smolden, Salt River Project (SRP), explained that coal-fire plants are old and need expensive retrofitting of their scrubbers, which increases the cost of doing business.
Yvonne Hunter, Arizona Public Service (APS), in response to a question about the Cholla Power Plant, stated that APS received a grant from the Department of Energy to use algae to sequester CO2; APS is working to see if this type of sequestration can be taken to a commercial level.
Presentation on Energy Options for Arizona – Wind
Dr. Tom Acker, Northern Arizona University, addressed the Committee to describe current wind energy technology, explaining that wind turbines use the kinetic energy of the wind to spin a shaft which drives a generator. He stressed that this form of energy uses no water and no carbon, although it is very sensitive to wind speed. The higher up the turbines are, the greater the wind speed. He stated that the cost of wind power is less than natural gas, but that wind resources in Arizona vary with the seasons and the height of the turbine hubs.
Amanda Ormand, Dry Lake Wind Farm, explained to the Members that the Dry Lake Wind Farm is Arizona’s first commercial scale wind farm, and is located between Holbrook and Heber. She stressed that the Farm provides engineering and construction jobs of up to $110 million in Navajo County. The project uses no water and the land can be returned to its original state. She stressed that wind power has been stable in price for over 30 years.
Discussion ensued about wind power potential in Arizona, the small footprint and recycling potential of each steel and concrete turbine, the 30-year lifespan of a system, transmission lines, noise and general technology.
Presentation on Energy Options for Arizona – Hydropower
Russell Smolden, Salt River Project, stated that hydropower is very important to the development of Phoenix and the Valley. He explained how the system switches transmission lines back and forth between sources of energy, particularly wind and solar that are episodic every day. He stated that utilities must be very careful as they generate the energy to meet the demand, adding that if customers were willing to use energy only when it’s available, that would simplify things, but of course they are not. Mr. Smolden stressed the importance of a balanced portfolio to provide base power at all times, explaining that the entire system is built around providing power on the hottest day of the year. He explained that Arizona is not a great wind state and it is better to depend upon resources that we have, such as coal.
In response to questions, Mr. Smolden stated that coal would be cheaper than nuclear and that wind peaks in the afternoon and solar around noon; however, actual peak demand is from 3:00 to 7:00 p.m. each day. He stated that SRP has found that a combination of solar and natural gas (as the backup at night) would be the best combination to accommodate base load requirements.
Regarding hydropower, Mr. Smolden discussed the Navajo Generating Station and the Glen Canyon Dam, as well as plans for the Big Chino Basin near Prescott. Hydropower is the most widely-used form of renewable energy, it does not produce waste or greenhouse gases, and it provides nearly 20 percent of the world’s electricity. He added that Canada is the biggest producer of hydropower, generating 350 terrawatts of power a year and exports hydropower to this country. He stated that there are at least 118,000 megawatts of hydropower – twice what is currently in operation – which could be developed in various parts of the world. He described the new Three Gorges Dam on the Yangtze River in China, which produces 22,500 megawatts, more than all of Arizona’s utilities combined. Construction of this dam has displaced 28 million people.
Arizona has two types of dams: reservoir dams on the Salt River which generate 271 megawatts of power and run-of-the-river dams which use the force of falling water to generate electricity.
Senator Verschoor asked if there is potential for more hydropower in Arizona. Mr. Smolden explained that there is, but it is very small and that the capital and environmental costs would be quite high.
Presentation on Energy Options for Arizona – Solar
Joe Simmons, AzRISE, stated that solar, not coal, is the largest energy resource in Arizona. He described for the Members three ways to turn sunshine into usable energy: heat, biology, and photovoltaics (Attachments 4 and 5). Heat produces steam which turns generators to produce electricity. Photovoltaics (solar panels) produce electricity directly, without water or carbon, which can be stored in batteries or as compressed air. He stressed that solar power is intermittent due to weather and the day/night cycle, so another system is required in order to meet the required base load, such as a battery system plus a compressed air system plus solar which could match the grid demand.
Representative Jones asked about using caverns or abandoned mines for compressed air storage. Mr. Simmons said there are ways to do that, including one that uses molten salt for compressed air storage.
Discussion ensued about transmission lines, which Mr. Simmons explained could be built in many locations in order to reduce the costs to transmit energy. Responding to a question about cleaning and recycling the photovoltaic panels, Mr. Simmons explained that the wind often keeps the panels swept clean although washing with water will work as well, and that the panels are basically silicon, which is easily reprocessed.
Co-Chairman Gowan announced that the remainder of the Agenda items will be scheduled for the next meeting and asked the Members if they had any questions or concerns.
Co-Chairman Melvin asked about the best way to do a comparison among these resources, particularly a comparison of the land footprint required to generate an identical amount of electricity by each resource. He also requested that a list of questions (Attachment 6) be sent to each of the utilities for response.
Representative Jones asked if there is a “best model” of a combination of energy resources, including transmission, storage, and the other aspects of providing energy.
Senator Verschoor stated his concern that the Federal government is trying to shut down NGS.
Co-Chairman Melvin spoke in favor of a Committee tour of the various energy sources in the state, particularly on the Hopi lands. He also stressed the close relationship between water and energy and the importance of that relationship in Arizona, a desert state.
Representative Pratt reminded the Members that, although it is important to focus on the Colorado River, Tucson generates most of its power from coal.
Co-Chairman Gowan announced that the next meeting would be on November 16, 2009.
Without objection, the meeting adjourned at 11:43 a.m.
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Jane Dooley, Committee Secretary
November 12, 2009
(Original minutes, attachments and audio on file in the Office of the Chief Clerk; video archives available at http://www.azleg.gov)
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AD HOC COMMITTEE ON ENERGY AND WATER DEVELOPMENT
November 2, 2009
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