Use of Water by Electric Generating Facilities in Texas

September 2010!

Legislative advertising paid for by: John W. Fainter, Jr. • President and CEO Association of Electric Companies of Texas, Inc. 1005 Congress, Suite 600 • Austin, TX 78701 • phone 512-474-6725 • fax 512-474-9670 • www.aect.net

2

AECT Principles!

• AECT is an advocacy group composed of member companies committed to:

- Ensuring a modern, reliable infrastructure for the supply & delivery of electricity.

- Supporting efficient competitive markets that are fair to customers and market participants.

- Supporting consistent and predictable oversight and regulation that will promote investment and ensure the stability of Texas’ electric industry.

- Promoting an economically strong and environmentally healthy future for Texas, including conservation and efficient use of available resources.

• AECT member companies remain dedicated to providing Texas customers with reliable service and are committed to the highest standards of integrity.

The Association of Electric Companies of Texas, Inc. (AECT) is a trade organization of investor-owned electric companies in Texas. Organized in 1978, AECT provides a forum for member company representatives to exchange information about public policy, and to communicate with government officials and the public. For more information, visit www.aect.net.

3

AECT Member Companies!Within ERCOT!

Generation Companies

Transmission and Distribution Utilities

Retail Electric Providers

4

AECT Companies!Outside of ERCOT!

Western Electricity Coordinating Council (WECC)

Southwest Power Pool (SPP)

SERC Reliability Corporation

5

•  AECT member companies represent the largest private owners, builders, and operators of reservoirs in Texas.

•  Water supply is essential to the reliable generation of electricity.

–  Water supply is generally obtained in the form of water contracts/rights, prior to the construction of an electric generation station.

–  Water contracts/rights are secured at a level to ensure a reliable water source during future drought periods.

Overview!

6

•  Most power plants heat water until it becomes steam, then pressurize that steam to turn a generating turbine.!

•  The steam is then routed to a condenser, where the water is condensed and reused in the steam cycle.!

•  Water from one or more reservoirs or cooling towers is used to cool the condenser, making it possible to recycle the water to make steam.!

Fuel

How Texasʼ Power PlantsUse Water!

7

•  The heat added to the water as it flows through the condenser must be allowed to dissipate from the system in some way.!

•  One way the cooling can occur is when cooling water is pumped from a reservoir through a condenser and is returned to the reservoir.!

•  If the heat is dissipated in a cooling tower, the heat dissipation occurs almost entirely by conduction and convection, or by evaporation, depending on the type of cooling tower.!

How Texasʼ Power PlantsUse Water!

8

•  AECT member companies have an outstanding record of water regulation compliance, and conduct rigorous biological monitoring tests at generating facilities.!

•  In addition to surface water use permits and groundwater permits in Groundwater Conservation Districts, electric generating companies in Texas are required to have permits for their wastewater discharge.!

•  In addition to complying with state and federal water regulations, AECT member companies are committed to practicing sound water conservation:!

–  Restore aquatic habitats.!–  Preserve ecosystems.!–  Enhance and create valuable wetlands.!

•  In addition, reservoirs created by electric generating companies are used for recreational purposes, including camping, boating, fishing and swimming.!

How Texasʼ Power PlantsUse Water!

9

Water Issues Impacting Electric Generation Facilities!

10

•  Flow conditions in Texas’ rivers and streams are necessary to support a sound ecological environment.!

•  State agencies have been engaged in studies of the requirements for instream flows since the late 1960s, particularly with regard to freshwater inflows to bays and estuaries.!

•  Some cities and municipalities are concerned that a significant portion of their water supply could be relocated due to instream flows.!

AECT Position

•  It is imperative that existing water rights are protected.

•  Oppose adaptive management requirements.

Instream Flows!

11

•  Texas has 23 River Basins!

•  Current statute:!–  Rights to diverted water becomes “junior” to other rights in that basin. –  Economic impact analysis required for both basins involved in the transfer.

AECT Position

•  Development of a mechanism for protection for current water rights holders should be studied.

Interbasin Transfers!

12

•  Property owner owns groundwater (i.e., right of capture)!

•  Groundwater Conservation Districts (GCD) established to manage groundwater (e.g., conservation, establish fees)!

•  AECT member companies have facilities located within numerous GCDs.!

•  AECT Member Company operations:!–  Mine dewatering !–  Cooling and/or drinking water!–  Some groundwater resources are held for future development!

AECT Position

•  Support right of capture.

•  Support water conservation.

•  Do not support historic use limitations.

•  Do not support groundwater use fees for dewatering wells.

Groundwater Conservation Districts!

13

•  AECT member companies owns and/or operate dozens of reservoirs –  Generators have the right to impound groundwater, but state owns surface water. –  The surface water is waters of the state and must be obtained via water contracts or

water rights.

•  AECT member companies serving on several Regional Water Planning Groups. –  The regional water plans were approved by the Texas Water Development Board in

2002. –  The water plans will be updated every five years.

•  50 year water use projections •  Identification of water projects to meet projections •  Identification of un-used water

–  Non-use for 10 years, state may cancel uncommitted water rights

•  Water Contracts are necessary for continued operation of existing facilities. –  Some held for future generating units or drought conditions

AECT Position •  Opposed to cancellation of uncommitted water contracts/rights. •  Long term contracts required for future projects and drought

periods.

Uncommitted Water!

14

Cooling Towers under Clean Water Act Sec.316(b)

  EPA is revising its cooling water intake structure rules under the Clean Water Act (CWA) Section 316(b) for new and existing power plants. 

  EPA plans for a proposed rule in December 2010 and a final rule by July 2012. 

  EPA wants to propose that new and existing once-through cooling plants retrofit cooling towers.

  AECT opposes the mandatory use of cooling towers since they use more electricity, consume more water from evaporation than the use of cooling lakes, and are very expensive to build. Dry cooling technology is generally inappropriate for the climate in Texas.

Electric Generating Unit- Effluent Limitation Guidelines (ELGs)

  In September 2009, EPA announced its intention to review the Steam Electric Generating Unit (EGU) Effluent Limitation Guidelines (ELGs).

  EPA believes wastewater discharges will increase due to installation of new pollution control equipment at EGUs.

  In June 2010, the EPA distributed an Information Collection Request (ICR) to EGUs across the U.S. (including several Texas’ genearting units) and a final rule is anticipated in 2014.

Federal Water Issues!

15

•  Electric utilities have a duty to plan for the long-term needs of our customers.

•  AECT member companies have made substantial investments to secure water contracts/rights and groundwater resources in advance of actual use.

•  All of these water contracts/rights and groundwater resources have been or are held for a substantial period of time for future generating units and also during drought periods for existing power plants.

•  AECT member companies strongly oppose:

–  any attempt to cancel unused water contracts/rights;

–  establishment of historical use limits for groundwater; and

–  assessment of fees for dewatering ahead of coal mining.

AECT Summary Position!

16

Q&A!