We have secured adequate water contracts and water rights to enable us to meet the future energy needs of our customers even if supplies are negatively affected by environmental changes. Contracts vary by type and duration for each plant; some last 25 years, some 50 years, and some have no expiration date. Maintaining long-term water contracts or contracts without expiration dates not only ensures adequate water supplies, but allows us to maintain strategic cost management of our water needs. For example, the water contract for the Palo Verde cooling water supply from 2025 to 2050, which accounts in 2020 for 69% of our fleet’s water consumption, has a price increase ceiling that will assure long-term affordable water supplies.

Our Water Resource Management Strategic Plan provides a blueprint to manage our water resources portfolio efficiently. It ensures long-term water supplies are available, even in times of extended drought, and water contingency plans are in place for each of our facilities. Each of our power plants has a unique water strategy, developed to promote efficient and sustainable use of water. This plan was revised in 2018 to encompass the period from 2019-2023. The revised plan includes new sections on water investment, including potential new business initiatives that will improve water infrastructure and be financially beneficial to APS and Pinnacle West. Specific new research is targeted at developing alternative water supplies, including brackish water recovery, aquifer storage and recovery, and brine disposal through deep well injection.

Water is an important factor in assessing risk for all utilities, regardless of location. However, those operating in water-constrained areas—such as the desert Southwest—face greater challenges that can be further exacerbated when coupled with anticipated load growth. To meet those challenges while maximizing the use of renewable water resources and minimizing the use of non-renewable resources, it is important to monitor water use consistently, both in terms of the amount of water used and the water intensity (gallons per MWh). The focus is on non-renewable water (i.e. groundwater) because this supply is at the greatest risk of depletion and is a significant source of supply at seven of nine APS power  plants.

The Chairman of the Board, President and Chief Executive Officer of Pinnacle West and the Chairman of the Board and Chief Executive Officer of Arizona Public Service Company, has the highest level of direct responsibility for water within our organization. The Chief Executive Officer reviews material water issues twice per year via the SEC reporting process and Board of Director's Top Risk Report. The CEO has the highest responsibility over water-related issues because he/she has oversight over ensuring that business operations remain consistent with APS's water-related environmental policies. The CEO considers water issues such as impacts of climate change, drought preparedness, future changes in water availability, increasing cost of water, and planning for more water efficient generation in the future.

The Board oversees the Company’s business strategy (including water strategy). In addition, the Board’s oversees the Company’s risk management function to provide assurance that the Company’s risk management processes are well adapted to and consistent with the Company’s business and strategy. Each Board Committee receives periodic presentations from management about its assigned risk areas. The Executive Risk Committee is responsible for ensuring the Board receives timely information concerning the Company’s material risks and risk management processes.

Each of our power plants has specific strategies in place to ensure efficient water use. Examples include the use of zero liquid discharge blowdown/recovery systems at the Redhawk and West Phoenix power plants, which maximize reclamation and on-site water reuse. Zero liquid discharge means no wastewater is discharged to rivers, streams or oceans. At the Cholla Power Plant, a site with a large and complex well field, we have performed groundwater modeling to prioritize withdrawal from wells with the highest water quality. This results in increased efficiency of the cooling towers and ultimately conserves water.

In 2016, we implemented a water metric designed to reduce consumption of non-renewable groundwater supplies—those most at-risk in Arizona. We reduced non-renewable water use in 2020 by 14.2% compared to a 2014 baseline. This water-use reduction was accomplished by retiring older, water-intensive units and replacing them with new units that employ water-efficient technologies; shifting loads from water-intensive power plants to more water-efficient plants; implementing water conservation strategies developed during water efficiency audits at each power plant; implementing leak-reduction programs; and expanding reliance upon renewable generation that requires little or no water. Expanding energy efficiency programs that reduce the need for new, potentially water-intensive generation will lead to further reductions. Through these measures, long-range projections indicate continued reductions in non-renewable water use.

Water is becoming a critical factor in assessing the viability of new energy projects for all utilities. Those operating in water-constrained areas—such as APS’s service territory—face greater challenges. To meet those challenges while maximizing the use of renewable water resources and minimizing the use of non-renewable resources, it is important to monitor water use consistently, in terms of the amount of water used and the water intensity (gallons per MWh). (gallons per MWh).

Learn more about our water usage for generation on our ESG Reporting page.

Our usage of reclaimed water exemplifies our awareness of the water-energy nexus. Reclaimed water accounted for 69% of the water used in our generating facilities in 2020. Use of reclaimed water is crucial in Arizona, where a non-renewable water resource like groundwater accounts for over 40% of statewide water use.

A critical asset in our water resource strategy is Palo Verde Generating Station, an internationally recognized leader in the use of reclaimed water for power generation. Palo Verde is the only nuclear plant in the world that is not located next to a large body of water. Instead, it uses treated effluent (i.e. wastewater) for plant cooling. No other nuclear power plant exclusively utilizes wastewater for cooling water.

Using wastewater for plant cooling conserves limited surface water and groundwater supplies for other uses, such as municipal drinking water. 

Water is an essential resource for thermo-electric generating facilities, as water is heated and converted into steam to drive steam turbine-generators and is used for cooling plant equipment. Consistent with our strategy to conserve water, we look for ways to reuse water whenever possible. In addition to the reclaimed effluent use at Palo Verde, our water conservation measures include ensuring our power plants produce little, if any, wastewater. These power plants are known as zero liquid discharge (ZLD) plants and have systems to collect and treat the wastewater for reuse at the plant.

Three of our power plants utilize ZLD operating strategies: Palo Verde, Redhawk and West Phoenix. These plants are all located in the Phoenix Active Management Area and are subject to Arizona Department of Water Resources (ADWR) groundwater regulations.

• Palo Verde. The most cost-effective zero liquid discharge practice at Palo Verde is through the use of evaporation ponds. Palo Verde has multiple evaporation ponds totaling over 650 surface acres to hold wastewater. Collectively, the evaporation ponds have a capacity of about 5.5 billion gallons. Palo Verde is the only nuclear power plant in the world that operates with a zero liquid discharge, which ensures no wastewater is discharged to the environment.

The Palo Verde Generating Station features evaporation ponds (left) and water storage reservoirs (right).

• Redhawk. The plant uses treated effluent water from the City of Phoenix to make steam and cool plant equipment. The plant cooling towers use evaporative cooling to provide cooling water for plant equipment. The wastewater blowdown from the cooling towers is discharged to the zero liquid discharge system for processing, where approximately 95% of the water is captured and reused in the plant.
• West Phoenix. The plant has six generating units that use waste heat from combustion turbines to produce steam for power generation. The plant also uses a brine concentrator to capture and treat wastewater for reuse. The zero liquid discharge system at West Phoenix is an effective water management tool that treats and recycles water for use in the plant, significantly reducing water consumption.

Although we have secured long-term water resources and maximized our water efficiency, we continue to explore methods to reduce our water use. Technological advances such as alternative cooling and water treatment may potentially improve water use efficiency. We participate in the EPRI Water Research Center’s membrane treatment and cooling tower technology research, which includes cooling tower studies and evaluation of the potential use of alternative technology.

To ensure the operating areas have reliable water resources when needed, we operate a well and pumping equipment maintenance program. Currently, there are approximately 47 production wells in our fleet. In 2020, we employed employed a Summertime Equivalent Availability Factor (EAF) reliability program designed to ensure that wells could support peak summer generation 100% of the time from May through September. Strategies to meet this goal included drilling new wells, replacing old equipment, testing and evaluating each well for efficiency, and monitoring performance trends in order to respond before failure occurs.

Typical planned well repairs can cost tens of thousands of dollars. However, if a well fails and then requires repair, costs are typically two to three times higher because damage may extend to multiple well components, plus emergency repairs and expedited parts delivery add cost. Past well failures were primarily caused by lubrication problems. To address this issue, we installed automatic lubrication systems on our wells that detect low lubrication and prevent potential damage. In addition, in 2020, we spent approximately $3.582 million on a capital replacement program to identify wells most likely to fail and prioritize replacement. As a result, in 2020 we achieved a 100% EAF reliability rating for well pumping equipment.

Groundwater well at Cholla Power Plant.

Well Survey and Risk Assessment. In 2019, APS completed a comprehensive data collection and field effort to identify and compile information associated with all wells owned by APS or its subsidiaries and affiliates in Arizona and New Mexico. Approximately 800 of the identified wells were field verified and surveyed.  Field data, along with data available from state records and APS reports, were used to perform a risk assessment of all APS-owned wells (i.e. monitoring, production, exploration).  Results of the well assessment were used to prioritize wells for abandonment or repair. 

In 2020, an extensive background investigation of 28 wells identified by the risk assessment as high priority was conducted to ensure the most accurate understanding of each well and its current or potential value. One small diameter and 18 large diameter unused wells were safely closed and abandoned in accordance with regulation. An additional nine wells were found to have value and were modified to meet regulatory construction standards. Additional wells in Arizona and New Mexico are being considered for safe closure and abandonment or modification in 2021.

Real-Time Monitoring. To better understand the performance of our production wells and the aquifer’s response to APS pumping, equipment will be installed in 2021 to enable us to monitor water levels in all wells located at oil and gas plants. The devices will communicate with our data portal over cellular network enabling real-time monitoring.

We work closely on water issues with federal and state agencies and governments, local community members and Native American tribes. We collaborate with organizations including Sandia National Laboratories, EPRI, the U.S. Department of Energy and Idaho National Laboratory.

Research Partnerships. Palo Verde Generating Station is working with researchers at Sandia National Laboratories to identify efficient and cost-effective strategies to reduce water use at the plant. Sandia has developed a first-of-its-kind comprehensive system dynamics analysis that shows power plants how to save money and reduce water use in cooling. The Sandia researchers have also redesigned and patented an air-cooling system to make waterless cooling more energy efficient and possible over a wider range of operating conditions.

Policy and Stewardship. We have committed financial support and serve on the Board of the Kyl Center for Water Policy, a research, analysis and collaboration entity at the Morrison Institute for Public Policy at Arizona State University. The Kyl Center works to promote sound water policy and stewardship in Arizona. Through the Kyl Center, we actively engage in discussion of the water economy, water-energy nexus, water rights, drought, water costs and policy solutions that are important to our customers, our company and our state. We are also members of the Governor’s Water Augmentation, Innovation and Conservation Council. This council investigates long-term water augmentation strategies, additional water conservation opportunities, funding and infrastructure needs, and innovative methods of expanding the state's water resources as well as targeting conservation efforts to help secure water supplies for Arizona’s future.

Regional Partnerships. In late 2020, we initiated negotiations to extend the shortage sharing agreement with all San Juan River water users. This multilateral agreement includes our Four Corners Power Plant, the Navajo Nation, municipalities, industrial operations and agricultural irrigators. It assures that all parties will share equally in any water shortages on the river.

U.S. Bureau of Reclamation. We also work with the U.S. Bureau of Reclamation, providing data and projections of future use that enable the agency to create models that project shortages.

Colorado River. We continue to work with the State of Arizona to implement a Lower Basin Drought Contingency Plan to establish guidelines for Arizona’s contribution to sharing shortages on the Colorado River. The shortages could affect the Yucca and Sundance power plants. We were part of the plan’s development process and have established contingencies to avoid cuts to water needed to operate our plants.