In addition to natural environmental factors, anthropogenic contributions to climate change may result in extended drought conditions that will require more focus on sustainable water practices.

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. In Arizona, less than 1% of water used by APS to support generation is drought-impacted surface water.

Water 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 Generating Station cooling water supply from 2025 to 2050, which accounts in 2021 for 73% of our fleet’s water consumption, has a price increase ceiling that will assure long-term predictable 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 2019-23. This plan includes sections on water investment, including potential new business initiatives that will improve water infrastructure and be financially beneficial to APS and Pinnacle West. Specific research is targeted at developing alternative water supplies.

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, 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. Recognizing the risk of future groundwater depletion in Arizona, APS has performed groundwater modeling at strategic locations where groundwater is used to support plant operations to confirm that sufficient supplies will be available to support long-term generation.

The CEO 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.

In 2020, APS created a Sustainability Department to enable greater focus on water policy and water strategy. Our Water Resource Management Department continues to provide direct support to our power plants, ensuring that sufficient water supplies are available to support generation. The Sustainability Department is engaged more in statewide and regional water planning, working with stakeholders to manage existing water supplies in a sustainable manner and to develop new supplies to support growth and development.

We are well established as a leader in water resource management and conservation in Arizona. To continue in this role, we developed Water Resource Principles  to direct and guide our water resource actions.

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 2021 by 33% compared to a 2014 baseline. This water-use reduction was accomplished by retiring older, water-intensive electric-generating units and replacing them with 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 and demand-side management 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).

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 is a renewable supply because it is generated in wastewater treatment plants and it is drought-resistant because in a drought, homeowners typically reduce water consumption by cutting back outdoor irrigation, while indoor usage (the water sent to wastewater treatment plants) remains consistent.

Use of reclaimed water is crucial in Arizona, where a non-renewable water resource like groundwater accounts for approximately 40% of statewide water use. This at-risk water supply should be conserved, when possible, as a contingency to be used when surface water is less available, as in a drought.

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.

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 wastewater for reuse at the plant.

Three of our power plants utilize ZLD operating strategies: Palo Verde, Redhawk and West Phoenix. These plants are 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 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.

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 unique 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.

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.

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.

We also serve on the External Advisory Committee of the Water Resources Research Center at the University of Arizona, one of Arizona’s premiere water research institutions. We provide guidance and assistance in planning research that will support sustainable statewide water practices.

U.S. Bureau of Reclamation. We 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.