Updated: April 2023

Reliable access to sustainable water supplies is critical in electric power generation. As an energy company based in the desert Southwest, we understand that responsible management of water can have a positive impact on the communities we serve and the environment. To help ensure regional water resources are responsibly managed for the people and prosperity of our state, we take a leadership role in Arizona’s water policy. We also work with two other Arizona energy companies, Salt River Project and Tucson Electric Power, to collect data on the total water used for power generation statewide. Currently, less than 3% of Arizona’s water budget is used for power generation, which is below the national average.

We are committed to preserving the long-term quality and availability of our water resources, and we are guided by a water resource strategic plan that ensures sufficient long-term water resources for our generating resources, promotes effective, sustainable water supplies, and minimizes water-related operational costs. Our water conservation efforts include retiring older, water-intensive electric-generating units, upgrading to more water-efficient technologies at existing plants, increasing renewable energy, and supporting energy efficiency and demand-side management among our customers.

Pinnacle West has been recognized for leadership in corporate sustainability by global environmental non-profit CDP for acting to protect water security. CDP collects and analyzes environmental data and benchmarks companies for investors to use in financial decisions.

For the fourth year in a row, Pinnacle West received a leadership score for Water Security in 2022. Over 18,700 companies were scored in total. Our water withdrawal data reported to CDP is third-party verified.

Ensuring Adequate Water Resources

The current drought in the desert Southwest began in the early 2000’s and has resulted in a shortage declaration on the Colorado River that is expected to continue in the near term.

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 accounted in 2022 for 71% 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 2022 to encompass the period from 2023-27. 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, it is important to monitor water use consistently, in terms of the amount of water used and the water intensity (gallons per MWh). 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.

Governance

The Chairman of the Board, President and Chief Executive Officer (CEO) 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 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 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 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.

Water Usage and Metrics

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 2022 by 34% 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, it is important to monitor water use consistently, in terms of the amount of water used and the water intensity (gallons per MWh). APS is emphasizing the efficient use of all water resources by tracking and trending the water intensity for all APS generation.

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

Reclaimed Water

Reclaimed water accounted for approximately 71% of the water used in our generating facilities in 2022.

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.

Zero Liquid Discharge

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 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.

Well and Pumping Equipment

To ensure the operating areas have reliable water resources when needed, we operate a well and pumping equipment maintenance program. Currently, there are approximately 40 production wells in our fleet.

In 2020, we employed a Summertime Equivalent Availability Factor (EAF) reliability program designed to ensure that each site’s production well fleet could support peak summer generation 100% of the time from June through September. Strategies to meet this goal include drilling wells, replacing equipment, monthly well efficiency testing and evaluation, and performance trend monitoring to detect a potential well failure before it occurs.

Typical planned well repairs can cost tens of thousands of dollars. However, if an unexpected well failure occurs, costs are typically two to three times higher because damage may extend to multiple well components and emergency repairs and expedited parts delivery increase costs. 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 2022, we spent approximately $3 million on a capital replacement program to address wells identified as most likely to experience an equipment failure. As a result, in 2022 we achieved a 100% Summertime 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, compile, and document information associated with all wells owned by APS or its subsidiaries and affiliates in Arizona and New Mexico. 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 are used each year to prioritize wells that no longer have value to APS for proper closure or to identify wells that may need repaired or replaced. This allows APS to mitigate environmental and regulatory risks associated with our well fleet.

Real-Time Monitoring. To better understand the performance of our production wells and the aquifer’s response to APS pumping, equipment was installed in 2021 and 2022 to enable real-time monitoring of water levels in production wells located at oil and gas plants. The devices communicate with our data portal over a cellular network for near real-time viewing.

Community Support and Collaboration

Innovation and collaboration are key to our long-term water strategies. We continue to explore methods to reduce our water use and collaborate closely on water issues with external stakeholders.

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 Electric Power Research Institue (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.

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