Transcript Document

Impact of Climate Change on the
Water Industry and Water Regulation
David K. Baker, President
Indiana American Water
Michigan American Water
MARC - Traverse City, MI
June 2009
Presentation Overview
•
Interrelationship between Water & Energy
•
Water Industry Greenhouse Gas Profile
•
Impacts of Climate Change on the Water Industry
•
Required Water Utility RE-actions to the impact of Climate Change
•
Midwestern Burden? Cap and Trade impacts on Water Industry
•
Regulatory actions to support consumers and investors
•
Climate Change – Exacerbating the Global Water Crisis
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Where We Are
We manage more than 350 individual water systems across the
country
Every day we operate and manage:
•
45,000 miles of distribution and
collection mains
And more than:
•
80 surface water treatment
plants
•
600 groundwater treatment
plants
Utility Only
•
1,000 groundwater wells
O&M Only
•
40 wastewater treatment plants
Both
3
American Water Subsidiaries
4
Interrelationships Between Water and Energy
Source: US Department of Energy, Dec 2006
5
Greenhouse Gas Profile – Water Utilities
AW Inventory of GHG Emissions
Emissions Source
Category
Stationary Combustion
Fuel
Quantity
Natural Gas
Diesel
Mobile Combustion
Gasoline
Diesel
Purchased Electricity
Electricity
Units
Emissions
(Metric Tons
CO2e)
Percent
Total
Emissions
5,102,952
therms
26,998
3.60%
341,981
gallons
3,457
0.50%
2,409,305
gallons
22,591
3.00%
401,922
gallons
4,053
0.50%
691,011
92.40%
748,110
100.00%
1,089,424,091
Total Emissions
kWh
Emissions in metric tons CO2e includes CO2, N20 and methane emissions
Emissions from flared methane gas and HVAC were both <0.5%
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Costs of Water Production and Distribution
Contributing to Greenhouse Gases
•
Energy costs (primarily Electricity) can range from 20% to 60% of a water
utility’s operating budget
•
At INAW/MAW, this translates to over 50% of total
production costs per year
•
Most energy is consumed in pumping water
•
According to Scientific American:





Lake or River Source
Groundwater
Wastewater treatment
Wastewater reuse
Seawater
.37kWh/m3 (cubic meter)
.48
.75
1.75
5.54
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Climate Change – Water Related Impacts:
• Rising Temperatures: 11 of the 12 warmest of the past 150 years have
occurred since 1995, with an increase of approx. .6 degrees C
• Increasing Evaporation and corresponding precipitation – regional
increases and decreases
• Melting of polar ice caps - rising sea levels range from .2 - .6 m*
• Increased extreme events: intensified hydrogeologic cycle which
increases floods, droughts and tropical storms
• Anecdotal evidence abounds recently in Midwest with flooding and
droughts
*Intergovernmental Panel on Climate Change, Fourth Assessment Report, 2007
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Impacts on the Water Utility Industry
• Water Quantity Impacts: reduced in-stream flows, earlier and more
intense seasonal snowmelt, reduced aquifer recharge
 Major increases in demand with peaks coinciding with periods of restricted
supply
• Water Quality Impacts: increased run-off leads to increased
sedimentation and pathogen loading, urban storm water runoff,
combined sewer overflows, increased algal blooms
• Unique Coastal Impacts: rising sea levels may lead to salt water
intrusion of groundwater
• Infrastructure Impacts: increased main breaks due to soil shrinkage
and settling, reservoir management due to runoff timing and intensity
 flood control and water supply considerations
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Appropriate Water Industry Actions in Response to
Climate Change
• Collaborate, understand, predict: Climate Leaders, a voluntary
EPA partnership with US Companies to develop long term,
comprehensive strategies
• Reduce energy consumption:
 increased pump efficiencies – VFD’s, testing
 SCADA optimization
 Storage and pumping management
 Conduct energy audits
• Developing Alternative Water Supplies:
 Desalinization - more than 50% of the US population lives within 50
miles of seawater
 Making Desalinization more efficient
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Appropriate Water Industry Actions – continued
• Reduce Non-Revenue Water:
 enhanced pressure management
 leak surveys, cost benefit analysis
 enhanced leak detection activities, acoustic technologies
• Maximize Reuse Opportunities:
 reuse of gray water and wastewater for sanitary and irrigation needs
 continued research and special projects (Sullair Building, Gillette
Stadium)
• Water Conservation:
 customer education, in-home water saving devices
 Indiana’s first state-wide comprehensive wise water use plan
 promote low-use appliances
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Appropriate Water Industry Actions – continued
• Construction of facilities with enhanced Sustainability:




lower energy use design
reduced waste disposal
efficient, regional approaches
maximization of existing infrastructure
• Energy Efficiency “Starts at Home”:
 Increase efficiency/decrease use of mobile combustion – vehicles
 Fugitive Emissions: Refrigeration and Air Conditioning
 Stationary Combustion: Water Heaters, on-site generators, pumps
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Results of Previous Energy Audits (2003-2006)
Recommended Improvements
(E.g. replace impellars, install VFD's, install high efficienty lighting)
PAAW System
Capital Cost ($) Annual Savings ($/yr) Payback (years)
PITTSBURGH
$673,500
$197,561
3.4
MECHANICSBURG
$148,500
$64,305
2.3
NEW CASTLE
$17,400
$58,454
0.3
MILTON/WHITE DEER
$78,000
$40,777
1.9
INDIANA
$32,000
$31,460
1
HERSHEY
$12,000
$28,700
0.4
ELLWOOD
$33,500
$24,569
1.4
$3,000
$12,249
0.2
BUTLER
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The “Midwestern Burden?”
• The controversy is “on” in the Hoosier State – Cap and Trade
legislation
• Production of Midwestern energy is carbon based: 94% of Indiana’s
energy is coal produced
• Impact on electricity rates may be as much as 40%
• Dependent upon purchase of emissions allowances – dramatic
impact on water utility costs
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Regulatory support of Climate Change related Utility
Actions and Investments
•
•
•
•
Economic support of research and climate change planning
Support of NRW reduction studies and leak detection capital
Collaboration and support of long-term sustainable infrastructure
Expansion of Infrastructure Surcharge Recovery programs to
include necessary replacement capital to support response
programs
• Continued and enhanced support of industry consolidation and
related efficiencies
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Regulatory support of Climate Change related Utility
Actions and Investments
• Support of Conservation Programs
 Appropriate Cost recovery for program investments
 Customer rate restructuring to curb demand (inclining blocks,
irrigation rates)
• Revenue levelization to deal with flood/drought cycles
• Appropriate surcharges/trackers for energy cost recovery between
rate cases
• Long range comprehensive planning rate treatment
• Establish appropriate rates of return on equity to support new
infrastructure investment
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The Water Industry is the most Capital Intensive of All Utility types
Capital Intensity
$4.00
$3.50
$3.48
$3.00
$2.50
$1.63
$2.00
$1.36
$1.50
$1.15
$0.82
$1.00
$0.50
$0.00
1-Water
2-Electric
3-Comb E&G
4-Gas Dist.
5-Tel Cos
Source: AUS Utility Reports
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Levelization of Rates
Essential to attraction of appropriate investment
Fixed Cost vs. Fixed Revenue – The Quest for Balance
COST
REVENUE
Variable
25%
Fixed
28%
Fixed
75%
Variable
72%
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Climate Change will exacerbate the Global Water
Crisis
•
Water is the basic key to life – human and economic sustainability
•
Water resources are the foundation of economics – arid countries battle for
the water resource
•
Our Nation’s Security is directly linked to water
•
Worldwide, 1.1 Billion people lack access to safe drinking water
•
2.6 Billion people lack access to proper sanitation
•
Water related illnesses kill over 2 million people per year, most of them
children
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Impact of Climate Change on the
Water Industry and Water Regulation
- - - END OF PRESENTATION - - -
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