Water and Electricity in Texas

November 1, 2011!

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

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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.

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AECT Companies!Within ERCOT!

Generation Companies

Transmission and Distribution Utilities

Retail Electric Providers

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AECT Companies!Outside of ERCOT!

Western Electricity Coordinating Council (WECC)

Southwest Power Pool (SPP)

SERC Reliability Corporation

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•  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.

•  The reliable generation of electricity is necessary for pumping water to cities and farms, and for water treatment and sewage treatment – among other necessities.

•  Moreover, the reliability of Texas’ generation is necessary for the state to meet the needs of our growing population and the new and growing businesses that fuel our state’s economy.

Overview!

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•  The graphic above is an example of a coal-fired power plant’s use of water. •  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 Coal-Fired !Power Plants Use Water!

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•  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. We:

–  Clean and reuse water whenever possible. –  Capture storm water runoff. –  Restore aquatic habitats. –  Preserve ecosystems. –  Enhance and create valuable wetlands.

•  Reservoirs created by electric generating companies are used for recreational purposes, including camping, boating, fishing and swimming.

How Texasʼ Power PlantsUse Water!

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Drought Impacting Electric Generation Facilities!

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“Exceptional” Drought Conditions!

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Each River Basin Has Been Impacted!

•  Power plants throughout the state are facing impacts resulting from the drought.

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Most Severe Challenges!

•  Brazos and Sabine river basins are hardest hit.

•  Power plants in these regions face challenges to maintain current levels of generation.

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•  Based on ERCOT’s surveys of generators regarding the drought’s impact on generation availability:

–  As of October 2011, only 24 MW of capacity is unavailable due to drought. –  If East Texas receives only half of its normal winter/spring rainfall,

unavailability could go up to 434 MW by May. –  If no significant rainfall is received, unavailability is estimated to be as much as

3,044 MW by May –  Approximately 9,000 MW of generation is dependent on water rights from

sources at historically low levels.

•  Areas of Texas outside ERCOT face similar challenges to ensure continued generation availability.

ERCOT: Forecasting Drought Effects!

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•  Generators are taking many actions to help ensure water levels allow for reliable operation. Examples include:

–  Building pipelines to remote water sources –  Procuring additional water rights –  Adding pumping capability –  Using city sewage effluent for the use of cooling water, displacing use of fresh

water –  Using advanced water treatment systems to treat and use surface water that

naturally contains high levels of minerals or dissolved solids, thus avoiding use of higher quality surface water

–  Upgrading power plant processes to minimize or eliminate use of water for non-cooling purposes

–  Capturing, treating and using storm runoff from the plant site

Mitigating Actions by Generators!

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•  Zebra mussels clog cooling water intake valves, as well as impacting water supply. The mussels have multiplied so quickly in Lake Texoma that the North Texas Municipal Water District is no longer able to pump water.

•  Hydrilla, a non-native invasive aquatic plant, is found in over 100 bodies of water in Texas. In great quantities, it can affect water supplies and operations of power plants.

Additional Water Challenges:!Invasive Species!

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•  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 Summary Position!