Harvey Economics ♦ 600 South Cherry Street, Suite 220 ♦ Denver, Colorado 80246 

tel. 720.889.2755♦ fax 720.889.2752 ♦ www.harveyeconomics.com ♦ he@harveyeconomics.com

March 15, 2012 

Mr. Linus Everling 

General Counsel 

Gila River Indian Community 

Law Office 

525 W. Gu u Ki 

P.O. Box 97 

Sacaton, Arizona 85247 

Re: Updated Impacts of EPA BART Changes at NGS on the GRIC- Revised 

Cost of Capital Assumption 

Dear Mr. Everling: 

On February 28th, 2012, Harvey Economics (HE) sent you a draft letter report describing the 

estimated impacts to the Gila River Indian Community (GRIC) resulting from the US 

Environmental Protection Agency’s (EPA’s) proposed best available retrofit technologies (BART) 

for the Navajo Generating Station (NGS). The impacts outlined in that report were based on 

information about the costs of each BART scenario and an assumed 3.7 percent cost of borrowing 

for SRP. Since that time, SRP has requested that HE revise the 3.7 percent assumption to reflect the 

weighted average cost of capital for all NGS owners. As of early March 2012, the weighted average 

cost of capital for all NGS owners is estimated to be 6.2 percent. Enclosed please find HE’s 

updated findings related to the impacts of BART at NGS on the GRIC, which are based on the 

revised cost of capital assumption. 

The conclusions of our updated work are generally similar to those found in the February 28th letter; 

they indicate that the EPA’s proposed BART changes to the NGS will have major negative impacts 

upon the GRIC. In general, the updated analysis included in this report shows that the increased 

costs of BART technologies due to the revised cost of capital result in larger impacts to the GRIC 

than shown in the previous report. 

The GRIC’s agricultural enterprise, which operates on small margins similar to most agriculture, 

will be adversely affected by increased Central Arizona Project (CAP) water costs attributable to 

EPA’s actions. This will result in a loss in the economic viability of irrigated agriculture on certain 

GRIC croplands, which will mean a loss of GRIC employment, personal income, and the 

substantial investments that have been made in the GRIC agricultural system by the U.S. and the 

GRIC in partnership. 

A separate, but profound, impact on the GRIC will stem from revenue losses to the Lower Colorado 

River Basin Development Fund (LCRBDF). Simplifying the complex flow of monies into this Fund 

and to its recipients, HE has reached the conclusion that the reduction in the NGS surplus revenues 

into the Fund attributable to EPA’s proposed BART technologies will serve to reduce monies 

available to pay for GRIC’s CAP water and infrastructure. The GRIC are the largest of the CAP 
Harvey Economics 

Page 2 

Indian contractors, and hold a priority position with respect to infrastructure monies coming from 

the Fund. 

In short, the EPA’s proposed BART changes at NGS will substantially diminish any economic 

benefit the GRIC might have achieved from the utilization of CAP waters and the related 

investments in agriculture, some of which are in place at the present time. 

Overview of Data Sources and Methods 

As noted in the February 28th letter report, HE gathered information from extensive interviews with 

the Salt River Project (SRP), the U.S. Bureau of Reclamation (BOR), and Central Arizona Water 

Conservation District (CAWCD). SRP is the plant operator and has been responsible for marketing 

NGS surplus power until the fall of 2011, when the Western Area Power Administration (WAPA) 

assumed that responsibility. The BOR provides the power for pumping CAP waters and oversees 

the LCRBDF. The CAWCD is responsible for operating and managing the CAP project. Mr. Gene 

Franzoy, of Franzoy Consulting, Inc., provided considerable information about historical and 

projected agricultural activities and water use within the GRIC on a timely basis. Additional 

interviews were conducted with GRIC economic development personnel and individuals 

responsible for the GRIC farming enterprise. HE also relied upon numerous secondary sources, 

including the U.S. Department of Census data, USDA agricultural census information, and U.S. 

Department of Energy, and Energy Information Administration data. 

The information about updated costs and scheduling used as the basis for the analysis found in this 

report was obtained through continued discussions with SRP throughout late 2011 and early 2012. 

SRP also provided additional information about the life expectancy of NGS. 

In this current impact analysis, HE relied upon the State of Arizona IMPLAN model to calculate 

indirect, induced and total impacts on the basis of the direct effects to the GRIC, which HE 

independently calculated.1

 There are a number of different models, referred to as econometric, 

input-output models, available for making these types of impact estimates. IMPLAN and other 

models generate “economic multipliers” to estimate impacts; IMPLAN outputs include estimates of 

total impacts to employment, personal income, the production of goods and services and tax 

revenues. 

Overview of Results and Findings 

Scenario definition. The possible scenarios for EPA BART implementation were based upon a 

review of EPA documents filed to date on this matter and available through the internet, plus 

discussions with the SRP. Each of the scenarios identified, low NOx burners (LNB), SNCR, SCR, 

SCR plus baghouse and NGS closure, all represent distinct options which the EPA might consider 

adopting as BART for NGS. It is our understanding that, at the present time, the EPA is seriously 

considering a recommendation of installing SCR on each of the three units at NGS. However, if 

that recommendation should, in fact, occur, the operator will recommend that baghouses also be 

installed for the three units to comply with the PSD air permit, which will substantially increase the 

 

1

 The Arizona IMPLAN model was created by the Minnesota IMPLAN Group (MIG). The Arizona IMPLAN tool 

models the structure and function of the statewide economy and estimates the impacts of activities occurring within the 

state based on the interactions between industries, households, institutions and governmental agencies. 
Harvey Economics 

Page 3 

cost of this BART option. Should that occur, it is quite possible that one or more of the current 

NGS owners of the plant will choose to simply close the facility and each of the NGS owners will 

then develop their own source of alternative power. With other issues pending for NGS, the option 

for NGS closure has a reasonable chance of occurring. The construction time periods and the costs 

for each of the scenarios were based upon the Sargent and Lundy reports and information 

forthcoming from the SRP. 

CAP energy costs. HE’s report projects increases in CAP energy costs per acre-foot attributable 

to the EPA BART implementation scenarios. Compared with the CAP energy costs under the 

baseline scenario, the LNB/ SOFA scenario would increase costs only slightly, by between 0.3 and 

0.8 percent per year. The SNCR scenario would reach a peak impact of 4.9 percent in 2015. The 

SCR and SCR plus baghouse scenarios would have peak impacts on CAP energy costs of 10.5 

percent and 20.4 percent, respectively, in the year 2020. Under the NGS closure scenario, CAP 

energy costs would increase by about 55 percent, as compared with the baseline costs. Increased 

CAP energy costs under NGS closure would result because the CAWCD would be required to 

purchase power on the open market at a much higher rate compared with its cost for NGS power.2

 

Impacts on GRIC agriculture. The GRIC currently has an active agricultural enterprise, 

irrigating about 37,000 acres. Their plans are to increase irrigated acres to 77,000 acres by 2030. 

Gross operating margins (gross revenues less farm operating expenses), are relatively thin, 

projected to be $113 per acre by the year 2030. As the GRIC increases irrigated agriculture, they 

plan to utilize more CAP water, reaching 141,000 acre-feet by the year 2044. Because of rising 

CAP energy costs, the GRIC agricultural operating margins will be adversely affected by the EPA 

BART implementation scenarios; under the SCR plus baghouse scenario, operating margins will 

decline by almost 20 percent in 2030 and, under the NGS closure scenario, by 67 percent. These 

declines in agricultural operating margins will lead to direct cumulative employment losses of 

9,000 job years, direct cumulative personal income losses of more than $266 M to the GRIC, and 

$402 M cumulative losses in sales of goods and service during the period of impact under the NGS 

closure scenario.3

 Further, the investment in canals, pump stations and other facilities to support 

GRIC agriculture, projected to be $645M at completion, will be jeopardized by the EPA BART 

implementation scenarios. For instance, under the SCR plus baghouse scenario, more than 40,000 

acres of the total 77,000 acres will become uneconomic for GRIC crops by 2044. Under the NGS 

closure scenario, the total loss in acreage would be 61,000 acres out of the 77,000 acres total, by 

2044. As these acres go out of production, the lost investment previously made would amount to 

$339M and $514M for the SCR plus baghouse and NGS closure scenarios, respectively. 

Impacts on the LCRBDF related to the GRIC. NGS surplus power amounts to those 

resources to which the BOR is entitled from the NGS plant, less the power required for CAP 

pumping. Those power resources are then sold by WAPA and the profits from those sales are an 

important revenue source for the LCRBDF. NGS surplus power revenues will be determined by the 

price WAPA is able to obtain from those sales which are, of course, uncertain over time. Although 

prices have been low recently, a gradual return to a more normal price range is anticipated over 

time. HE has assumed a price recovery from the current level of $31 per MWH to $50 per MWH by 

the year 2025, but this electricity price assumption does not affect the negative impact of the EPA 

 

2

 Interview with CAWCD personnel, October 2011. 

3

 A job year is one full time person employed for one year. 
Harvey Economics 

Page 4 

BART scenarios on that surplus power, since the cost of power would increase regardless of the 

power sales price under those scenarios. The cumulative negative impacts of the EPA BART 

implementation scenarios on NGS net revenues are projected to be almost $244M under the SCR 

plus baghouse scenario and almost $2.0B under the NGS closure scenario. 

The losses to the LCRBDF revenues under the alternative BART implementation scenarios will 

occur when the NGS net surplus exceeds the CAWCD repayment obligation less other minor 

revenues. That is projected to occur in the year 2019. Hence, the impacts to LCRBDF revenues 

occur thereafter. On a cumulative basis through the year 2044, the SCR plus baghouse scenario 

would result in a negative effect on LCRBDF revenues of approximately $182M. Under NGS 

closure, the loss in LCRBDF revenues would amount to approximately $849M. 

In the cascading distributions under the LCRBDF, Indian CAP contractors are in the first priority 

for payment of part of their CAP water resources. Since the GRIC represent between 57 percent and 

71 percent of the Indian CAP contractors depending on the year, they stand to lose the most from 

these revenue losses. The cumulative loss to the GRIC would be about $113M under the SCR plus 

baghouse scenario and $497M under the NGS closure scenario through 2044. 

Total losses. Beyond the GRIC’s present and future utilization of CAP waters for agriculture, 

their intention is to eventually use a total of about 231,800 acre-feet for all uses within the GRIC. 

All these waters will be subject to higher CAP energy charges which will result in losses to the 

GRIC. Under the SCR plus baghouse scenario, the cumulative loss from higher CAP energy cost 

alone through the year 2044 would amount to $69M and $289M under the NGS closure scenario. 

The final tables in the presentation represent a summary of the losses which the GRIC would face 

as a result of the alternative EPA BART implementation scenarios. Total monetary losses under the 

SCR plus baghouse scenario, including the lost value of agricultural investment, would amount to 

$930M. Under the NGS closure scenario, a distinct possibility, the losses to the GRIC would be 

more than $2B. 

Along with these losses would be the losses to employment opportunities and the economic 

development prospects associated with the availability of reasonably priced water. Cumulative 

losses for GRIC sales of goods and services would be about $505M and $1.7B under the SCR plus 

baghouse and NGS closure scenarios, respectively. 

Please let me know if you have any questions. 

Yours truly, 

Edward F. Harvey 

Principal 

Enclosures 
PROJECTED IMPACTS OF EPA BART IMPLEMENTATION O

A. Scenario Definitions

B. CAP Energy Costs

C. Impacts on GRIC Agriculture

D. Impacts on the GRIC from BART Implementation 

on the Lower Colorado River Basin Development 

(LCRBDF)

E. Summary Impacts on GRIC CAP Water Value
A. Scenario Definitions
Alternative EPA BART Implementation Scenario

Baseline – 3 units, combined 2,250 MW capacity; SO2 scrubbers

Low Nox Burners (LNB) – Applied to the boilers of the 3 units and uses the separated o

full installation recently completed at NGS

SNCR – Selective non‐catalytic reduction; reduces NOx by injection o

in stacks for three units

SCR – Selective catalytic reduction; reduces NOx by injection of am

exhaust of three units

SCR plus Baghouse –

If SCR is stipulated as BART, the NGS plant operator believes 

need to be added to each unit to collect additional particulat

compliance with the PSD permit.

NGS Closure –

If any of the six current NGS owners elect not to pay the incr

costs and no substitute buyer is found, the NGS plant will mo

perhaps by December 31, 2017. With consideration of pendi

negotiations and EPA MACT rules, NGS closure is a distinct p
Construction Plans and Costs of EPA BART Implementation Alternatives, in Millions Notes: (1) Assumes Final EPA Rule by Summer of 2012.  (2) Assumes 6.2 percent cost of long-term capital and financing over 20 years.  (3) Total annual costs are net increases compared to current costs.  (4) Capital costs are based on purchase of a combined cycle natural gas replacement plant for all NGS owners, other than BOR. 

 (5) Operating costs reflect savings of natural gas plants compared to coal plants and CAWCD's purchase of power on the open market. Sources: Sargent & Lundy, "SCR and Baghouse Capital Cost Estimate Report - Revision D", August, 2010; NREL, “Navajo Generating Station and Air V

and Impacts”, January, 2012; SRP, March 2012; U.S Treasury Department, March 13, 2012; and Harvey Economics, 2012. 

Engineering and 

Construction 

Start Date (1)

Construction 

End Date

Capital 

Cost

Annualized 

Capital Cost (2)

Annual 

Operating Costs

Total Annu

Costs (3)

LNB/ SOF

A 2009 2011 $45.0 $4.0 $0.0 $4.0

SNCR Sept, 2012 Dec, 2013 $39.2 $3.5 $19.0 $22.5SCR July, 2014 July, 2017 $544.2 $48.1 $11.9 $60.1SCR + Baghouse July, 2014 July, 2017 $1,131 $100.0 $20.6 $120.7NGS Closure (4,5) N/A N/A $766.5 $67.8 $2.3 $70.1
B. CAP ENERGY COSTS
Overview of CAP Energy Costs

1. CAWCD recoups the cost of pumping water from the Colorado River t

canals via the CAP energy charge per AF delivered.

2. Approximately 95 percent of CAP power comes from the NGS plant th

BOR power allocation.

3. The variable costs of NGS power, almost all coal costs, are recouped t

energy charge.

4. CAP energy charges, currently $53 per AF, have increased by an avera

percent per year over the past 15 years. This increase is already great

anticipated in the analysis done in support of the AWSA, which was 3

costs.

5. The GRIC is responsible for paying CAP energy charges for agricultura

of CAP water, except water leased to cities.
Increases in CAP Energy Cost per AF under Alternative EPA BART Implementation Scenarios and Percent Change from Baseline Note: Assumes 2.2 percent annual energy escalation price based on DOE Projections: EIA, AE02011 National Energy Modeling System. 

Source: Harvey Economics, 2012. 

Year

Cost 

Increase

Percent 

Change

Cost 

Increase

Percent 

Change

Cost 

Increase

Percent 

Change

Cost 

Increase

Percent 

Change

Cost 

Increase

P

C

2012 $0.41 0.8% $0.53 1.1% $0.41 0.8% $0.41 0.8% $0.41 2015 $0.41 0.7% $2.73 4.9% $3.99 7.2% $7.33 13.2% $0.41 2020 $0.41 0.7% $2.73 4.3% $6.60 10.5% $12.85 20.4% $35.03 2025 $0.41 0.6% $2.73 3.9% $6.60 9.4% $12.85 18.3% $38.97 2030 $0.27 0.3% $2.59 3.3% $6.47 8.2% $12.71 16.2% $43.09 2035 $0.00 0.0% $1.96 2.2% $4.49 5.1% $9.27 10.6% $47.44 2040 $0.00 0.0% $1.96 2.0% $1.23 1.3% $2.13 2.2% $52.90 2044 $0.00 0.0% $1.96 1.8% $1.23 1.2% $2.13 2.0% $57.72 

LNB/SOFA SNCR plus LNB SCR plus LNB

SCR + Baghouse

plus LNB NGS Clo
C. IMPACTS ON GRIC AGRICULTURE
Irrigated Acres, Baseline and Operating Margin for GRIC Agriculture, 2012 to Note: * Baseline water costs include an increase in CAP water costs, but not increases due to BART implementation. Sources: Franzoy Consulting, Inc. and Harvey Economics, 2012. 

Year Cotton Alfalfa

Small 

Grains Vegetables Melons

Total 

Irrigated Acres

Gross Margin

Except Water Costs

Baseline 

Water Costs*

Operati

for GRIC 

2012 21,342 4,155 10,274 491 1,511 37,773 $12,955,692 $4,282,190 $8,672015 24,882 4,844 11,978 572 1,762 44,038 $15,104,638 5,782,012 $ $9,322020 30,918 6,019 14,884 711 2,189 54,722 $18,769,066 8,802,879 $ $9,962025 36,230 7,054 17,442 834 2,565 64,123 $21,993,492 11,813,654 $ $10,12030 43,505 8,470 20,944 1,001 3,080 77,000 $26,410,046 17,746,625 $ $8,662035 43,505 8,470 20,944 1,001 3,080 77,000 $26,410,046 18,953,258 $ $7,452040 43,505 8,470 20,944 1,001 3,080 77,000 $26,410,046 20,533,602 $ $5,872044 43,505 8,470 20,944 1,001 3,080 77,000 $26,410,046 21,958,804 $ $4,45

Irrigated Acres by Crop Type
Water Requirements and Water Sources for GRIC Agriculture, 2012 to 2044 Note: * Includes delivery loss and 22% irrigation loss. 

**Water resources do not equal water requirements because GRIC non-agricultural water requirements are included in these totals. 

Source: Franzoy Consulting, Inc., 2012. 

Year Cotton Alfalfa

Small 

Grains Vegetables Melons

Total Water 

Requirements* CAP SRP Groundwater Reclaimed 

2012 99,026 37,437 29,795 810 3,264 229,868 35,000 25,900 28,968 15,000 2015 115,451 43,646 34,738 945 3,805 267,996 38,053 25,900 59,542 19,500 2020 143,460 54,235 43,165 1,174 4,728 333,012 59,315 25,900 95,797 27,000 2025 168,106 63,553 50,580 1,375 5,540 390,222 79,285 25,900 125,537 34,500 2030 201,863 76,315 60,738 1,652 6,653 468,583 135,269 25,900 140,414 42,000 2035 201,863 76,315 60,738 1,652 6,653 468,583 135,669 25,900 137,414 44,600 2040 201,863 76,315 60,738 1,652 6,653 468,583 138,669 25,900 134,414 44,600 2044 201,863 76,315 60,738 1,652 6,653 468,583 141,069 25,900 132,014 44,600 

Water Requirements, by Crop Type (AF) Projected Water Sources (AF)
Differences from Baseline GRIC Agricultural Operating Margins under Alternative EPA BART Implem

(thousands) 

Note: * Total includes all years from 2012 to 2044, not just those shown in the table. Source: Harvey Economics, 2012. 

Year Difference

Percent 

Change Difference

Percent 

Change Difference

Percent 

Change Difference

Percent 

Change 

2012 ($14.4) -0.2% ($18.5) -0.21% ($14.4) NA ($14.4) NA 

2015 ($15.6) -0.2% ($103.8) -1.1% ($151.8) -1.6% ($278.9) -3.0% 2020 ($24.3) -0.2% ($161.7) -1.6% ($391.7) -3.9% ($762.2) -7.6% 

2025 ($32.5) -0.3% ($216.2) -2.1% ($523.6) -5.1% ($1,018.9) -10.0% 2030 ($37.0) -0.4% ($350.3) -4.0% ($874.8) -10.1% ($1,719.8) -19.8% 2035 $0.0 0.0% ($265.7) -3.6% ($609.5) -8.2% ($1,257.4) -16.9% 2040 $0.0 0.0% ($271.6) -4.6% ($170.8) -2.9% ($295.0) -5.0% 

2044 $0.0 0.0% ($276.3) -6.2% ($173.7) -3.9% ($300.1) -6.7% 

Total ($502.8) -0.2% ($7,054.9) -2.5% ($12,992.4) -4.7% ($25,266.1) -9.1% 

LNB SNCR plus LNB SCR plus LNB

SCR plus 

Baghouse plus LNB 
Employment and Income Losses Attributable to GRIC Agricultural Impacts from EPA BART ImplemeNotes: Direct losses will be within GRIC. Total losses will include GRIC losses plus induced and indirect effects within the GRIC and Phoenix Area. 

Although cumulative employment losses are the same for SCR and SCR plus baghouse, cumulative income losses are greater under SCR plus 

they occur earlier. 

Sources: IMPLAN and Harvey Economics, 2012. 

Direct Total Direct Total Direct Total Direct Total 

Employment

Peak Annual Loss 0 0 0 (2) (376) (465) (366) (457) 

Cumulative Job Years 0 (3) 0 (35) (6,023) (7,434) (6,389) (7,943) 

Personal Income (millions)

Peak Annual Loss $0.0 $0.0 $0.0 ($0.1) ($11.1) ($14.9) ($10.8) ($14.6) 

Cumulative Loss $0.0 ($0.1) $0.0 ($1.3) ($177.2) ($237.0) ($188.0) ($253.6) 

Total Sales of Goods and Services (millions)

Peak Annual Loss ($0.04) ($0.06) ($0.4) ($0.6) ($12.0) ($26.9) ($12.5) ($27.7) 

Cumulative Loss ($0.5) ($0.9) ($7.1) ($12.5) ($190.2) ($427.1) ($213.3) ($473.5) 

SNCR plus LNB SCR plus LNB

SCR plus 

LNB/SOFA Baghouse plus LNB 
Investment in GRIC Agriculture Jeopardized by EPA BART Implementation Strategies Source: Harvey Economics, 2012. 

GRIC Farm 

Development Plan LNB SNCR plus LNB SCR plus LNB

SCR plus Baghouses 

plus LNB NGS Clos

Acres 77,000 0 0 (40,443) (40,443) (61,387Farm Investment(millions) $645 $0 $0 ($339) ($339) ($514

Potential Losses by 2044
D. EPA BART IMPLEMENTATION EFFECTS ON THE 

AND IMPACTS ON THE GRIC
S

CA

ource: Harvey Econo

SH FLOWS AND

omics, 2012. 

FUNDING PRIORITIES OF THE LOWER COLORADO RIVER BASIN DEVELOPMENT

FU
Overview of NGS Surplus Power Sales

 Amount of electricity resource available for sale equals BOR p

share less CAP pumping requirements.

 Surplus power previously sold through exchange similar to sp

 Electricity sales price currently low by historical standards.

 Total NGS surplus sales less costs of NGS production equals su

revenue available for Lower Colorado River Basin Developme

(LCRBDF).

 Costs of NGS production driven by NGS capital and operating 

including EPA BART implementation.

* Certain NGS surplus will be sold to SRP and perhaps other utilities. Water Area Power Adm

manage future sales.
Alternative EPA BART Scenario Impacts on Net NGS Surplus Power Revenues, Assuming Power Price Recovery to $50 per MWh by 2025 (thousands) Note: Totals include revenue losses occurring in all years between 2012 and 2044. Source: Harvey Economics, 2012. 

Year Base Case LNB SCR plus LNB

2012 $28,784.7 ($351.7) ($453.9) ($351.7) ($351.7) ($351.72015 $37,294.8 ($351.7) ($2,337.0) ($3,418.3) ($6,282.5) ($351.72020 $51,995.5 ($351.7) ($2,337.0) ($5,660.5) ($11,014.8) ($51,9952025 $65,414.4 ($351.7) ($2,337.0) ($5,660.5) ($11,014.8) ($65,4142030 $71,536.3 ($234.5) ($2,219.8) ($5,543.3) ($10,897.6) ($71,5362035 $78,564.4 $0.0 ($1,678.9) ($3,850.9) ($7,944.1) ($78,5642040 $86,901.6 $0.0 ($1,678.9) ($1,055.6) ($1,823.3) ($86,9012044 $94,517.6 $0.0 ($1,678.9) ($1,055.6) ($1,823.3) ($94,517

Total $2,199,152.0 ($6,917.3) ($65,548.8) ($125,791.6) ($243,605.6) ($1,960,36

SNCR plus LNB

SCR plus 

Baghouse plus LNB NGS Clo
Fixed OM&R Costs of Indian CAP Water Notes: (1) The CAP OM&R charges are projected to increase at a rate of 2.98% per year, based on the average annual increase projected between 20

(2) The projected Indian CAP water delivery schedule is based on projections provided by the GRIC and assumed growth of 2%-3% per year 

These numbers assume 71,000 AF of water are leased by the GRIC over time. 

Sources: BOR and CAWCD, September, 2011; and Harvey Economics, 2012.

Year

Projected Indian CAP Water 

Delivery Schedules (AF)

Projected CAP Fixed 

OM&R Charges per AF

Total Indian CAP Fixed 

OM&R Obligations

GRIC % o

Indian CAP 

2012 377,914 $73 $27,587,745 75%2015 351,677 $81 $28,485,836 72%2020 356,585 $93 $33,285,896 68%2025 375,026 $108 $40,544,630 64%2030 396,405 $125 $49,634,653 61%2035 421,189 $145 $61,079,700 57%2040 424,000 $168 $71,213,110 57%2044 424,000 $189 $80,090,182 57%
Relationship of NGS Surplus losses to LCRBDF Losses and Losses 

3⁄4 LCRBDF revenue losses under each EPA BART implementation sce

on comparisons with revenue generated under the Baseline scena

3⁄4 Annual CAWCD payments offset any reductions in NGS surplus po

revenue, up to the amount of the annual CAP repayment by CAW

3⁄4 Therefore, revenue losses to the LCRBDF only occur when baselin

projected to be greater than the annual CAP repayment.

3⁄4 Lost revenue to the LCRBDF mean losses first to the Indian CAP co

because of their order in the two “cascades”. As by far the largest 

contractor, GRIC stands to lose the most.

3⁄4 The portion of total revenue losses attributed to the GRIC is based 

percentage of GRIC CAP water subject to fixed OM&R costs relativ

Indian CAP water subject to fixed OM&R.
LCRBDF Revenue Losses under Alternative EPA BART Implementation Scenarios (thousands) Note: Totals include revenue losses occurring in all years between 2012 and 2044. Source: Harvey Economics, 2012. 

Year LNB 

2012 $0.0 $0.0 $0.0 $0.0 $0.02015 $0.0 $0.0 $0.0 $0.0 $0.02020 ($351.7) ($2,337.0) ($5,660.5) ($5,884.4) ($5,884.4)2025 ($351.7) ($2,337.0) ($5,660.5) ($11,014.8) ($15,581.5)2030 ($234.5) ($2,219.8) ($5,543.3) ($10,897.6) ($27,568.8)2035 $0.0 ($1,678.9) ($3,850.9) ($7,944.1) ($41,402.6)2040 $0.0 ($1,678.9) ($1,055.6) ($1,823.3) ($50,447.1)2044 $0.0 ($1,678.9) ($1,055.6) ($1,823.3) ($91,934.4)

Total ($4,220.7) ($51,531.1) ($99,847.6) ($182,314.8) ($848,821.0)

SNCR

plus LNB

SCR

plus LNB

SCR plus 

Baghouse plus LNB NGS Closure
Lost LCRBDF Revenues Available to the GRIC under Alternative EPA BART Implementation Scenarios (thousands) Note: Totals include revenue losses occurring in all years between 2012 and 2044. Source: Harvey Economics, 2012. 

Year LNB 

2012 $0.0 $0.0 $0.0 $0.0 $0.02015 $0.0 $0.0 $0.0 $0.0 $0.02020 ($237.5) ($1,578.2) ($3,822.5) ($3,973.7) ($3,973.7)2025 ($225.8) ($1,500.6) ($3,634.6) ($7,072.5) ($10,004.7)2030 ($142.4) ($1,348.4) ($3,367.3) ($6,619.8) ($16,746.9)2035 $0.0 ($959.9) ($2,201.6) ($4,541.8) ($23,670.5)2040 $0.0 ($953.5) ($599.5) ($1,035.5) ($28,650.1)2044 $0.0 ($953.5) ($599.5) ($1,035.5) ($52,211.8)

Total ($2,722.4) ($31,539.3) ($61,989.3) ($112,586.6) ($496,932.2)

SNCR

plus LNB

SCR

plus LNB

SCR plus 

Baghouse plus LNB NGS Closure
Employment, Income and Sales Losses to the GRIC Attributable to LCRBDF Impacts from EPA BARImplementation Scenarios Note: Direct losses will be within GRIC. Total losses will include GRIC losses plus induced and indirect effects within the GRIC and Phoenix Area. 

Sources: IMPLAN and Harvey Economics, 2012. 

Direct Total Direct Total Direct Total Direct Total 

Employment

Peak Annual Loss (3) (5) (20) (30) (48) (73) (85) (127) 

Cumulative Job Years (34) (52) (400) (600) (785) (1,180) (1,426) (2,143) 

Personal Income (millions)

Peak Annual Loss ($0.2) ($0.2) ($1.1) ($1.6) ($2.8) ($3.8) ($4.8) ($6.7) Cumulative Loss ($2.0) ($2.7) ($22.8) ($31.7) ($44.9) ($62.3) ($81.5) ($113.2) 

Total Sales of Goods and Services (millions)

Peak Annual Loss ($0.2) ($0.4) ($1.6) ($2.9) ($3.8) ($7.0) ($6.7) ($12.2) 

Cumulative Loss ($2.7) ($5.0) ($31.5) ($57.7) ($62.0) ($113.4) ($112.6) ($205.9) 

SNCR plus LNB SCR plus LNB

SCR plus 

LNB/SOFA Baghouse plus LNB 
LCRBDF Obligations after Indian CAP Fixed OM&R Notes: (1) The GRIC OM&R Trust Fund obligation was fulfilled in 2010.  (2) Outlays for the LCRBDF Fund began in 2010 and will be completed by 2029 if the funds are available.  (3) Totals include expenditures occurring in all years between 2010 and 2029. Source: Harvey Economics, 2012. 

Other Total Annual

Year GRIC OM&R Trust Fund GRIC SCIP P-MIP Obligations Obligations 

2011 $0 $25,000,000 $11,863,312 $33,180,069 $70,043,381 2015 $0 $25,000,000 $16,195,943 $54,998,644 $96,194,587 2020 $0 $20,014,756 $22,441,649 $49,445,020 $91,901,425 2025 $0 $0 $34,268,965 $16,666,000 $50,934,965 2030 $0 $0 $0 $0 $0 2035 $0 $0 $0 $0 $0 2040 $0 $0 $0 $0 $0 2045 $0 $0 $0 $0 $0 2050 $0 $0 $0 $0 $0 

TOTAL $0 $270,014,756 $487,629,484 $800,327,723 $1,557,971,963

GRIC Related Obligations
Present and Projected Utilization of GRIC’s CAP Allotment, in AF Note: Leased water assumed to increase according to the anticipated schedule of leases after 2011. Source: Harvey Economics, 2012. 

Year

On Reservation Irrigation 

and Other Tribal Uses Leases Exchanges Total

2012 274,625 28,000 9,173 311,7982015 242,795 60,000 9,005 311,8002020 231,795 71,000 9,005 311,8002025 231,795 71,000 9,005 311,8002030 231,795 71,000 9,005 311,8002035 231,795 71,000 9,005 311,8002040 231,795 71,000 9,005 311,8002044 231,795 71,000 9,005 311,800
Increased Costs of GRIC CAP Water Energy Charges and CAP OM&R Deficits Attributable 

to EPA BART Implementation Alternatives (thousands) 

Notes: (1) Calculations assume a recovery in NGS surplus electricity price to $50 per MWh energy price by 2025.  (2) Increases in energy charge costs reflect impacts to agricultural and non-agricultural water use. Source: Harvey Economics, 2012. 

Year

Energy 

Charges

Lost Fund 

Dollars Total

Energy 

Charges

Lost Fund 

Dollars Total

Energy 

Charges

Lost Fund 

Dollars To

2012 $116 $0 $116 150 $ $0 $150 116 $ $0 $12015 $103 $0 $103 684 $ $0 $684 1,001 $ $0 $1,02020 $98 $238 $336 654 $ $1,578 $2,233 1,585 $ $3,823 $5,42025 $98 $226 $324 654 $ $1,501 $2,155 1,585 $ $3,635 $5,22030 $66 $142 $208 622 $ $1,348 $1,970 1,552 $ $3,367 $4,92035 $0 $0 $0 470 $ $960 $1,430 1,078 $ $2,202 $3,22040 $0 $0 $0 470 $ $953 $1,424 296 $ $599 $82044 $0 $0 $0 470 $ $953 $1,424 296 $ $599 $8

Total $1,926 $2,722 $4,648 18,513 $ $31,539 $50,053 35,409 $ $61,989 $97,

LNB SNCR plus LNB SCR plus LNB

Year

Energy 

Charges

Lost Fund 

Dollars Total

Energy 

Charges

Lost Fund 

Dollars Total

2012 $116 $0 $116 $116 $0 $1162015 $1,840 $0 $1,840 $103 $0 $1032020 $3,084 $3,974 $7,058 $8,407 $3,974 $12,3812025 $3,084 $7,072 $10,157 $9,352 $10,005 $19,3572030 $3,051 $6,620 $9,671 $10,341 $16,747 $27,0882035 $2,224 $4,542 $6,766 $11,385 $23,670 $35,0552040 $511 $1,035 $1,546 $12,696 $28,650 $41,3462044 $511 $1,035 $1,546 $13,852 $52,212 $66,064

Total $68,590 $112,587 $181,176 $289,159 $496,932 $786,092

SCR Plus Baghouse plus LNB NGS Closure
E. SUMMARY OF EPA BART IMPLEMENTAT

IMPACTS ON THE GRIC
Summary of Losses Facing the GRIC from EPA BART Implementation Scenarios 

through 2044, in Millions 

Note: Higher CAP energy costs include increased costs for agricultural and non-agricultural water use. Source: Harvey Economics, 2012. 

GRIC Financial Losses LNB

SNCR

plus LNB

SCR

plus LNB

SCR plus Baghouses

plus LNB 

Lost Value of Agricultural Investment $0.0 $0.0 ($338.5) ($338.5) Higher CAP Energy Costs ($1.9) ($18.5) ($35.4) ($68.6) Lost Monies from the LCRBDF to Pay CAP Fixed OM&R Charges ($2.7) ($31.5) ($62.0) ($112.6) Personal Income Reduction ($4.3) ($44.6) ($321.9) ($410.4) Total Monetary Losses ($8.9) ($94.6) ($757.8) ($930.1) Employment Losses(cumulative job years) (81) (853) (9,041) (10,910) 
Direct and Indirect Losses to the GRIC from EPA BART Implementation Scenario Impacts on the LCCost, and Agriculture, through 2044, in Millions Notes: (1) Employment and income losses include direct and indirect workers.  (2) The impacts presented in this table do not include the lost value of agricultural investment. Sources: IMPLAN and Harvey Economics, 2012. 

Direct Total Direct Total Direct Total Direct Total 

Employment

Peak Annual Loss (4) (7) (28) (44) (442) (564) (485) (635) 

Cumulative Job Years (53) (81) (545) (853) (7,092) (9,041) (8,364) (10,910) 

Personal Income (millions)

Peak Annual Loss ($0.2) ($0.4) ($1.6) ($2.3) ($14.9) ($20.1) ($17.6) ($24.0) Cumulative Loss ($3.0) ($4.3) ($31.1) ($44.6) ($238.3) ($321.9) ($300.9) ($410.4) 

Total Sales of Goods and Services (millions)

Peak Annual Loss ($0.4) ($0.7) ($2.6) ($4.6) ($6.1) ($21.5) ($11.1) ($30.2) 

Cumulative Loss ($4.6) ($8.4) ($50.1) ($89.9) ($97.4) ($344.5) ($181.2) ($505.1) 

SNCR plus LNB SCR plus LNB

SCR plus 

LNB/SOFA Baghouse plus LNB 
Fw:EPA Ed Harvey report questions EPA Ed Harvey report questions

Colleen McKaughan Colleen McKaughan to: Eugene Chen, Anita Lee 04/12/2012 02:13 PM

History: This message has been replied to and forwarded .

I just got this from Gila River. I think this is the last of the information.

Colleen W. McKaughan

Associate Director, Air Division

USEPA, Region 9

(520) 498-0118

----- Forwarded by Colleen McKaughan/R9/USEPA/US on 04/12/2012 02:18 PM -----

From: "Amy Mignella" <amy.mignella@gric.nsn.us>

To: Colleen McKaughan/R9/USEPA/US@EPA

Date: 04/12/2012 01:43 PM

Subject: EPA Ed Harvey report questions

Colleen –

Please see the attached response to EPA questions prepared for the Community by Harvey Economics . 

Sorry for the delay – I confused the sequence of events for this in the early days of my work here . 

Please read this in the context of the other information provided by the Community since its drafting 

and let us know if you have any additional questions after review. 

Thank you for inquiring about it so that we were able to ensure its consideration. 

Amy

Amy Mignella

Senior Assistant General Counsel

Office of General Counsel

Gila River Indian Community

P.O. Box 97

Sacaton, AZ 85147

(520)562-9766 direct line

(520)562-9769 fax

amy.mignella@gric.nsn.us

This transmission may contain privileged and confidential information. It is intended only for the use of the 

person(s) named above. If you are not the intended recipient, you are hereby notified that any review, 

dissemination, distribution or duplication of this communication is strictly prohibited. If you are not the 

intended recipient, please contact the sender by e-mail and destroy all copies of the original message. 

This message contains confidential information and is intended 

only for the individual(s)named. If you are not the named 

addressee you should not disseminate, distribute or copy this 

email. Please notify the sender immediately by e-mail if you have 
received the e-mail by mistake

and permanently delete this e-mail from your system. E-mail 

transmission cannot be guaranteed to be secure or error-free as 

information could be intercepted, corrupted, lost, destroyed, 

arrive

late or incomplete, or contain viruses. The sender therefore does 

not accept liability for any errors or omissions in the contents 

of this message, which arise as a result of e-mail transmission. 

If verification is required please request a hard-copy version.
Harvey Economics ♦ 600 South Cherry Street, Suite 220 ♦ Denver, Colorado 80246 

tel. 720.889.2755♦ fax 720.889.2752 ♦ www.harveyeconomics.com ♦ he@harveyeconomics.com 

MEMORANDUM 

TO: COLLEEN MCKAUGHAN, EPA REGION 9 

FROM: ED HARVEY, HARVEY ECONOMICS 

DATE: JANUARY 24, 2012 

RE: HE REPORT- ECONOMIC IMPACTS TO THE GRIC UNDER NGS BART SCENARIOS 

In November 2011, Harvey Economics (HE) prepared an analysis for the Gila River Indian 

Community (GRIC) that focused on the economic impacts to the GRIC resulting from a number 

of NGS BART implementation scenarios. After reviewing the HE report, EPA Region 9 

contacted the GRIC with several follow-up questions about the report, specifically requesting 

information about the inputs to the economic impact calculations. This memo responds to that 

request and also provides some additional background detail on the models and methodologies 

used to estimate impacts to the GRIC. 

EPA Information Request 

In an e-mail to the GRIC from Colleen McKaughan on January 3, 2012, EPA requested that HE 

share its economic impact models and provide information about the following model input 

assumptions: 

• Estimated total NGS energy production (MWh/yr); 

• Estimated share of NGS available to BOR/CAP each year (MWh/yr); 

• Estimated incremental cost of power ($/MWh) for each year in the analysis; 

• Estimated CAP water pumping volumes for each year (AF/yr); 

• Estimated MWh consumed for pumping by CAP each year (MWh/yr); 

• Estimated Capital and Operating Expenses (CAPEX and OPEX) for baseline plant (nonincremental costs, i.e. non-SCR, non-baghouse CAPEX and OPEX); 

• CAPEX each year for SCR and Baghouse and installation schedule by NGS unit. 

HE is unable to share the detailed models developed to assess the economic impacts to the GRIC 

for a host of reasons. There are, in fact, numerous sub-models which are used to perform the 

impact analyses. The manner in which each works and how they work together is very complex 

and the provision of those models would not be constructive to an understanding of the impact 
Harvey Economics 

Page 2 

estimates. Further, some of the models and data are proprietary. Information about the model 

inputs is provided below as are brief descriptions of how those assumptions were applied in the 

models used to estimate agricultural impacts to the GRIC and revenue losses to the Lower 

Colorado River Basin Development Fund (LCRBDF). We would also be pleased to answer 

further questions or provide briefings about the methods and models as needed. 

Specific Model Input Assumptions 

Exhibit 1 provides information about the specific analytical assumptions requested by EPA. 

Exhibit 1 

Model Attributes and Assumptions of Interest to EPA

Sources: Salt River Project; Bureau of Reclamation; Central Arizona Water Conservation District; and Energy Information 

Administration. 

Except for Attribute 4, the input assumptions shown in Exhibit 1 were mainly gathered from 

detailed interviews with the Salt River Project (SRP), U.S. Bureau of Reclamation (BOR) and 

Central Arizona Water Conservancy District (CAWCD) during the Fall of 2011. The annual 

incremental cost of NGS power under each of the BART implementation scenarios is provided in 

Attachment 1. These production cost increases are based on the capital and operating costs and 

financing assumptions for each scenario. HE used these assumptions in a variety of models 

developed to assess impacts to the GRIC. 

Exhibit 2 identifies the capital cost and schedule assumptions for the SCR plus baghouses. 

 

Model Attribute HE Assumption

1. Estimated total NGS energy production (MWh/yr) 18,106,996

2. Estimated share of NGS power available to BOR each year (MWh/yr) 4,400,000

3. Estimated power consumed for pumping by CAP each year (MWh/yr) 2,800,000

4. Estimated annual incremental cost of NGS power See Attachment 1

5. Average annual AF of water delivered by CAP (AF/yr) 1,500,000

6. Baseline annual NGS expenses (capital and operating costs) per MWh $31

7. Baseline total annual NGS expenses (capital and operating costs) $561,316,872
Harvey Economics 

Page 3 

Exhibit 2 

HE Capital Cost and Schedule Assumptions for the SCR plus Baghouse Scenario 

Source: Salt River Project; Sargent and Lundy; Harvey Economics, 2011. 

Capital cost data was obtained from the SCR and Baghouse Capital Cost Estimate Report

prepared by Sargent and Lundy in August 2010. That report assumes a 74 month schedule. It is 

HE’s understanding that EPA would require any BART scenario to be completed within 5 years; 

therefore HE assumed a compressed schedule of 60 months. The terms of the loan (interest rate 

and time period) are based on recent SRP bonds. 

Agricultural Impacts 

Franzoy Consulting, Inc. provided an understanding of current and future GRIC agricultural 

operations, in terms of total irrigated acreage, crop type, water requirements, water sources, 

current water costs and GRIC investment in agriculture. This data is included in the draft report. 

The agricultural impacts to the GRIC under each BART scenario are generally based on the 

difference between the total cost of water used for agriculture under the baseline and the cost of 

water under each BART implementation scenario along with the resulting change in agricultural 

operating margins. Only the cost of CAP water would change as a result of the BART scenarios; 

the cost of other water sources are assumed to remain constant. The baseline cost of CAP water is 

assumed to increase over time as well. 

Using the available data, an agricultural impact model was developed for the GRIC to determine 

the operating margin for each crop given varying water costs. Agricultural operating margins 

Model Attribute HE Assumption

Interest Rate 3.68%

Loan Period (yrs) 20

Total Capital Costs

 Unit 1 $372,184,000

 Unit 2 $410,919,000

 Unit 3 $347,869,000

Annualized Costs

 Unit 1 $26,615,594

 Unit 2 $29,385,609

 Unit 3 $24,876,782

Installation Schedule

 Timeline 60 month completion schedule

 Unit 1 Installation begins 2016; ties in Fall 2017

 Unit 2 Installation begins 2015; ties in Fall 2016

 Unit 3 Installation begins 2014; ties in Fall 2015
Harvey Economics 

Page 4 

under each BART scenario were calculated by applying the cost of water to the GRIC crop 

budgets; the margin under each BART scenario was then compared to the margin under the 

baseline to determine to form the basis of the impact analysis. Reduced operating margins result 

in employment losses in the agricultural sector, as well as associated loss of personal income, as 

acreage goes out of production. 

The change in water costs under the BART scenarios would also have an effect on the GRIC’s 

investment in agricultural infrastructure. In 2011, as part of the Pima-Maricopa Irrigation Project 

Six Year Strategic Plan 2011-2016, it was determined that the maximum sustainable irrigated 

acreage for the GRIC is 77,000 acres. The current intention is for an expansion of irrigated 

agriculture from around 34,000 acres in 2010 to 77,000 acres by 2030. However, under all BART 

scenarios, with the exception of LNB/SOFA, a portion of the GRIC’s agricultural investment 

would be lost as it would no longer be economically viable to maintain all acres in agriculture as 

the cost of water increases. 

Impacts to the Lower Colorado River Basin Development Fund 

HE developed a detailed model of the LCRBDF based on an understanding of the structure and 

operation of the Fund gained from the Arizona Water Rights Settlement Act of 2014 and 

interviews with the SRP, BOR and CAWCD. A graphic of the Fund’s structure is provided in the 

draft report, which illustrates the cascading priorities of Fund revenues. In the LCRBDF model, 

HE assumed that miscellaneous revenues and the Hoover and Parker-Davis surcharge would 

remain constant over the analysis period. Therefore, NGS surplus sales would be the only 

fluctuating source of Fund revenues, other than the amount CAWCD would be required to pay 

towards the CAP repayment obligation. Under each BART scenario, the amount of NGS surplus 

power revenue available to the Fund is determined by a number of factors, including the 

following: 

• The assumption of total annual NGS production (18,106,996 MWhs as shown in Exhibit 

1); 

• The assumption of total annual NGS power available for surplus sales (1.38 million 

MWhs per year, exclusive of the 220 GWhs sold to SRP); 

• 220 GWhs of surplus power are sold to SRP annually for $25 million and escalating over 

time; 

• The assumption of the sales price of surplus power (rising from a current value of $31 per 

MWh to $50 per MWh by 2025); 

• The cost of each BART scenario. 

The only factor that varies among scenarios is the cost of the BART alternative itself; all other 

inputs remain constant. Therefore, changes to surplus power sale revenues are completely 

dependent on the cost of each BART implementation scenario. 
Harvey Economics 

Page 5 

LCRBFD revenue losses would not occur under any BART scenario until after 2019. Fund 

revenue losses do not occur before then because of the CAWCD repayment obligation. CAWCD 

is required to make payments into the Fund to meet annual CAP repayment obligations, ensuring 

annual Fund revenues of at least as much as the annual obligation. Under the baseline scenario, 

total Fund revenues are equal to the repayment obligation until 2019; after that point, revenues 

under the baseline scenario are greater than the repayment obligation. The losses occur under the 

BART scenarios because after that time, annual revenues for those scenarios are less than under 

the baseline. 

The Fund was created to cover the costs of a number of items, including fixed O,M&R costs for 

CAP Indian deliveries and a number of infrastructure projects for the distribution of CAP water 

to various tribes. The reduction of LCRBDF revenues under the BART scenarios will impact the 

ability of the Fund to fully cover the O,M&R costs or pay for other projects. 

I hope this is helpful. Please let me know if you have further questions. 
Attachment 1 

Estimated Annual Incremental Cost per MWh of NGS Power Under Each Scenario Note: Under NGS closure, replacement power costs would result in a 50 percent increase in power costs.. 

Source: Harvey Economics, 2011. 

Year

Cost 

Increase

Percent 

Change

Cost 

Increase

Percent 

Change

Cost 

Increase

Percent 

Change

Cost 

Increase

Percent 

Change

Cos

Incre

2011 $0.12 0.38% $0.00 0.00% $0.00 0.00% $0.00 0.00% $0.02015 $0.18 0.58% $0.23 0.75% $2.37 7.63% $4.85 15.63% $0.02020 $0.18 0.58% $0.54 1.75% $2.80 9.05% $5.61 18.08% N/2025 $0.18 0.58% $0.54 1.75% $2.80 9.05% $5.61 18.08% N/2030 $0.12 0.38% $0.54 1.75% $2.80 9.05% $5.61 18.08% N/2035 $0.00 0.00% $0.46 1.50% $0.66 2.13% $1.14 3.68% N/2040 $0.00 0.00% $0.46 1.50% $0.66 2.13% $1.14 3.68% N/2045 $0.00 0.00% $0.46 1.50% $0.66 2.13% $1.14 3.68% N/2050 $0.00 0.00% $0.46 1.50% $0.66 2.13% $1.14 3.68% N/

LNB SNCR plus LNB SCR plus LNB SCR plus Baghouse plus LNB N
Harvey Economics ♦ 600 South Cherry Street, Suite 220 ♦ Denver, Colorado 80246 

tel. 720.889.2755♦ fax 720.889.2752 ♦ www.harveyeconomics.com ♦ he@harveyeconomics.com

November 16, 2011 

Mr. Linus Everling 

General Counsel 

Gila River Indian Community 

Law Office 

525 W. Gu u Ki 

P.O. Box 97 

Sacaton, Arizona 85247 

Re: Proposed EPA BART Changes at NGS 

Dear Mr. Everling: 

Enclosed please find Harvey Economics’ (HE’s) draft findings related to the impacts of the US 

Environmental Protection Agency’s (EPA’s) proposed best available retrofit technologies (BART) 

for the Navajo Generating Station (NGS). As you know, on August 23, 2011, the Gila River Indian 

Community (GRIC) contracted with Harvey Economics to identify and estimate the ultimate 

impacts of these proposed changes on the GRIC. The enclosed tables and graphics provide the 

results of our research and analysis, albeit preliminary, since we continue to gather information and 

refine these impact estimates. 

Although the results are preliminary, the conclusions of our work are clear. The EPA’s proposed 

BART changes to the NGS will have major negative impacts upon the GRIC. The GRIC’s 

agricultural enterprise, which operates on small margins similar to most agriculture, will be 

adversely affected by increased Central Arizona Project (CAP) water costs attributable to EPA’s 

actions. This will result in a loss in the economic viability of irrigated agriculture on certain GRIC

croplands, which will mean a loss of GRIC employment, personal income, and the substantial 

investments that have been made in the GRIC agricultural system by the U.S. and the GRIC in 

partnership. A separate, but profound, impact on the GRIC will stem from revenue losses to the 

Lower Colorado River Basin Development Fund (LCRBDF). Simplifying the complex flow of 

monies into this Fund and to its recipients, HE has reached the conclusion that the reduction in the 

NGS surplus revenues into the Fund attributable to EPA’s proposed BART technologies will serve 

to reduce monies available to pay for GRIC’s CAP water and infrastructure. The GRIC are the 

largest of the CAP Indian contractors, and hold a priority position with respect to infrastructure 

monies coming from the Fund. In short, the EPA’s proposed BART changes at NGS will 

substantially diminish any economic benefit the GRIC might have achieved from the utilization of 

CAP waters and the related investments in agriculture, some of which are in place at the present 

time. 

Overview of Data Sources and Methods 

HE’s performance schedule, abbreviated because of the need to provide this information to EPA 

and others in accordance with their decision-making process, has influenced our efforts to complete 
Harvey Economics 

Page 2 

this assignment. The background, framework for the analysis, and key assumptions were 

forthcoming from extensive interviews with the Salt River Project (SRP), the U.S. Bureau of 

Reclamation (BOR), and Central Arizona Water Conservation District (CAWCD). SRP is the plant 

operator and has been responsible for marketing NGS surplus power until the fall of 2011, when the 

Western Area Power Administration (WAPA) assumed that responsibility. The BOR provides the 

power for pumping CAP waters and oversees the LCRBDF. The CAWCD is responsible for 

operating and managing the CAP project. All three entities were highly responsive and cooperative 

in providing information for our analyses. Mr. Gene Franzoy, of Franzoy Consulting, Inc., provided 

considerable information about historical and projected agricultural activities and water use within 

the GRIC on a timely basis. Additional interviews were conducted with GRIC economic 

development personnel and individuals responsible for the GRIC farming enterprise. 

In addition to these primary data sources, HE relied upon numerous secondary sources, including 

the U.S. Department of Census data, USDA agricultural census information, and U.S. Department 

of Energy, and Energy Information Administration data. HE also reviewed reports and previous 

impact analyses prepared by the CAWCD; their staff was particularly helpful and timely in their 

assistance. HE also reviewed the Arizona Water Settlement Act and other reports and documents 

related to the LCRBDF. 

The analyses performed were dictated by the types of impacts which we identified. Regarding 

GRIC agriculture, the impacts from EPA’s proposed BART changes would directly affect GRIC 

water costs. This would occur because Indian CAP contractors pay CAP energy charges and 95 

percent of CAP energy comes from the NGS plant. Therefore, we examined increased NGS 

production costs which the BOR would pass along to CAP to pump waters from the Colorado River 

through CAP canals and conveyances to the GRIC and other CAP contractors. Higher NGS 

production costs would be attributable to the costs of the BART alternatives. We relied upon the 

Sargent and Lundy reports for those cost figures. Capital costs were assumed to be financed with 

20-year bonds at the current SRP long-term borrowing rate of 3.7 percent. 

The effects stemming from the loss of revenue to the LCRBDF were predicated on HE’s 

understanding of the flow of monies into and out of that Fund, which are portrayed in a graphic in 

our attachment. The focus of the impact of that segment of the impact analysis was on the NGS 

surplus revenues. As NGS surplus monies exceed the CAWCD repayment obligation, those monies 

are available to pay for CAP Indian water costs and other prioritized investments, which the Fund 

has adopted over the years. If the EPA BART technologies are implemented, they will reduce the 

NGS surplus, which will in turn reduce revenues available into the Fund. Whereas there are many 

beneficiaries of the LCRBDF, Indian CAP contractors have a priority in the cascade of 

beneficiaries to see that the large part of their CAP water is paid for, and the GRIC is by far the 

largest of the Indian CAP contractors. Therefore, losses to the NGS surplus attributable to the EPA 

BART implementation beyond the CAWCD repayment obligations will have an adverse affect on 

the GRIC. 

Overview of Results and Findings 

Scenario definition. The possible scenarios for EPA BART implementation were based upon a 

review of EPA documents filed to date on this matter and available through the internet, plus 

discussions with the SRP. Each of the scenarios identified, low NOx burners (LNB), SNCR, SCR, 
Harvey Economics 

Page 3 

SCR plus baghouses and NGS closure, all represent distinct options which the EPA might consider 

adopting as BART for NGS. It is our understanding that, at the present time, the EPA is seriously 

considering a recommendation of installing SCR on each of the three units at NGS. However, if 

that recommendation should, in fact, occur, the operator will recommend that baghouses also be 

installed for the three units to comply with the PSD air permit, which will substantially increase the

cost of this BART option. Should that occur, it is quite possible that one or more of the current 

NGS owners of the plant will choose to simply close the facility and each of the NGS owners will 

then develop their own source of alternative power. With other issues pending for NGS, the option 

for NGS closure has a reasonable chance of occurring. The construction time periods and the costs 

for each of the scenarios were based upon the Sargent and Lundy reports and information 

forthcoming from the SRP. 

CAP energy costs. HE’s report projects increases in CAP energy costs per acre-foot attributable 

to the EPA BART implementation scenarios. Compared with the CAP energy costs under the 

baseline scenario, the SCR would reach a peak impact of 8.8 percent in 2020, but the SCR plus 

baghouses would have a peak impact on CAP energy costs of 17.2 percent in that year. Under the 

NGS closure scenario, CAP energy costs would increase by about 58 percent, as compared with the 

baseline costs. Increased CAP energy costs under NGS closure would result because the CAWCD 

would be required to purchase power on the open market at a much higher rate compared with its 

cost for NGS power. 1 

Impacts on GRIC agriculture. The GRIC currently has an active agricultural enterprise, 

irrigating about 35,600 acres. Their plans are to increase irrigated acres to 77,000 acres by 2030. 

Gross operating margins (gross revenues less farm operating expenses), are relatively thin, 

projected to be $113 per acre by the year 2030. As the GRIC increases irrigated agriculture, they 

plan to utilize more CAP water, reaching 144,700 acre-feet by the year 2050. Because of rising 

CAP energy costs, the GRIC agricultural operating margins will be adversely affected by the EPA 

BART implementation scenarios; under the SCR plus baghouse scenario, operating margins will 

decline by 16.7 percent in 2030 and, under the NGS closure scenario, by 70.9 percent. These 

declines in agricultural operating margins will lead to cumulative employment losses of 1,218 and 

cumulative personal income losses of more than $1B, during the period of impact under the NGS 

closure scenario. Further, the investment in canals, pump stations and other facilities to support 

GRIC agriculture, projected to be $645M when complete before 2030, will be jeopardized by the 

EPA BART implementation scenarios. For instance, under the SCR plus baghouse scenario, almost 

49,000 acres of the total 77,000 acres will become uneconomic for GRIC crops by 2050. Under the 

NGS closure scenario, the total loss in acreage would be 61,000 acres out of the 77,000 acres total, 

by 2050. As these acres go out of production, the lost investment previously made would amount to 

$409M and $514M for the SCR plus baghouse and NGS closure scenarios, respectively. 

Impacts on the LCRBDF related to the GRIC. NGS surplus power amounts to those 

resources to which the BOR is entitled from the NGS plant, less the power required for CAP 

pumping. Those power resources are then sold by WAPA and the profits from those sales are an 

important revenue source for the LCRBDF. NGS surplus power revenues will be determined by the 

price WAPA is able to obtain from those sales which are, of course, uncertain over time. Although 

prices have been low recently, a gradual return to a more normal price range is anticipated over 

 

1

 Interview with CAWCD personnel, October 2011. 
Harvey Economics 

Page 4 

time. HE has assumed a price recovery from the current level of $31 per MWH to $50 per MWH by 

the year 2025, but this assumption does not affect the negative impact of the EPA BART scenarios 

on that surplus power, since the cost of power would increase regardless of the power sales price 

under those scenarios. The cumulative negative impacts of the EPA BART implementation 

scenarios on NGS net revenues are projected to be $212M under SCR plus baghouses and $2.6B 

under the NGS closure scenario. 

The losses to the LCRBDF revenues under the alternative BART implementation scenarios will 

occur when the NGS net surplus exceeds the CAWCD repayment obligation less other minor 

revenues. That is projected to occur in the year 2018. Hence, the impacts to LCRBDF revenues 

occur thereafter. On a cumulative basis through the year 2050, the SCR plus baghouse scenario 

would result in a negative effect on LCRBDF revenues of approximately $148.6M. Under NGS 

closure, the loss in LCRBDF revenues would amount to approximately $1.46B. S In the cascading 

distributions under the LCRBDF, Indian CAP contractors are in the first priority for payment of 

part of their CAP water resources. Since the GRIC represent between 57 percent and 71 percent of 

the Indian CAP contractors depending on the year, they stand to lose the most from these revenue 

losses., The cumulative loss to the GRICs would be $92.1M under the SCR plus baghouses 

scenario and $844M under the NGS closure scenario through 2050. 

Total losses. Beyond the GRIC’s present and future utilization of CAP waters for agriculture, 

their intention is to eventually use a total of about 231,800 acre-feet for all uses within the GRIC. 

All these waters will be subject to higher CAP energy charges which will result in losses to the 

GRIC. Under the SCR plus baghouse scenario, the cumulative loss from higher CAP energy cost 

alone through the year 2050 would amount to $53.4M and $248.1M under the NGS closure 

scenario. 

A final table in the presentation represents a summary of the losses which the GRIC would face as a 

result of the alternative EPA BART implementation scenarios. Total monetary losses under the 

SCR plus baghouse scenario would amount to almost $1.3B. Under the NGS closure scenario, a 

distinct possibility, the losses to the GRIC would be more than $2.6B. Along with these losses 

would be the losses to employment opportunities and the economic development prospects 

associated with the availability of reasonably priced water. 

HE is available to expand upon these findings and conclusions in a presentation or a more elaborate 

report as needed, and, as mentioned earlier, we continue to refine our work on these preliminary 

findings. 

Please let me know if you have any questions. 

Yours truly, 

Edward F. Harvey 

Principal 

Enclosures 
PROJECTED IMPACTS OF EPA BART IMPLEMENTATION OA. Scenario Definitions B. CAP Energy Costs C. Impacts on GRIC Agriculture D. Impacts on the GRIC from BART Implementation 

the Lower Colorado River Basin Development Fu

E. Summary Impacts on GRIC CAP Water Value 
A. Scenario Definitions 
Alternative EPA BART Implementation Scenarios f

 Baseline – 3 units, combined 2,200 MW capacity; SO2 scrubbers 

Low Nox Burners (LNB) – Applied to the boilers of the 3 units and uses the separated o

full installation recently completed at NGS 

SNCR – Selective non-catalytic reduction; reduces NOx by injection o

in stacks for three units 

SCR – Selective catalytic reduction; reduces NOx by injection of am

exhaust of three units 

SCR plus Baghouse – 

If SCR is stipulated as BART, the NGS plant operator believes need to be added to each unit to collect additional particulatcompliance with the PSD permit. 

NGS Closure – 

If any of the six current NGS owners elect not to pay the incr

costs and no substitute buyer is found, the NGS plant will moperhaps by December 31, 2017. With consideration of pendinegotiations and EPA MACT rules, NGS closure is a distinct p
Construction Plans and Costs of EPA BART Implementation Alternatives, in Millions Notes: * Assumes Final EPA Rule by Summer of 2012.  ** Assumes capital costs financed for 20 years at 3.7 percent, equal to SRP’s long-term borrowing costs as of Fall 2011. 

 *** Decommissioning costs will be borne by the owners, but these will not affect the GRIC. Source: Sargent & Lundy, "SCR and Baghouse Capital Cost Estimate Report - Revision D", August, 2010;  and SRP, October, 2010. 

Construction 

Start Date *

Construction 

End Date

Capital 

Cost

Annualized 

Capital Cost **

Annual 

Operating Costs

Total 

Annual Co

LNB 2009 2011 $45.2 $3.2 $0.0 $3.2SNCR Sept, 2012 Dec, 2013 $20.0 $1.4 $8.4 $9.8SCR July, 2014 July, 2017 $544.2 $38.9 $11.9 $50.9SCR + Baghouse July, 2014 July, 2017 $1,131.0 $80.9 $20.6 $101.5NGS Closure*** N/A N/A $0 $0 $0 $0
B. CAP ENERGY COSTS 
Overview of CAP Energy Costs 

1. CAWCD recoups the cost of pumping water from the Colorado River t

canals via the CAP energy charge per AF delivered. 

2. Approximately 95 percent of CAP power comes from the NGS plant th

BOR power allocation. 

3. The variable costs of NGS power, almost all coal costs, are recouped t

energy charge. 

4. CAP energy charges, currently $53 per AF, have increased by an avera

percent per year over the past 15 years. This increase is already greatanticipated in the analysis done in support of the AWSA, which was 3costs. 

5. The GRIC is responsible for paying CAP energy charges for agricultura

of CAP water, except water leased to cities. 
Increases in CAP Energy Cost per AF under Alternative EPA BART Implementation Scenarios and Percent Change from Baseline Note: Assumes 2.2 percent annual energy escalation price based on DOE Projections: EIA, AE02011 National Energy Modeling System. Source: Harvey Economics, Fall 2011. 

Year

Cost 

Increase

Percent 

Change

Cost 

Increase

Percent 

Change

Cost 

Increase

Percent 

Change

Cost 

Increase

Percent 

Change

2011 $0.22 0.4% $0.22 0.4% $0.22 0.4% $0.22 0.4% 2015 $0.33 0.6% $0.77 1.4% $4.75 8.5% $9.38 16.9% 2020 $0.33 0.5% $1.35 2.1% $5.57 8.8% $10.80 17.2% 2025 $0.33 0.5% $1.35 1.9% $5.57 7.9% $10.80 15.4% 2030 $0.22 0.3% $1.24 1.6% $5.46 7.0% $10.69 13.6% 2035 $0.00 0.0% $0.87 1.0% $1.23 1.4% $2.13 2.4% 2040 $0.00 0.0% $0.87 0.9% $1.23 1.3% $2.13 2.2% 2045 $0.00 0.0% $0.87 0.8% $1.23 1.1% $2.13 1.9% 2050 $0.00 0.0% $0.87 0.7% $1.23 1.0% $2.13 1.7% 

SCR plus Baghouses

plus LNB

SCR

plus LNB

SNCR

LNB plus LNB
C. IMPACTS ON GRIC AGRICULTURE 
Irrigated Acres, Baseline and Operating Margin for GRIC Agriculture, 2011 to 2050 Note: * Baseline water costs include an increase in CAP water costs, but not increases due to BART implementation. Source: Franzoy Consulting, Inc. and Harvey Economics, 2011. 

Year Cotton Alfalfa

Small 

Grains Vegetables Melons

Total 

Irrigated Acres

Gross Margin

Except Water Costs

Baseline 

Water Costs*

Operating 

for GRIC Ag

2011 20,131 3,919 9,691 463 1,425 35,630 $12,220,656 $4,068,861 $8,151,2015 24,882 4,844 11,978 572 1,762 44,038 $15,104,638 $5,781,943 $9,322,2020 30,918 6,019 14,884 711 2,189 54,722 $18,769,066 $8,802,772 $9,966,2025 36,230 7,054 17,442 834 2,565 64,123 $21,993,492 $11,813,511 $10,1792030 43,505 8,470 20,944 1,001 3,080 77,000 $26,410,046 $17,746,462 $8,663,2035 43,505 8,470 20,944 1,001 3,080 77,000 $26,410,046 $18,953,258 $7,456,2040 43,505 8,470 20,944 1,001 3,080 77,000 $26,410,046 $20,533,602 $5,876,2045 43,505 8,470 20,944 1,001 3,080 77,000 $26,410,046 $22,339,372 $4,070,2050 43,505 8,470 20,944 1,001 3,080 77,000 $26,410,046 $24,400,415 $2,009,

Irrigated Acres by Crop Type
Water Requirements and Water Sources for GRIC Agriculture, 2011 to 2050 Note: * Includes delivery loss and 22% irrigation loss. 

**Water resources do not equal water requirements because GRIC non-agricultural water requirements are included in these totals. 

Source: Franzoy consulting, Inc., 2011. 

Year Cotton Alfalfa

Small 

Grains Vegetables Melons

Total Water 

Requirements* CAP SRP Groundwater Reclaimed 

2011 93,408 35,313 28,105 764 3,078 216,826 37,351 25,900 14,575 14,000 2015 115,451 43,646 34,738 945 3,805 267,996 38,053 25,900 59,542 19,500 2020 143,460 54,235 43,165 1,174 4,728 333,012 59,315 25,900 95,797 27,000 2025 168,106 63,553 50,580 1,375 5,540 390,222 79,285 25,900 125,537 34,500 2030 201,863 76,315 60,738 1,652 6,653 468,583 135,269 25,900 140,414 42,000 2035 201,863 76,315 60,738 1,652 6,653 468,583 135,669 25,900 137,414 44,600 2040 201,863 76,315 60,738 1,652 6,653 468,583 138,669 25,900 134,414 44,600 2045 201,863 76,315 60,738 1,652 6,653 468,583 141,669 25,900 131,414 44,600 2050 201,863 76,315 60,738 1,652 6,653 468,583 144,669 25,900 128,414 44,600 

Water Requirements, by Crop Type (AF) Projected Water Sources (AF)
Differences from Baseline GRIC Agricultural Operating Margins under Alternative EPA BART Implementation Scenarios Note: * Total includes all years from 2011 to 2050, not just those shown in the table. Source: Harvey Economics, Fall 2011. 

Year

Difference Percent Change Difference Percent Change Difference Percent Change Difference Percent Change 

2011 -$8,306 -0.10% -$8,306 -0.10% -$8,306 -0.10% -$8,306 -0.10% 2015 -$12,693 -0.14% -$29,288 -0.31% -$180,691 -1.94% -$356,954 -3.83% 2020 -$19,785 -0.20% -$79,896 -0.80% -$330,350 -3.31% -$640,517 -6.43% 2025 -$26,446 -0.26% -$106,794 -1.05% -$441,567 -4.34% -$856,157 -8.41% 2030 -$30,081 -0.35% -$167,163 -1.93% -$738,326 -8.52% -$1,445,666 -16.69% 2035 $0 0.00% -$117,484 -1.58% -$167,080 -2.24% -$288,592 -3.87% 2040 $0 0.00% -$120,082 -2.04% -$170,774 -2.91% -$294,974 -5.02% 2045 $0 0.00% -$122,680 -3.01% -$174,469 -4.29% -$301,355 -7.40% 2050 $0 0.00% -$125,278 -6.23% -$178,163 -8.87% -$307,737 -15.31% 

Total* -$417,248 N.A. -$3,972,263 N.A. -$10,982,252 N.A. -$20,797,971 N.A. -

LNB SNCR plus LNB SCR plus LNB SCR plus Baghouses plus LNB 
Employment and Income Losses Attributable to GRIC Agricultural Impacts from EPA BART Implem

Notes: Direct losses will be within GRIC. Total losses will include GRIC losses plus induced and indirect effects within the GRIC and Phoenix Area. 

Although cumulative employment losses are the same for SCR and SCR plus baghouses, cumulative income losses are greater under SCR pluearlier. 

Source: Harvey Economics, Fall 2011. 

Direct Total Direct Total Direct Total Direct Total 

Employment

Cumulative Loss Between 2011 - 2050 0 0 79 168 455 970 455 970 

Personal Income

Cumulative Loss Between 2011 - 2050(millions)

$0 $0 $9.3 $25.7 $252.9 $701.7 $263.7 $731.6 

LNB SNCR plus LNB SCR plus LNB

SCR plus 

Baghouses plus LNB 
Investment in GRIC Agriculture Jeopardized by EPA BART Implementation Strategies Source: Harvey Economics, Fall 2011. 

GRIC Farm 

Development Plan LNB SNCR plus LNB SCR plus LNB

SCR plus Baghouses 

plus LNB NGS C

Acres 77,000 0 -8,470 -48,913 -48,913 -61,Farm Investment(millions) $645 $0 -$71 -$409 -$409 -$5

Potential Losses by 2050
D. EPA BART IMPLEMENTATION EFFECTS ON TH

AND IMPACTS ON THE GRIC 
Source: Harvey Economics, Fall 2011. 
Overview of NGS Surplus Power Sales 

 Amount of electricity resource available for sale equals BOR p

share less CAP pumping requirements. 

 Surplus power previously sold through exchange similar to sp

 Electricity sales price currently low by historical standards.  Total NGS surplus sales less costs of NGS production equals s

revenue available for Lower Colorado River Basin Developme(LCRBDF). 

 Costs of NGS production driven by NGS capital and operating 

including EPA BART implementation. 

* Certain NGS surplus will be sold to SRP and perhaps other utilities. Water Area Power Adm

 manage future sales. 
Alternative EPA BART Scenario Impacts on Net NGS Surplus Power Revenues, Assuming Power Price Recovery to $50 per MWh by 2025 Note: Totals include revenue losses occurring in all years between 2011 and 2050. Source: Harvey Economics, Fall 2011. 

Year Baseline LNB

SNCR

plus LNB

SCR

plus LNB

SCR plus Baghouses

plus LNB N

2012 $28,825,334 ($285,911) ($328,038) ($1,458,273) ($2,484,114) 2015 $37,335,455 ($285,911) ($659,711) ($4,070,039) ($8,040,349) 2020 $52,036,128 ($285,911) ($1,154,547) ($4,773,767) ($9,255,879) (2025 $65,455,097 ($285,911) ($1,154,547) ($4,773,767) ($9,255,879) (2030 $71,563,388 ($190,608) ($1,059,243) ($4,678,463) ($9,160,576) (2035 $78,564,448 $0 ($742,255) ($1,055,592) ($1,823,295) (2040 $86,901,562 $0 ($742,255) ($1,055,592) ($1,823,295) (2045 $96,566,561 $0 ($742,255) ($1,055,592) ($1,823,295) (2050 $107,770,945 $0 ($742,255) ($1,055,592) ($1,823,295) ($

Total $2,786,524,753 ($5,432,314) ($33,938,845) ($111,023,305) ($212,181,106) ($
Fixed OM&R Costs of Indian CAP Water Notes: (1) The CAP OM&R charges are projected to increase at a rate of 2.98% per year, based on the average annual increase projected between 20

(2) The projected Indian CAP water delivery schedule is based on projections provided by the GRIC and assumed growth of 2%-3% per year These numbers assume 71,000 AF of water are leased by the GRIC over time. 

Source: BOR and CAWCD, September, 2011; and Harvey Economics, Fall 2011. 

Year

Projected Indian CAP Water 

Delivery Schedules (AF)

Projected CAP Fixed 

OM&R Charges per AF

Total Indian CAP Fixed 

OM&R Obligations

GRIC % o

Indian CAP 

2011 320,668 $69 $22,126,085 71%2015 351,677 $81 $28,485,836 72%2020 356,585 $93 $33,285,896 68%2025 375,026 $108 $40,544,630 64%2030 396,405 $125 $49,634,653 61%2035 421,189 $145 $61,079,700 57%2040 424,000 $168 $71,213,110 57%2045 424,000 $195 $82,477,239 57%2050 424,000 $225 $95,523,073 57%
Relationship of NGS Surplus losses to LCRBDF Losses and Losses 

 LCRBDF revenue losses under each EPA BART implementation sce

on comparisons with revenue generated under the Baseline scena

 Annual CAWCD payments offset any reductions in NGS surplus po

revenue, up to the amount of the annual CAP repayment by CAW

 Therefore, revenue losses to the LCRBDF only occur when baselin

projected to be greater than the annual CAP repayment. 

 Lost revenue to the LCRBDF mean losses first to the Indian CAP co

because of their order in the two “cascades”. As by far the largest contractor, GRIC stands to lose the most. 

 The portion of total revenue losses attributed to the GRIC is based 

percentage of GRIC CAP water subject to fixed OM&R costs relativIndian CAP water subject to fixed OM&R.
LCRBDF Revenue Losses under Alternative EPA BART Implementation Scenarios Notes: Totals include revenue losses occurring in all years between 2011 and 2050. Source: Harvey Economics, Fall 2011. 

Year LNB

SNCR

plus LNB

SCR

plus LNB

SCR plus Baghouses

plus LNB NGS 

2011 $0 $0 $0 $0 2015 $0 $0 $0 $0 2020 $285,911 $1,154,547 $4,773,767 $5,925,065 $52025 $285,911 $1,154,547 $4,773,767 $9,255,879 $152030 $190,608 $1,059,243 $4,678,463 $9,160,576 $272035 $0 $742,255 $1,055,592 $1,823,295 $412040 $0 $742,255 $1,055,592 $1,823,295 $502045 $0 $742,255 $1,055,592 $1,823,295 $952050 $0 $742,255 $1,055,592 $1,823,295 $107

Total $3,430,935 $28,952,416 $82,123,951 $148,628,975 $1,46
Lost LCRBDF Revenues Available to the GRIC Resulting from LCRBDF Revenue Losses under AlternEPA BART Implementation Scenarios Notes: Totals include revenue losses occurring in all years between 2011 and 2050. Source: Harvey Economics, Fall 2011. 

Year LNB SNCR plus LNB SCR plus LNB

SCR Plus Baghouses 

plus LNB NGS 

2011 $0 $0 $0 $0 2015 $0 $0 $0 $0 2020 $193,075 $779,660 $3,223,702 $4,001,168 $42025 $183,580 $741,321 $3,065,180 $5,943,092 $102030 $115,786 $643,447 $2,841,976 $5,564,678 $162035 $0 $424,358 $603,498 $1,042,405 $232040 $0 $421,545 $599,497 $1,035,494 $282045 $0 $421,545 $599,497 $1,035,494 $542050 $0 $421,545 $599,497 $1,035,494 $61

Total $2,212,989 $17,587,242 $51,013,204 $92,104,987 $844
LCRBDF Obligations after Indian CAP Fixed OM&R Notes: (1) The GRIC OM&R Trust Fund obligation was fulfilled in 2010.  (2) Outlays for the LCRBDF Fund began in 2010 and will be completed by 2029 if the funds are available. 

 (3) Totals include expenditures occurring in all years between 2010 and 2029. Source: Harvey Economics, Fall 2011. 

Other Total Annual

Year GRIC OM&R Trust Fund GRIC SCIP P-MIP Obligations Obligations 

2011 $0 $25,000,000 $11,863,312 $33,180,069 $70,043,381 2015 $0 $25,000,000 $16,195,943 $54,998,644 $96,194,587 2020 $0 $20,014,756 $22,441,649 $49,445,020 $91,901,425 2025 $0 $0 $34,268,965 $16,666,000 $50,934,965 2030 $0 $0 $0 $0 $0 2035 $0 $0 $0 $0 $0 2040 $0 $0 $0 $0 $0 2045 $0 $0 $0 $0 $0 2050 $0 $0 $0 $0 $0 

TOTAL $0 $270,014,756 $487,629,484 $800,327,723 $1,557,971,963

GRIC Related Obligations
Present and Projected Utilization of GRIC’s CAP Allotment, in AF Note: Leased water assumed to increase according to the anticipated schedule of leases after 2011. Source: Harvey Economics, Fall 2011. 

Year

On Reservation Irrigation 

and Other Tribal Uses Leases Exchanges Total

2011 221,700 41,000 7,697 270,3972015 242,795 60,000 9,005 311,8002020 231,795 71,000 9,005 311,8002025 231,795 71,000 9,005 311,8002030 231,795 71,000 9,005 311,8002035 231,795 71,000 9,005 311,8002040 231,795 71,000 9,005 311,8002045 231,795 71,000 9,005 311,8002050 231,795 71,000 9,005 311,800
Increased Costs of GRIC CAP Water Energy Charges and CAP OM&R Deficits Attributable to EPA BART Implementation Alternatives Notes: Calculations assume a recovery in NGS surplus electricity price to $50 per MWh energy price by 2025. Source: Harvey Economics, Fall 2011. 

Year

Energy 

Charges

Lost Fund 

Dollars Total

Energy 

Charges

Lost Fund 

Dollars Total

Energy 

Charges

Lost Fund 

Dollars Total

2011 $49,078 $0 $49,078 $49,078 $0 $49,078 $49,078 $0 $49,0782015 $80,987 $0 $80,987 $186,870 $0 $186,870 $1,152,883 $0 $1,152,8832020 $77,318 $193,075 $270,393 $312,221 $779,660 $1,091,881 $1,290,958 $3,223,702 $4,514,6602025 $77,318 $183,580 $260,899 $312,221 $741,321 $1,053,542 $1,290,958 $3,065,180 $4,356,1372030 $51,546 $115,786 $167,332 $286,448 $643,447 $929,896 $1,265,185 $2,841,976 $4,107,1612035 $0 $0 $0 $200,726 $424,358 $625,084 $285,461 $603,498 $888,9592040 $0 $0 $0 $200,726 $421,545 $622,271 $285,461 $599,497 $884,9582045 $0 $0 $0 $200,726 $421,545 $622,271 $285,461 $599,497 $884,9582050 $0 $0 $0 $200,726 $421,545 $622,271 $285,461 $599,497 $884,958

Total $1,562,678 $2,212,989 $3,775,667 $7,295,479 $17,587,242 $24,882,721 $27,673,595 $51,013,204 $78,686,799

LNB SNCR plus LNB SCR plus LNB

Year

Energy 

Charges

Lost Fund 

Dollars Total

Energy 

Charges

Lost Fund 

Dollars Total

2011 $49,078 $0 $49,078 $49,078 $0 $49,0782015 $2,277,516 $0 $2,277,516 $80,987 $0 $80,9872020 $2,503,044 $4,001,168 $6,504,212 $8,504,567 $4,001,168 $12,505,7362025 $2,503,044 $5,943,092 $8,446,136 $9,474,844 $10,030,784 $19,505,6282030 $2,477,272 $5,564,678 $8,041,949 $10,531,061 $16,763,377 $27,294,4382035 $493,069 $1,042,405 $1,535,474 $11,686,081 $23,670,469 $35,356,5502040 $493,069 $1,035,494 $1,528,563 $13,031,566 $28,650,131 $41,681,6962045 $493,069 $1,035,494 $1,528,563 $14,531,963 $54,180,001 $68,711,9642050 $493,069 $1,035,494 $1,528,563 $16,205,110 $61,205,763 $77,410,873

Total $53,364,545 $92,104,987 $145,469,532 $248,123,010 $844,353,181 $1,092,476,192

SCR Plus Bag Houses plus LNB NGS Closure
E. SUMMARY OF EPA BART IMPLEMENTAT

IMPACTS ON THE GRIC 
Summary of Losses Facing the GRIC from EPA BART Implementation Scenarios though 2050, in Millions Note: Employment and Income losses include direct and indirect workers. Source: Harvey Economics, Fall 2011. 

GRIC Financial Losses LNB

SNCR

plus LNB

SCR

plus LNB

SCR plus Baghouses

plus LNB 

Lost Value of Agricultural Investment $0.0 $70.9 $409.4 $409.4 Higher CAP Energy Costs(including agricultural operating margins) $1.6 $7.3 $27.7 $53.4 Lost Monies from the LCRBDF to Pay CAP Fixed OM&R Charges $2.2 $17.6 $51.0 $92.1 Personal Income Reduction $0.0 $25.7 $701.7 $731.6 Total Monetary Losses $3.8 $121.5 $1,189.8 $1,286.5 Employment Losses 0 168 970 970