### Final Report

April 4, 2012



# The Economic Impact of EPA Proposed BART Implementation at Navajo Generating Station

Prepared for Salt River Project P.O. Box 52025 Phoenix, Arizona 85072-2025

Prepared by Harvey Economics 600 South Cherry Street, Suite 220 Denver, Colorado 80246 720.889.2755 fax 720.889.2752 www.harveyeconomics.com 

### he@harveyeconomics.com

# Table of Contents

Executive Summary

.................................................. .......................................... ES-1 

### SECTION 1: Introduction Scenarios Considered for the HE Economic Impact Stu dy ................................................ ....... 1 Key Parties Impacted in Arizona ...................

................................................... ......................... 2 Data Sources, Assumptions and Study Limitations ...

................................................... ............. 3 

### SECTION 2: CAP Energy Costs

.................................................. ....................... 5 

### SECTION 3: Economic Impacts of EPA BART Implementation on Arizona Indian Tribes Overview of Economic Impacts to CAP Entitlement Tri bes ............................................... ...... 8 Agricultural Impacts to Tribes ....................

................................................... .......................... 10 Non-agricultural Impacts to Tribes ................

................................................... ....................... 13 Impacts to the Lower Colorado River Basin Developme nt Fund and Associated Tribal Impacts ...........................................

................................................... ....................................... 13 Total Impacts to Indian Tribes ....................

................................................... .......................... 17 

### SECTION 4: Economic Impacts of EPA BART Implementation on Other CAP Water Users Municipal and Industrial Use ......................

................................................... .......................... 19 Non-Indian Agricultural Use .......................

................................................... ......................... 20 

### SECTION 5: Economic Impacts of EPA BART Implementation on the State of Arizona An Overview of the Economic Impacts to the State of Arizona .......................................... ... 22 Impacts to CAWCD ..................................

................................................... ............................ 24 Impacts to Electric Utilities and Electric Customer s ................................................. .............. 26 Total Impacts to the State of Arizona .............

................................................... ...................... 28 

### SECTION 6: Summary and Conclusions of Economic Impacts of EPA BART Implementation

.................................................. ....................... 31Harvey Economics Page ES-1 

# Executive Summary

This report describes the economic impacts associat ed with certain air emission control options under consideration by the U.S. Environment al Protection Agency’s (EPA) as part of the pending Best Available Retrofit Technology (BAR T) determination for the Navajo Generating Station (NGS). The EPA BART scenarios ev aluated in this report include (1) Low NO x 

### Burners and Separated Overfire Air (LNB/ SOFA); (2 ) Selective Non-Catalytic Reduction (SNCR); (3) Selective Catalytic Reduction (SCR); and (4) SCR plus Baghouse. The impacts to CAP entitlement Tribes were also est imated under an NGS closure scenario. The approach used to conduct this analysis should n ot be mistaken to imply that NGS would continue to operate if EPA were to require SCR or b aghouses as BART. In a letter submitted to EPA on March 12 th 

### , 2012, the NGS owners indicated that if EPA propos es a BART emission limit that requires the owners to begin de sign and construction of SCR or baghouses before the multi-year NEPA and ESA compliance proce ss is complete and the Lease and rights-of-way have been signed by the secretary of Interior, the continuing viability of NGS is at substantial risk. The six NGS owners are currently working to extend the site lease beyond its initial term, which expires in 2019. The owners are also renegot iating the coal supply agreement with Peabody Energy. If the EPA proposes a BART emissio n limit that requires costly additional emission controls such as SCR or baghouses, each pa rticipant would need to decide whether to make large capital investments without any certa inty that the plant could continue to operate beyond 2019, and without certainty regardin g the future costs of operating NGS due to the potentially higher lease and coal costs. Th is would put the plant at a significant risk of closure. Economic impacts to the State of Arizona resulting from the EPA BART scenarios include the following:

• Agricultural impacts to CAP entitlement Tribes due to increased CAP water costs;

• Increased CAP water costs to Tribes for non-agricul tural purposes;

• Lower Colorado River Basin Development Fund revenue losses to Indian Tribes;

• Increased water costs for non-Indian CAP users; and

• Increased electric costs for Arizona electric utili ty customers. Impacts to these entities will result in losses of employment, personal income and the production and sale of various goods and services t hroughout the state.
CAP entitlement Tribes. 

### Arizona’s CAP entitlement Tribes utilize CAP water for irrigation, as well as non-agricultural purposes, i ncluding commercial use. Increased costs for CAP water will reduce agricultural operating margin s as well as affect business operationsHarvey Economics Page ES-2 

### and revenues. CAP entitlement Tribes also benefit f rom the Lower Colorado River Basin Development Fund; reduced Fund revenues may result in further increases in CAP water costs to Tribes, as well as lost opportunities to d evelop on-reservation water systems. Exhibit ES-1shows the employment losses, personal income lo sses and losses of goods and services for the CAP entitlement Tribes under the EPA BART i mplementation scenarios and the NGS closure scenario.
Exhibit ES-1. Economic Losses to CAP Entitlement Tribes Attributab le to Increased Agricultural and Non-Agricultural Water Costs and L CRBDF Losses under EPA BART Implementation Scenarios, 2012 - 2044

Direct Total Direct Total Direct Total Direct Total Direct Total
Employment Peak Annual Loss (9) (12) (49) (73) (504) (650) (621) (828) (1,852) (2,776) Cumulative Job Years (124) (178) (1,213) (1,759) (8,460) (10,909) (11,093) (14, 641) (30,423) (42,107)

Personal Income (millions) Peak Annual Loss ($0.4) ($0.6) ($2.3) ($3.3) ($17.2) ($23.5) ($23.5) ($32.4 ) ($99.5) ($139.6) Cumulative Loss ($5.6) ($7.9) ($55.2) ($78.8) ($289.0) ($394.0) ($402.1) ( $554.6) ($1,227.6) ($1,730.9)

Total Sales of Goods and Services (millions) Peak Annual Loss ($0.6) ($1.2) ($3.7) ($6.9) ($20.9) ($43.5) ($30.8) ($61.9 ) ($144.0) ($273.7) Cumulative Loss ($8.7) ($16.2) ($87.7) ($163.1) ($353.5) ($732.1) ($527.4 ) ($1,060.5) ($1,819.6) ($3,500.2) LNB/SOFA SNCR SCR SCR + Baghouse NGS Closure

Notes: (1) Direct losses will be on the Indian reservations. Total losses will include on-reservat ion losses plus induced

and indirect effects on the reservations and elsewh ere in Arizona. Total impacts include direct, indir ect and induced effects. (2) A job year is equivalent to one full time empl oyee for one year. (3) Total sales of goods and services is equivalen t to total economic output.
Non-Indian CAP water users. 

### Municipal and industrial (M&I) water users, as wel l as non-Indian agricultural users, utilize CAP water as a component in their portfolios to varying degrees. Increases in the price of CAP water will i mpact the cost of operations for M&I users and reduce the operating margins of non-Indian agri cultural operations.
Arizona electric utilities. 

### SRP, APS and Tucson Electric Power customers will experience increases in their electric rates as inc reases in NGS capital and operating costs are passed down through the utility owners of the power plant.
State of Arizona. 

### Total impacts to the State of Arizona include all direct impacts to CAP entitlement Tribes, non-Indian CAP users and electr ic utilities, as well as the indirect and induced effects of those impacts. Exhibit ES-2 pres ents the direct and total impact projections on employment, personal income and sales of goods a nd services under each EPA BART scenario; peak year effects and cumulative effects (2012 through 2044) are shown.Harvey Economics Page ES-3 Exhibit ES-2. Direct and Total Impacts to the Economy of Arizona un der the EPA BART Implementation Scenarios, 2012 - 2044

Direct Total Direct Total Direct Total Direct Total
Employment Peak Annual Loss (23) (39) (135) (223) (731) (1,051) (1,076) (1,634) Cumulative Job Years (400) (667) (3,719) (6,197) (13,546) (19,915) (21,211) (32 ,556)

Personal Income (millions)

Peak Annual Loss ($1.2) ($1.9) ($6.6) ($11.0) ($28.5) ($43.8) ($46.1) ($73. 2) Cumulative Loss ($19.3) ($32.8) ($180.1) ($304.0) ($542.5) ($851.0) ($906 .5) ($1,463.9)

Total Sales of Goods and Services (millions)
Peak Annual Loss ($2.8) ($5.2) ($16.1) ($29.6) ($54.1) ($104.1) ($97.5) ($1 83.6) Cumulative Loss ($50.5) ($91.4) ($454.3) ($832.8) ($1,097.0) ($2,090.5) ( $2,007.6) ($3,764.1)

State and Local Taxes (millions) Cumulative Loss ($5.1) ($46.2) ($93.7) ($186.4) SNCR LNB/SOFA SCR SCR + Baghouse

Note: (1) Total impacts include direct, indirect a nd induced effects. (2) A job year is equivalent to one full time empl oyee for one year. (3) Total sales of goods and services is equivalen t to total economic output.Harvey Economics Page 1 

# SECTION 1 Introduction

This report was prepared for the Salt River Project (SRP) by Harvey Economics (HE). The report describes the economic impacts associated wi th certain air emission control options under consideration by the U.S. Environmental Prote ction Agency’s (EPA) as part of the pending Best Available Retrofit Technology (BART) d etermination for the Navajo Generating Station (NGS). The report quantifies the anticipated economic impact of the identified BART control options on Indian Tribes in central Arizona, other central Arizona water users, and the State of Arizona as a whole. T he purpose of this report is to provide economic impact information to the EPA for its cons ideration in the development of a BART determination for NGS. 

### Scenarios Considered for the HE Economic Impact Study Based on the potential control options that may be required by EPA as BART for NGS, the following scenarios were considered in this economi c analysis: 1) Base Case: 3 generating units, combined 2,250 MW c apacity; sulfur dioxide (SO 2 

### ) scrubbers. 2) Low NO x 

### Burners and Separated Overfire Air (LNB/ SOFA): I nstalled on all three units at NGS between 2009 and 2011; under considera tion by EPA as a potential BART control option. 3) Selective Non-Catalytic Reduction (SNCR): Reduces NO x 

### by injection of urea; under consideration by EPA as a potential BART cont rol option. 4) Selective Catalytic Reduction (SCR): Reduces NO x 

### by injection of ammonia in the presence of a catalyst; under consideration by EPA as a potential BART control option. 5) SCR + Baghouse: If EPA requires SCR as BART, 

### baghouses may also be required to mitigate the increase in emissions of other poll utants created by SCR

. 6) NGS Closure: The six NGS owners are currently work ing to extend the site lease beyond its initial term, which expires in 2019. Th e owners are also renegotiating the coal supply agreement with Peabody Energy. If the EPA proposes a BART emission limit that requires costly additional emission cont rols such as SCR or baghouses, each participant would need to decide whether to make la rge capital investments without any certainty that the plant could continue to oper ate beyond 2019, and without certainty regarding the future costs of operating N GS due to the potentially higher lease and coal costs. This would put the plant at a significant risk of closure.Harvey Economics Page 2 

### For the purposes of this analysis, the NGS closure scenario assumes that the plant would cease operations on December 31, 2017. With consideration of pending Navajo lease negotiations and other uncertainties f acing the plant, NGS closure is a distinct possibility. Impacts of the NGS closure sc enario were not presented at a statewide level since SRP contracted with Arizona S tate University to perform that impact analysis. Each of these action scenarios (2) through (6) was compared with a base case. The economic impact analysis is performed under each of these sc enarios, focusing on the incremental impacts beyond the base case.
Exhibit 1 indicates the various dates and cost esti mates for the LNB/ SOFA, SNCR, SCR and SCR plus baghouse scenarios.
Exhibit 1. Construction Plans and Costs of EPA BART Implementati on Alternatives (millions) Engineering and Construction Start Date (1) Construction

End Date Capital

Cost Annualized Capital Cost (2) Annual

Operating Costs Total Annual

Costs (3)

LNB/ SOFA 2009 2011 $45.0 $4.0 $0.0 $4.0
SNCR Sept, 2012 Dec, 2013 $39.2 $3.5 $19.0 $22.5
SCR July, 2014 July, 2017 $544.2 $48.1 $11.9 $60.1 SCR + Baghouse July, 2014 July, 2017 $1,131 $100.0 $20.6 $120.7
Notes: (1) Assumes Final EPA Rule by Summer of 201 2.

(2) Assumes a cost of long-term capital of 6.2% and financing over 20 years. (3) Total annual costs are net increases compared t o current costs. Sources: Sargent & Lundy, "SCR and Baghouse Capital Cost Estimate Report - Revision D", August, 2010; Electric Power Research Institute, Program on Technolog y Innovation; Integrated Generation Technology Opti ons, June 2011; NREL, “Navajo Generating Station and Ai r Visibility Regulations: Alternatives and Impacts” ,

January, 2012; SRP, March 2012; U.S Treasury Depart ment, March 13, 2012; and Harvey Economics, 2012. 

### Annualized capital and operating costs drive the im pact analyses for all scenarios. 

### Key Parties Impacted in Arizona SRP requested that HE examine the impacts of these scenarios on three groups in Arizona which might be potentially economically affected by the scenarios. Certain Arizona Indian Tribes are major beneficiaries of NGS because the C entral Arizona Project (CAP) water upon which they rely utilizes NGS energy to pump water r esources from the Colorado River. Similarly, non-Indian agriculture, municipalities a nd other water users also rely on CAP water for a portion of their water resources and wi ll be affected by EPA BART implementation. Finally, HE examined the economic i mpacts of these scenarios on the whole State of Arizona, since, in addition to these group s, NGS power users in the State would incur higher costs as a result of these scenarios.Harvey Economics Page 3 

### Data Sources, Assumptions and Study Limitations Key data sources for this study include the SRP, th e Gila River Indian Community (GRIC), the Central Arizona Water Conservation District (CA WCD) and the U.S. Bureau of Reclamation (BOR). HE extensively interviewed these entities and obtained information about scenario costs, water allocations and costs, and many other issues surrounding the EPA BART proposal. HE acknowledges and is grateful for their timely assistance. In addition, a number of secondary sources were rel ied upon for various aspects of this study. These include the Arizona Water Settlement Act, the 2007 Census of Agriculture, the Sargent and Lundy Report, the U.S. Department of Energy, an d the Energy Information Administration, among others. 1 

### Immediately prior to the completion of this study, HE performed a separate economic impact study for the GRIC, focusing on agricultural and ot her economic impacts from EPA BART implementation. The findings from that study have b een incorporated into this study as well. HE relied upon readily available information to con duct its analyses. The projections used in various impact models were based upon assumptions c oncerning water allocation, costs, and future market conditions as described in this repor t. Although these projections are believed to be based upon reasonable assumptions and the bes t data available to HE, projections are necessarily subject to many uncertainties. Financing assumptions. 

### The costs of each EPA BART scenario were amortized over a period of 20 years based on the assumed life of the equipment to be installed. The assumed 6.2 percent cost of capital is the weighted average among the current six owners of NGS. The approach used to conduct this analysis should n ot be mistaken to imply that NGS would continue to operate if EPA were to require SCR or b aghouses as BART. In a letter submitted to EPA on March 12 th 

### , 2012, the NGS owners indicated that if EPA propos es a BART emission limit that requires the owners to begin de sign and construction of SCR or baghouses before the multi-year NEPA and ESA compliance proce ss is complete and the Lease and rights-of-way have been signed by the Secretary of Interior, the continuing viability of NGS is at substantial risk. Period of analysis. 

### The initial term of the NGS site lease expires in 2 019. There is an option to extend the lease until 2044. The analysis presented in this report assumes that the lease will be extended and that the terms of the ex tended lease will be the same as for the current lease; this assumption applies to all scena rios, except the NGS closure scenario. Under the NGS closure scenario, the plant is assume d to cease operations on December 31, 2017; therefore, the site lease would not be renewe d. Accordingly, the impact analysis for all scenarios extends from 2012 through 2044.

1 Sargent and Lundy, SCR and Baghouse Capital Cost Estimate Report- Revi sion D , August 2010.Harvey Economics Page 4 IMPLAN model. 

### The Arizona IMPLAN tool models the structure and fu nction of the statewide economy and estimates the impacts of acti vities occurring within the state based on the interactions between industries, households, in stitutions and governmental agencies. 2 

### HE relied upon the State of Arizona IMPLAN model to ca lculate indirect, induced and total impacts to Indian Tribes, CAWCD, Arizona utilities and the State of Arizona based on the direct costs under each BART scenario and, in the c ase of the Tribes, estimates of revenue losses to the Lower Colorado River Basin Developmen t Fund. HE independently calculated those direct costs for input into the IMPLAN model. In IMPLAN, the direct costs to these entities translate into lost output, or reduced sal es of goods and services. From reduced output, IMPLAN was also able to calculate the direc t employment and income losses for all non-Indian impacts. However, when determining the d irect impacts to Tribes associated with agricultural operations, HE developed independent e stimates of the reduction in operating margins (lost output), as well as related direct em ployment and income losses. These direct losses were then input into the IMPLAN model to est imate the total employment and income losses resulting from impacts to Tribal agricultura l operations. There are a number of different models, referred to as econometric, input-output models, available for making these types of impact estimate s. IMPLAN and other models generate “economic multipliers” to estimate impacts. Althoug h the IMPLAN model is well regarded as an impact assessment tool, other models might yi eld different results. In sum, HE believes that the impact projections in this report are reas onable, based upon the available information. Excluded impacts. 

### HE did not separately evaluate the economic impact s of NGS closure to entities other than the CAP entitlement Tribes. Under the NGS closure scenario, impacts to these Tribes focus on agricultural impacts as well as non-agricultural impacts related to increases in CAP water costs. The impacts presented here do not include impacts a t the plant site, which have been addressed by a separate group of economic analysts at Arizona State University (ASU). Impacts to the State of Arizona due to NGS closure were also evaluated in the ASU study.
HE also did not include the construction effects as sociated with installing air pollution control equipment or with building replacement gas- fired combined cycle plants or other resources if NGS closes down. These types of econo mic effects are temporary, whereas the focus of this report is on long-term effects on the State of Arizona and certain groups, such as the CAP entitlement Tribes.

2 The Arizona IMPLAN model was created by the Minnes ota IMPLAN Group (MIG).Harvey Economics Page 5 

# SECTION 2 CAP Energy Costs

Prior to addressing the overall economic impacts on Arizona Indian Tribes, other affected groups and the State of Arizona as a whole, changes to CAP energy costs, a major source of economic impact upon all three groups, must be addr essed. The Central Arizona Water Conservation District (CAWCD) provides between 1.4 million and 1.6 million acre-feet of water per year to Central Arizona, diverted from th e Colorado River and transported via canals and transmission facilities which require pu mping. Almost 95 percent of the CAP pumping power comes from the NGS, under an arrangem ent with the U.S. Bureau of Reclamation (BOR), in which, as part owner of the p lant, the BOR sells approximately 2,800 gigawatt-hours (GWH) to the CAWCD for the specific purpose of pumping CAP water each year. The CAWCD recovers the costs of pumping CAP water ( the blended capital and operating costs of NGS power charged to the BOR) through an e nergy charge to CAP contractors. CAP entitlement Tribes, as well as non-Indian agricultu re, municipal and industrial users, and all other CAP water users, must pay this energy charge. In 2011, the CAP energy charge was $53 per acre-foot, a decrease from the 2010 rate. P reliminary rates are published for five years into the future, though subject to change. CA P energy charges have increased by an average of 4.7 percent per year over the past 15 ye ars, largely due to fuel cost increases for NGS. As provided in Exhibit 2, HE calculated the increas es in CAP energy charges per acre-foot, attributable to cost increases at NGS associated wi th each of the scenarios. A decline in impacts under SNCR, SCR and SCR plus baghouse occur s after 20 years once the capital cost associated with that equipment have been paid off. The NGS closure scenario reflects the cost of obtaining alternative power sources on the open market which CAWCD would be compelled to purchase if the plant closed. A cost e stimate of $50 per MWH is used in the study. 3

3 This assumption is based on several sources. Acco rding to the U.S. Department of Energy, the cost of new gas fired, combined cycle generation resources would be $66.1 per Mwh in 2016. (EIA, Annual Energy Outlook, 2011, December 2010.)**Harvey Economics Page 6** Exhibit 2.Projected Increases in CAP Energy Cost per AF under Alternative EPA BART Implementation Scenariosand Percent Change from Base CaseYearCostIncreasePercentChangeCostIncreasePercentChangeCostIncreasePercentChangeCostIncreasePercentChangeCostIncreasePercentChange2012 $0.4 0.8% $0.5 1.1% $0.4 0.8% $0.4 0.8% $0.4 0.8%2015 $0.4 0.7% $2.7 4.9% $4.0 7.2% $7.3 13.2% $0.4 0.7%2020 $0.4 0.7% $2.7 4.3% $6.6 10.5% $12.9 20.4% $35.0 55.7%2025 $0.4 0.6% $2.7 3.9% $6.6 9.4% $12.9 18.3% $39.0 55.5%2030 $0.3 0.3% $2.6 3.3% $6.5 8.2% $12.7 16.2% $43.1 54.9%2035 $0.0 0.0% $2.0 2.2% $4.5 5.1% $9.3 10.6% $47.4 54.1%2040 $0.0 0.0% $2.0 2.0% $1.2 1.3% $2.1 2.2% $52.9 54.1%2044 $0.0 0.0% $2.0 1.8% $1.2 1.2% $2.1 2.0% $57.7 54.1%LNB/SOFA SNCR SCR SCR + Baghouse NGS ClosureNote: Assumes 2.2 percent annual energy escalationprice based on long-term U.S. DOE projections: EIA, AE02011 National Energy Modeling System. The energy escalation isin addition to the specific costs of each EPA BARTscenario.Source: Harvey Economics, 2012.Harvey Economics Page 7 

### The impacts of the LNB/SOFA scenario on CAP energy costs per acre-foot are slight, less than one percent per year for the highest years and no impact in some years. The SNCR scenario reflects moderate impacts to CAP energy pr ices, about 4.9 percent in the highest year. Impacts under the SCR scenario are greater, r eaching almost a 10.5 percent increase in 2020, with increases between 5 and 9.4 percent duri ng other periods. Under the SCR plus baghouse scenario, the impacts on CAP energy charge s are quite substantial, increasing costs by about 20.4 percent during the peak impact period , compared to the base case, with increases between approximately 10.6 and 18 percent in other years. Under the NGS closure scenario, the incremental costs increase by more th an 50 percent. These increases do not include other CAP energy cost increases due to othe r CAWCD operating costs. These CAP energy cost increases will have a pervasi ve negative impact in central Arizona. Indian Tribes, non-Indian agriculture, municipaliti es, other domestic users, and industrial users rely on CAP water to some extent. These impac ts will be described for each CAP water user group and then aggregated to examine the impac ts on the State.Harvey Economics Page 8 

# SECTION 3 Economic Impacts of EPA BART Implementation on Arizona Indian Tribes

This study focuses on the Arizona Indian Tribes wit h the CAP contracts from the BOR, which include: Ak – Chin Indian Community Salt River Pima-Maricopa Indian Community Camp Verde (Yavapai Apache) San Carlos-Apache Trib e Fort McDowell Indian Community Tonto – Apache Gila River Indian Community Tohono O’odham (San Xa vier, Schuk Toak, Chui Chu) Pascua Yaqui 

### To date, a number of these Tribes do not take CAP w ater. Additionally, several of these Tribes do not practice irrigated agriculture or the ir present and likely future use is very small. These Tribes are: Camp Verde, Pascua Yaqui, Tonto A pache, Fort McDowell Yavapai Nation, Salt River Pima-Maricopa Indian Community, and San Carlos Apache. Although the present and future water use of these Tribes is sma ll relative to others, the economic impact of this rulemaking may still be significant to thos e Tribes, as well as other Tribes with unsettled reserved right water claims 4 

### . The impact analyses included in this report focus on the Ak-Chin, the GRIC, and the Tohono O’odham. 

### Overview of Economic Impacts to CAP Entitlement Tribes Exhibit 3 illustrates the source of impacts and the ir results for the CAP entitlement Tribes.

4 Eleven Arizona tribes have outstanding unresolved water rights claims; the only water that can be use d to satisfy any Indian claims in Arizona is CAP water. Therefore, it should be noted that (1) the afforda bility of CAP water will create economic consequences for any of the 11 tribes with outstanding unresolved claims; and (2) the economic impacts to the remaini ng half of Arizona's tribes may be dramatic because without surplus NGS power sales to generate revenue for the Lower Colorado River Basin Development Fund, a critical component of funding is lost, dimi nishing tribes' abilities to secure access to a qua ntified, reliable water supply.Harvey Economics Page 9 Exhibit 3. Economic Impacts to CAP Entitlement Tribes from EPA BAR T Implementation

Source: Harvey Economics, 2012. 

### The EPA BART implementation will result in higher c osts for NGS power as discussed earlier. One effect of that, discussed earlier in S ection 2, will be increased CAP energy costs, which are the only direct CAP expense Tribes must p ay for CAP water. These higher CAP energy costs will result in higher agricultural exp enses, thereby reducing agricultural operating margins. To the extent that agricultural operating margins become negative for crops, Tribes will reduce their irrigated acreage. Should that occur, job losses and income losses might follow. Further, some Indian communiti es, such as the GRIC, have made considerable capital investment, with Federal suppo rt, in their agricultural systems, including canals and laterals, etc. These investments would b e jeopardized if irrigated acreage were retired. Tribes also use CAP water for other purpos es and the value of these other purposes would be diminished with higher energy costs. In o ther words, higher CAP water costs for any enterprise or beneficial activity means that th e net benefit after costs would be reduced as a result of higher NGS costs or shutdown. CAP entitlement Tribes would also be subject to a s econd negative impact from higher NGS costs. As will be explained in detail later in this section, the Lower Colorado River Basin Development Fund (LCRBDF) will experience reduced r evenue inflows from NGS surplus power sales. These impacts will be important to the Tribes because reduced monies in theHarvey Economics Page 10 

### LCRBDF will mean less funds are available to help s ubsidize the cost of water for Tribes. Higher water costs would result in job loss and per sonal income losses. Additionally, LCRBDF monies designated for investment in the Indi an irrigation systems, according to the Water Settlement Act, will also be jeopardized. 

### Agricultural Impacts to Tribes Exhibit 4 provides descriptive data about the agric ultural sector for CAP entitlement Tribes in the year 2010.
Exhibit 4. Selected Agricultural Data for CAP Entitlement Trib es, 2010

Indian Community Ak-Chin Indian Community 16,000 68,700 $3,641 $14,296 Gila River Indian Community 35,630 37,400 $2,204 $8,143 Tohono O'odham Nation/Chui Chu District 1,500 7,100 $3 78 $1,107 Tohono O'odham Nation/San Xavier District 880 4,200 $2 22 $650 Tohono O'odham Nation/Schuk Toak District 2,200 10,500 $555 $1,624

Totals 56,210 127,900 $7,001 $25,820 Irrigated Acres CAP Water

Use (AF) CAP Water Cost

(Thousands) Total Gross Revenues Less

Expenses (Thousands)

Note: Other Tribes either do not take CAP water or do not practice irrigated agriculture or their pres ent and likely

future use was very small. These Tribes are: Camp V erde, Pascua Yaqui, Tonto Apache, Fort McDowell Yavapai Nation, Salt River Pima-Maricopa Indian Com munity, and San Carlos Apache. Sources: Arizona Water Atlas; CAWCD, Websites of Ak -Chin, Ft. McDowell, University of Arizona and U.S. Census of

Agriculture, 2007. 

### The five reservation areas that utilize CAP water a nd practice irrigated agriculture have a total of about 56,000 irrigated acres and use appro ximately 128,000 acre-feet of CAP water. These Tribes together spend about $7M on CAP water. In 2010, the combined gross agricultural revenues, less expenses, were about $2 5.8M for these Indian communities. With the increasing CAP energy costs under the diff erent scenarios, the gross agricultural operating margins for the CAP entitlement Tribes wi ll diminish. Exhibit 5 indicates the impacts of the different EPA BART scenarios on the agricultural operating margins of CAP entitlement Tribes.Harvey Economics Page 11 Exhibit 5. Impact on CAP Entitlement Tribes’ Agricultural Operat ing Margins under Alternative EPA BART Implementation Scenarios (thousa nds)

Baseline

Year Difference Percent Change Difference Percent Change Difference Percent Change Difference Percent Change Difference Percent Change
2010 25,820.2 $ NA NA NA NA NA NA NA NA NA NA 2012 26,854.9 $ (52)

$ NA (15)

$ NA

-

$ NA

-

$ NA

-

$ NA 2015 27,395.2 $ (54)

$ -0.2% (307)

$ -1.1% (474)

$ -1.7% (917)

$ -3.3%

-

$ NA 2020 28,272.5 $ (65)

$ -0.2% (369)

$ -1.3% (987)

$ -3.5% (1,983)

$ -7.0% (5,516)

$ -19.5% 2025 29,026.0 $ (77)

$ -0.3% (434)

$ -1.5% (1,162)

$ -4.0% (2,333)

$ -8.0% (7,227)

$ -24.9% 2030 28,394.9 $ (69)

$ -0.2% (587)

$ -2.1% (1,568)

$ -5.5% (3,150)

$ -11.1% (10,831)

$ -38.1% 2035 28,559.4 $

-

$ 0.0% (527)

$ -1.8% (1,210)

$ -4.2% (2,494)

$ -8.7% (12,730)

$ -44.6% 2040 26,945.3 $

-

$ 0.0% (549)

$ -2.0% (345)

$ -1.3% (596)

$ -2.2% (14,699)

$ -54.6% 2044 24,399.0 $

-

$ 0.0% (554)

$ -2.3% (348)

$ -1.4% (601)

$ -2.5% (16,097)

$ -66.0% Total 922,340.0 $ (1,304)

$ -0.1% (14,546)

$ -1.6% (28,112)

$ -3.0% (55,797)

$ -6.0% (283,340)

$ -30.7% LNB/SOFA SNCR SCR SCR + Baghouse NGS Closure

Note: Total in thousands is cumulative for all year s through 2044. Source: Harvey Economics, 2012. 

### There are almost no changes in the operating margin s under the LNB/ SOFA scenario and only minor changes under the SNCR scenario. Reducti ons in the operating margins of Tribes are greater under the SCR and SCR plus baghouse sce narios, reaching a maximum of 5.5 percent and 11.1 percent, respectively, in 2030 und er each of those scenarios. Total losses under the SCR and SCR plus baghouse scenarios amoun t to about $28.1M and $55.8M, respectively between 2012 and 2044. For the NGS clo sure scenario, the total lost operating margin is projected to be over $283M between 2012 a nd 2044. The CAP entitlement Tribes farm a variety of crops, each of which has a different water use requirement and operating margin. As the cost of wa ter rises, some of these crops become uneconomic and will cease to be produced. The loss of this agricultural acreage for those crops will lead to job and income losses. Exhibit 6 presents the projected direct agricultural related employment losses, personal income losses a nd losses of goods and services for the CAP entitlement Tribes under the EPA BART scenarios and NGS closure scenario. The exhibit also shows the total losses to the economy, as estimated by IMPLAN, resulting from the impacts to Indian agricultural operations. Peak year and cumulative impacts are provided.Harvey Economics Page 12 Exhibit 6. Employment and Income Losses to CAP Entitlement Tribes Attributable to the Agricultural Impacts from EPA BART Implementation Scen arios, 2012 - 2044

Direct Total Direct Total Direct Total Direct Total Direct Total
Employment

Peak Annual Loss (2) (3) (14) (19) (411) (509) (434) (547) (547) (815) Cumulative Job Years (40) (53) (390) (523) (6,784) (8,391) (7,901) (9,845) (16,2 41) (20,799)

Personal Income (millions)

Peak Annual Loss ($0.05) ($0.1) ($0.3) ($0.5) ($11.9) ($16.1) ($12.7) ($17. 5) ($24.9) ($36.0)

Cumulative Loss ($0.8) ($1.3) ($8.1) ($13.5) ($193.1) ($260.9) ($219.6) ($ 301.2) ($416.6) ($604.9)

Total Sales of Goods and Services (millions)

Peak Annual Loss ($0.1) ($0.3) ($0.9) ($1.7) ($13.5) ($30.0) ($16.0) ($34.8 ) ($41.0) ($85.3)

Cumulative Loss ($2.1) ($4.1) ($22.7) ($44.3) ($221.2) ($490.1) ($275.4) ( $599.6) ($699.9) ($1,452.2) LBN/SOFA SNCR SCR SCR + Baghouse NGS Closure

Notes: (1) Direct losses will be on the Indian reservations. Total losses will include on-reservat ion losses plus induced

and indirect effects on the reservations and elsewh ere in Arizona. Total impacts include direct, indir ect and induced effects. (2) A job year is equivalent to one full time empl oyee for one year.

(3) Total sales of goods and services is equivalent to total economic output. Sources: IMPLAN and Harvey Economics, 2012. 

### Total sales of goods and services is analogous to t he gross product for the affected Arizona Indian communities. The direct cumulative loss of t otal sales of goods and services for these Indian communities ranges from $2.1M under the LNB/ SOFA scenario up to almost $700M under the NGS closure scenario during the 2012 thro ugh 2044 time period. The total loss, including indirect and induced effects, ranges from $4.1M up to $1.45B during that same time period. These employment, personal income and output losses relate only to agriculture and not other affected enterprises of the CAP entit lement Tribes. Some agricultural investments on the reservations o f CAP entitlement Tribes will become uneconomic under certain EPA BART implementation sc enarios. Because of SCR, SCR plus baghouse or NGS closure, approximately one-half of the irrigated acres within the GRIC are projected to experience operating cost increases th at will raise costs higher than gross crop revenues. This threatens the viability of irrigati ng these acres, which means that the agricultural canals, pipelines, pumps and turn-outs which required previous investment and construction would have been wasted. The threatene d investment on the GRIC reservation alone amounts to more than $400M. The Federal Gover nment investment, in partnership withHarvey Economics Page 13 

### the Tribes, would be potentially lost, along with t he goal of developing agriculture in these
areas. 

### Non-agricultural Impacts to Tribes Examining the impacts of CAP water costs more broad ly, CAP entitlement Tribes are expected to utilize more than 460,000 acre-feet of CAP water, out of a total entitlement of 555,806 acre-feet, by the year 2020. By 2020, about 303,000 acre-feet of water will be used for non-agricultural purposes, including use on res ervations for golf courses, other businesses and groundwater storage, excluding leases to Arizon a municipal and industrial customers. Direct costs, due to higher CAP energy prices for n on-agricultural purposes, will total about $2.4M under the LNB/SOFA scenario, $17.3M under the SNCR scenario, $36.3M under the SCR scenario and $72.5M under the SCR plus baghouse scenario by the year 2044. Under the NGS closure scenario, cumulative direct costs t o the Tribes amount to almost $271M. These costs are shown in Exhibit 7.
Exhibit 7. Direct Costs to CAP Entitlement Tribes of Increased CAP Energy Costs due to EPA BART Implementation Scenarios (thousands)

Baseline

Year Difference Percent Change Difference Percent Change Difference Percent Change Difference Percent Change Difference Percent Change 2012 24,592.63 $ 155.8

$ 0.6% 45.2 $ 0.2%

- $ NA

- $ NA

- $ NA 2015 26,356.67 $ 140.2

$ 0.5% 791.3 $ 3.0% 1,222.3 $ 4.6% 2,364.0 $ 9.0%

- $ NA 2020 29,118.36 $ 124.6

$ 0.4% 703.6 $ 2.4% 1,881.4 $ 6.5% 3,778.9 $ 13.0% 10,516.6 $ 36.1% 2025 32,492.80 $ 113.1

$ 0.3% 638.3 $ 2.0% 1,706.9 $ 5.3% 3,428.4 $ 10.6% 10,629.9 $ 32.7% 2030 36,319.11 $ 57.4

$ 0.2% 486.1 $ 1.3% 1,300.0 $ 3.6% 2,611.1 $ 7.2% 8,996.4 $ 24.8% 2035 40,642.01 $ -

$ 0.0% 379.7 $ 0.9% 870.9 $ 2.1% 1,798.2 $ 4.4% 9,239.4 $ 22.7% 2040 45,321.36 $ -

$ 0.0% 358.2 $ 0.8% 225.2 $ 0.5% 389.0 $ 0.9% 9,800.0 $ 21.6% 2044 49,449.86 $ -

$ 0.0% 353.5 $ 0.7% 222.2 $ 0.4% 383.9 $ 0.8% 10,633.6 $ 21.5%
Total 1,173,203.35 $ 2,361.2

$ 0.2% 17,304.9 $ 1.5% 36,316.9 $ 3.1% 72,480.9 $ 6.2% 270,796.5 $ 23.1% LNB/SOFA SNCR SCR SCR + Baghouse NGS Closure

Note: Totals include revenue losses occurring in al l years between 2012 and 2044. Sources: CAWCD and Harvey Economics, 2012. 

### Impacts to the Lower Colorado River Basin Development Fund and Associated Tribal Impacts The LCRBDF gathers revenues from a number of differ ent sources, including NGS surplus power sales. Those monies are then expended on spec ific items, including fixed OM&R costs for CAP deliveries to entitlement Tribes and a numb er of water distribution projects for various Indian Tribes. 5 

### Exhibit 8 shows the sources and flow of revenues t hrough the Fund.

5 Fund revenues flow through two separate tiers of c ascading priorities, as dictated by the 2004 Arizon a Water Settlements Act (AWSA).Harvey Economics Page 14 Exhibit 8. Cash Flows and Funding Priorities of Lower Colorado River Basin Development Fund

Source: Harvey Economics, 2012.

LCRBDF revenues. 

### Annual Fund revenues from all sources must at leas t equal the annual CAP repayment obligation or, as shown in Exhibit 8, CAWCD is required to make up the difference in cash payments. NGS surplus power sal es proceeds make up the bulk of annual Fund revenues from sources other than the CAWCD. 6 

### NGS surplus power is simply that resource to which the BOR is entitled from the NGS plant, less the power required for CAP pumping. Those powe r resources are then sold by the Western Area Power Authority (WAPA) and the profits from those sales are then expended according to the hierarchy indicated in Exhibit 8. Net NGS surplus power proceeds will be determined by the price WAPA is able to obtain from those sales. Although prices have been low in recent years, a gradual return to a more nor mal price range is anticipated over time. A price recovery from the current $31 per MWH to $50 per MWH by the year 2025 is

6 Hoover and Parker-Davis Surcharge revenues togethe r are assumed to contribute $8M to the Fund each year.Harvey Economics Page 15 

### assumed. 7 

### As that occurs, the NGS surplus power proceeds wil l exceed the CAP repayment obligation, allowing additional monies through the Fund to help pay off Indian fixed OM&R costs, as well as other planned investments for Ind ian irrigation and other projects. However, if the cost of NGS power would increase du e to an EPA requirement to install more stringent controls as BART, there would be an overall loss of net proceeds available to the Fund. Exhibit 9 projects the reduction in net N GS surplus power sales proceeds under each EPA BART scenario.
Exhibit 9. Alternative EPA BART Scenario Impacts on Net NGS Su rplus Power Proceeds (thousands)

Year Base Case LNB / SOFA SCR 2012 28,785 $ (352)

$ (102)

$ -

$ -

$ -

$ 2015 37,295 $ (352)

$ (1,985)

$ (3,067)

$ (5,931)

$ -

$ 2020 51,995 $ (352)

$ (1,985)

$ (5,309)

$ (10,663)

$ (51,995)

$ 2025 65,414 $ (352)

$ (1,985)

$ (5,309)

$ (10,663)

$ (65,414)

$ 2030 71,536 $ (234)

$ (1,985)

$ (5,309)

$ (10,663)

$ (71,536)

$ 2035 78,564 $ -

$ (1,679)

$ (3,851)

$ (7,944)

$ (78,564)

$ 2040 86,902 $ -

$ (1,679)

$ (1,056)

$ (1,823)

$ (86,902)

$ 2044 94,518 $ -

$ (1,679)

$ (1,056)

$ (1,823)

$ (94,518)

$ Total 2,199,152 $ (6,917)

$ (58,632)

$ (118,874)

$ (236,688)

$ (1,958,017)

$ NGS Closure SCR + Baghouse SNCR

Notes: (1) Totals include losses occurring in all y ears between 2012 and 2044. (2) Base case proceeds assume power price recovery to $50 per MWH by 2025. Source: Harvey Economics, 2012. 

### Surplus power proceeds will be reduced under all EP A BART scenarios, as compared to the base case. The cumulative reduction in proceeds wil l range from $6.9M under the LNB/ SOFA scenario up to $236.7M under the SCR plus bagh ouse scenario. Surplus power proceeds will be reduced by almost $2B under the NG S closure scenario.

7 Based upon a review of historical wholesale power sales data from the DOE, EIA, the 2010 and 2011 period represents an historically low price period over the past 15 years.Harvey Economics Page 16 

### Reduced surplus power proceeds will eventually have an impact on overall Fund revenues. Losses to the LCRBDF revenues under the EPA BART sc enarios will occur only when base case revenues are projected to be greater than the annual CAP repayment obligation. 8 

### This is projected to occur in the year 2019 and impacts to the Fund will occur thereafter. Exhibit 10 presents the LCRBDF losses anticipated under the EP A BART scenarios.
Exhibit 10. Change in LCRBDF Revenue under Alternative EPA BART Scenarios (thousands)

Year Base Case LNB / SOFA SCR 2012 55,311 $ -

$ -

$ -

$ -

$ -

$ 2015 57,768 $ -

$ -

$ -

$ -

$ -

$ 2020 59,995 $ (352)

$ (1,985)

$ (5,309)

$ (5,884)

$ (5,884)

$ 2025 73,414 $ (352)

$ (1,985)

$ (5,309)

$ (10,663)

$ (15,581)

$ 2030 79,536 $ (234)

$ (1,985)

$ (5,309)

$ (10,663)

$ (27,569)

$ 2035 86,564 $ -

$ (1,679)

$ (3,851)

$ (7,944)

$ (41,403)

$ 2040 94,902 $ -

$ (1,679)

$ (1,056)

$ (1,823)

$ (50,447)

$ 2044 102,518 $ -

$ (1,679)

$ (1,056)

$ (1,823)

$ (91,934)

$ Total 2,566,033 $ (4,221)

$ (47,662)

$ (95,979)

$ (179,501)

$ (848,821)

$ SNCR NGS Closure SCR + Baghouse

Notes: (1) Totals include revenue losses occurring in all years between 2012 and 2044. (2) Fund losses in 2020 are limited to $5.88 milli on by the CAWCD repayment requirement. Sources: Harvey Economics, 2012. 

### Cumulative Fund losses range from $4.2M under the L NB/SOFA scenario up to $849M under the NGS closure scenario. Impacts to CAP entitlement Tribes. 

### As illustrated in Exhibit 8, paying the fixed OM&R costs for CAP Indian deliveries is the first p riority for the expenditure of Fund revenues, followed by payments for a number of spec ific Indian water infrastructure and development projects. Reductions in LCRBDF revenues may result in the following impacts:

• Tribes may be responsible for covering any unpaid f ixed OM&R costs for their CAP water deliveries. The amount that the Tribes would be responsible for will vary, depending on the EPA BART determination and degree of associated LCRBDF revenue losses, along with a number of other factor s, including the annual increase in fixed OM&R costs on a per acre-foot basis.

8 Annual CAWCD payments offset reductions in NGS sur plus power sales proceeds, up to the amount of the annual CAP repayment obligation, limiting the r evenue losses to the Fund.Harvey Economics Page 17 

### • If Tribes are financially unable to cover any unpai d fixed OM&R costs, they may be forced to reduce or eliminate their CAP water deliv eries, which would impact any uses of that water, from agriculture to residential or commercial use. Hence, the economic benefits of CAP water for these Arizona Tr ibes would be lost entirely.

• If CAP water costs become uneconomic for the Tribes to utilize, the Arizona Water Settlement Act, the bargain the Tribes made to give up their reserved water rights claims faces a breach. This would raise once again the extraordinarily difficult issues surrounding water rights and supplies which Arizona grappled with for more than 40 years.

• If the Tribes do not take delivery on their CAP ent itlements, CAWCD might find itself in a dire fiscal circumstance. Other entiti es might not step up to pay the higher costs to take the additional water. Should that ha ppen, CAP water costs would rise higher to cover the fixed costs among reduced deliv eries.

• Tribes may be responsible for making some, or all, payments on various water development projects, especially those projects wit h low priority. As a result, these projects may be eliminated, scaled back or otherwis e modified to fit within the available funds, limiting the development potential for a number of Tribes. 

### Total impacts to Indian Tribes Total impacts of BART implementation on the CAP ent itlement Tribes include the effects of increased CAP water costs for agricultural and non- agricultural purposes, plus the effects of LCRBDF revenue losses. Exhibit 11 indicates the emp loyment losses, personal income losses and losses of goods and services for the CAP entitl ement Tribes under the EPA BART implementation scenarios and NGS closure scenario. Total losses to the Indian economies resulting from increased non-agricultural CAP water costs to Indian Tribes and Fund losses are estimated by IMPLAN. Peak year and cumulative i mpacts are provided.Harvey Economics Page 18 Exhibit 11. Economic Losses to CAP Entitlement Tribes Attributab le to Increased Agricultural and Non-Agricultural Water Costs and L CRBDF Losses under EPA BART Implementation Scenarios, 2012 - 2044

Direct Total Direct Total Direct Total Direct Total Direct Total
Employment Peak Annual Loss (9) (12) (49) (73) (504) (650) (621) (828) (1,852) (2,776) Cumulative Job Years (124) (178) (1,213) (1,759) (8,460) (10,909) (11,093) (14, 641) (30,423) (42,107)

Personal Income (millions) Peak Annual Loss ($0.4) ($0.6) ($2.3) ($3.3) ($17.2) ($23.5) ($23.5) ($32.4 ) ($99.5) ($139.6) Cumulative Loss ($5.6) ($7.9) ($55.2) ($78.8) ($289.0) ($394.0) ($402.1) ( $554.6) ($1,227.6) ($1,730.9)

Total Sales of Goods and Services (millions) Peak Annual Loss ($0.6) ($1.2) ($3.7) ($6.9) ($20.9) ($43.5) ($30.8) ($61.9 ) ($144.0) ($273.7) Cumulative Loss ($8.7) ($16.2) ($87.7) ($163.1) ($353.5) ($732.1) ($527.4 ) ($1,060.5) ($1,819.6) ($3,500.2) LNB/SOFA SNCR SCR SCR + Baghouse NGS Closure

Notes: (1) Direct losses will be on the Indian reservations. Total losses will include on-reserva tion losses plus induced

and indirect effects on the reservations and elsewh ere in Arizona. Total impacts include direct, indir ect and induced effects. (2) A job year is equivalent to one full time empl oyee for one year.

(3) Total sales of goods and services is equivalent to total economic output. Sources: IMPLAN and Harvey Economics, 2012. 

### The direct cumulative loss of total sales of goods and services for these Indian communities ranges from $8.7M, under the LNB/SOFA scenario, up to $1.8B, under the NGS closure scenario, during the 2012 through 2044 time period. The total loss, including indirect and induced effects, ranges from $16.2M up to $3.5B dur ing that same time period. These employment, personal income and output losses relat e to both the agricultural and nonagricultural enterprises of the CAP entitlement Tri bes.Harvey Economics Page 19 

# SECTION 4 Economic Im pacts of EPA BART Implementation on Other CAP Water Users

In addition to CAP entitlement Tribes, CAWCD also s ells CAP water to other types of customers, including:

• Municipalities and industrial users; and

• Non-Indian agricultural users For these types of water users, CAP water generally represents a portion of total water supplies; CAP supplies are incorporated into the ov erall water portfolios with varying degrees of importance for each user. This section o f the report describes each group of CAP water users, other than the Indian Tribes described in Section 3, and provides information about how CAP water supplies are used, the amount o f CAP water used for each purpose and the role of CAP as a water source. The impacts of t he EPA BART scenarios are discussed qualitatively for each water user group. 

### Municipal and Industrial Use
CAWCD maintains subcontracts with a number of munic ipal and industrial (M&I) customers for CAP water. These customers are able to schedule actual deliveries each year based on their specific annual needs, up to the amount of th e entitlement. M&I subcontracting customers include small and large cities and towns; water companies and utilities; and mining companies, among others. These entities util ize CAP water for a variety of purposes, including sales of potable water to customers for d rinking and other purposes, or as part of industrial processes. As of October 2011, M&I entit lements ranged from 25 acre-feet per year up to 122,120 acre-feet per year for individua l entities, for a total of 620,678 acre-feet of M&I CAP water entitlements. 9 

### Actual CAP water deliveries to M&I subcontractors in any given year may be less than the total entitlement a mount; for example, in 2010, CAP water deliveries to subcontractors amounted to only about 400,000 acre-feet. 10


### In addition to M&I subcontracts, other M&I users ma y apply for an annual delivery of excess CAP water, depending on availability. Excess water has a junior priority within the CAP system; these supplies may be reduced to meet other demands, if necessary. In 2010, excess water contracts were in place for a number of entit ies, including utilities; groundwater savings and underground storage facilities; HOAs; g olf clubs; schools and other businesses.

9 CAWCD, CAP Subcontracting Status Report, October 1 , 2011. 10 CAWCD, Monthly M&I Deliveries, Calendar Year 2010, Revised January, 2011.Harvey Economics Page 20 

### In that year, excess water deliveries exceeded 464, 000 acre-feet. Excess CAP water is likely used for a number of purposes, including groundwate r recharge and irrigation. Impacts to M&I CAP water users. 

### Each EPA BART scenario will result in increased costs to NGS owners, including the BOR. As discusse d in Section 2, this will result in increases in CAP energy prices, and therefore, incr eases in the overall cost of CAP water under each scenario. 11 

### The increased cost of CAP water for M&I users is l ikely to have a variety of effects, including the following:

• Water rate increases for residential, commercial an d other water customers of cities and towns . Residential customers will pay more for water and will, therefore, have less disposable income to spend on purchases of oth er types of goods and services, on both a local and statewide level. Residential cu stomers may be able to reduce water use to some degree. Public entities, such as city governments, may not be able to reduce water use and paying more for water may mean cuts in spending on other items.

• Increased costs of production for commercial and in dustrial water users . Costs may be fully or partially passed on to the customer via increases in wholesale or retail prices. Again, this will reduce the available dispo sable income of residents and businesses throughout the state.

• Increased costs of goods and services . Along with reductions in disposable income, the BART implementation scenarios will result in re duced spending, loss of employment and associated income losses, at the reg ional and statewide levels. The degree of effect on M&I users will vary under e ach EPA BART scenario, depending on the costs associated with that scenario. 

### Non-Indian Agricultural Use CAWCD does not currently have any non-Indian agricu ltural subcontracts. All non-Indian agricultural users of CAP water must set up excess water contracts with CAWCD for any water available after the requests of CAWCD M&I sub contractors and Indian contracts have been met; however, non-Indian agricultural users ha ve the first priority for excess water. In 2010, almost 401,000 acre-feet of excess CAP water was delivered to non-Indian agricultural entities, including irrigation districts and indivi duals. CAP water is just one source of total supplies for non-Indian agricultural users, althoug h some irrigation districts rely on CAP more than others. Impacts to non-Indian agricultural CAP water users. 

### Similar to the agricultural impacts on Indian CAP water users, non-Indian agric ultural users will face higher water costs

11 Costs to these customers may also increase if NGS surplus power sales are insufficient to contribute to the costs of the annual CAP repayment obligation. U nder that circumstance, CAWCD may also increase the capital charge and property tax components of C AP water costs.Harvey Economics Page 21 

### and increased total agricultural expenditures as a result of the EPA BART scenarios. If another, less expensive, source of water cannot be substituted for the CAP water, agricultural operating margins will be reduced. Once the operati ng margin becomes negative for any particular crop, that acreage may be changed to gro w another crop, if possible, or may go out of production, thereby reducing agricultural acreag e. Reductions in agricultural production and activity will result in loss of employment in t he agricultural sector, along with associated loss of income.Harvey Economics Page 22 

# SECTION 5 Economic Impacts of EPA BART Implementation on the State of Arizona

In addition to the economic impacts to CAP Indian c ontractors, the economy of the State of Arizona will also be affected by higher electric an d water rates paid by CAWCD and electric utility customers. 12 

### Therefore, the total impact to the State of Arizon a under the EPA BART scenarios includes impacts to:

• CAP entitlement Tribes;

• Other CAWCD customers (M&I and non-Indian agricultu re); and

• Electric utility customers This section of the report generally focuses on the impacts to CAWCD, its Indian and nonIndian customers as well as impacts to the electric utilities and their customers. Arizona’s affected electric utilities include SRP, Arizona Pu blic Service (APS) and Tucson Electric Power (TEP). Total impacts to the state are also discussed, whic h includes the economic impacts to CAP entitlement Tribes, detailed in Sect ion 3. The effects of the NGS closure scenario on statewide economic conditions was not e valuated in this report; Arizona State University has conducted that analysis as part of a separate report.
An 

### Overview of the Economic Impacts to the State of Arizona Exhibit 12 illustrates the source of impacts and th eir results for the State of Arizona.

12 Impacts to non-Indian CAP water users (CAWCD custo mers) were discussed qualitatively in Section 4. Those impacts will be quantified in this section.**Harvey Economics Page 23** Exhibit 12.Overview of Impacts to the Arizona EconomySource: Harvey Economics, 2012.Harvey Economics Page 24 

### The EPA BART scenarios will result in increased ann ual capital and operating costs for NGS owners, including SRP, APS, TEP and the BOR. As joi nt owners, these entities will be responsible for covering their portion of higher NG S costs. 13 

### HE assumed that the utilities would pass the additional costs along to customers in the form of electric rate increases and the BOR would pass a portion of costs on to CAWCD a nd ultimately to CAP water customers, including M&I and agricultural users, in the form of increased CAP energy charges. CAWCD may also need to increase CAP capita l charges or property taxes. 14


### Increased water and electric rates for Arizona resi dents and businesses will result in a reduction of disposable income and therefore, a red uction of dollars spent within the state. To the extent that they cannot reduce usage, household s and businesses would reduce spending on other goods in order to pay for electricity and water, resulting in a contraction of economic activity. Impacts to economic activity in Arizona would include reduced production of goods and services, loss of employmen t and loss of associated income. The degree of effect will, of course, vary with each EP A BART scenario and the specific rate increases faced by consumers. 15


### As discussed in Section 3, increased water costs an d impacts to the Indian agricultural sector, along with revenue losses to the LCRBDF, will resul t in additional loss of production, employment and income within the state. 

### Impacts to CAWCD CAWCD obtains its power from NGS through an agreeme nt with the BOR; therefore CAWCD would be responsible for covering a portion o f the increased capital and operating costs under each EPA BART scenario. CAWCD costs are based on the additional cost per MWH under each scenario applied to the 2.8 million MWHs used to pump CAP water. Exhibit 13 offers the portion of EPA BART scenario costs that CAWCD would be responsible for paying as well as the costs faced b y CAWCD under the NGS closure scenario.

13 SRP owns 21.7 percent of NGS; APS owns 14 percent; TEP owns 7.5 percent and the BOR owns 24.3 percent. Several additional electric utilities loca ted outside Arizona are also part owners of NGS; th e economic impacts to these utilities are not include d in this study, since they would occur outside the state. 14 All cost data used to calculate economic impacts t o the utilities and CAWCD are increases compared to the baseline (current capital and operating cost sc hedules). 15 HE did not model the changes to electric and water rates at the consumer level, but instead modeled a loss of income equal to the costs faced by the util ities and CAWCD at the statewide level.Harvey Economics Page 25 Exhibit 13. Increased CAWCD Costs Attributable to EPA BART Implem entation (millions)



### Year LNB / SOFA SNCR SCR SCR + Baghouse 2012 $0.6 $0.2 $0.0 $0.0 2015 $0.6 $3.5 $5.4 $10.4 2020 $0.6 $3.5 $9.3 $18.7 2025 $0.6 $3.5 $9.3 $18.7 2030 $0.4 $3.5 $9.3 $18.7 2035 $0.0 $2.9 $6.7 $13.9 2040 $0.0 $2.9 $1.8 $3.2 2044 $0.0 $2.9 $1.8 $3.2 Total $11.7 $102.6 $208.0 $414.2
Note: Totals include costs occurring in all years b etween 2012 and 2044. Sources: Sargent and Lundy, “SCR and Baghouse Capit al Cost Estimate Report- Revision D”, August 2010; SRP, 2011;

U.S. BOR, 2011; and Harvey Economics, 2012. 

### Increased costs to CAWCD range from $11.7M under th e LNB/SOFA scenario up to $414.2M under the SCR plus baghouse scenario. The impacts to CAWCD Indian CAP contractors were pr ovided in Section 3; therefore, the impacts to CAWCD described below include only the n on-Indian portion of total CAWCD impacts. Exhibit 14 presents the direct and total i mpacts to Arizona’s employment, income and production of goods and services resulting from costs faced by CAWCD under each EPA BART scenario. Both peak year effects and cumulativ e effects (2012 through 2044) are shown. Total impacts include indirect and induced e ffects, as estimated by IMPLAN.Harvey Economics Page 26 Exhibit 14. Direct and Total Impacts to Arizona Attributable to EPA BART Implementation Impacts on Non-Indian CAWCD Water Users, 2012 - 2044

Direct Total Direct Total Direct Total Direct Total
Employment Peak Annual Loss (3) (5) (19) (33) (50) (88) (99) (176) Cumulative Job Years (61) (108) (549) (973) (1,114) (1,973) (2,213) (3,919)

Personal Income (millions) Peak Annual Loss ($0.2) ($0.3) ($0.9) ($1.7) ($2.5) ($4.5) ($4.9) ($8.9) Cumulative Loss ($3.0) ($5.5) ($27.4) ($49.4) ($55.5) ($100.1) ($110.3) ($ 198.9)

Total Sales of Goods and Services (millions) Peak Annual Loss ($0.5) ($0.9) ($2.7) ($5.0) ($7.2) ($13.2) ($14.6) ($26.6) Cumulative Loss ($9.1) ($16.5) ($80.0) ($146.5) ($162.3) ($297.0) ($323.1 ) ($590.6)

State and Local Taxes (millions) Cumulative Loss ($1.1) ($10.1) ($20.5) ($40.8) LNB/SOFA SNCR SCR SCR + Baghouse

Notes: (1) Total impacts include direct, indirect and induced effects. (2) A job year is equivalent to one full time emp loyee for a period of one year.

(3) Total sales of goods and services is equivalent to total economic output. Sources: IMPLAN and Harvey Economics, 2012. 

### The direct cumulative loss of total sales of goods and services ranges from $9.1M under the LNB/SOFA scenario up to over $323M under the SCR pl us baghouse scenario during the 2012 through 2044 time period. The total loss, incl uding indirect and induced effects, ranges from $16.5M up to $590.6M during that same time per iod. The employment and income losses and losses of goods and services relate only to the impacts to the non-Indian portion of CAWCD operations resulting from EPA BART implementa tion. 

### Impacts to Electric Utilities and Electric Customers Costs to the electric utilities (SPR, APS and TEP) and their customers for EPA BART scenarios are based on increases in NGS capital and operating costs, discussed in Section 1, and the total percentage Arizona electric utility o wnership in NGS (43.2 percent). Exhibit 15 provides the costs faced by the utilities under eac h of the EPA BART scenarios.Harvey Economics Page 27 Exhibit 15. Increased Costs for Arizona Electric Utilities Attr ibutable to EPA BART Implementation (millions)



### Year LNB / SOFA SNCR SCR 2012 $1.7 $0.5 $0.0 $0.0 2015 $1.7 $9.7 $15.0 $29.0 2020 $1.7 $9.7 $26.0 $52.1 2025 $1.7 $9.7 $26.0 $52.1 2030 $1.1 $9.7 $26.0 $52.1 2035 $0.0 $8.2 $18.8 $38.8 2040 $0.0 $8.2 $5.2 $8.9 2044 $0.0 $8.2 $5.2 $8.9 Total $32.7 $286.6 $581.2 $1,157.1 SCR + Baghouse

Note: Totals include all costs occurring in all ye ars between 2012 and 2044. Sources: Sargent and Lundy, “SCR and Baghouse Capit al Cost Estimate Report- Revision D”, August 2010; SRP, 2011;

U.S. BOR, 2011; and Harvey Economics, 2012.


### Increased costs to affected electric utilities rang e from $32.7M under the LNB/SOFA scenario up to $1.16B under the SCR plus baghouse s cenario. Exhibit 16 presents the direct and total impacts to Arizona’s employment, income and production of goods and services resulting from cos ts faced by SRP, APS and TEP under each EPA BART scenario; both peak year effects and cumulative effects (2012 through 2044) are shown. Total impacts include indirect and induced effects, as estimated by IMPLAN.Harvey Economics Page 28 Exhibit 16. Direct and Total Impacts to Arizona Attributable to EPA BART Implementation Impacts to Electric Utilities, 2012 - 2044

Direct Total Direct Total Direct Total Direct Total
Employment Peak Annual Loss (12) (21) (66) (117) (177) (313) (356) (630) Cumulative Job Years (215) (381) (1,957) (3,465) (3,972) (7,033) (7,905) (13,99 7)

Personal Income (millions) Peak Annual Loss ($0.6) ($1.1) ($3.3) ($6.0) ($8.8) ($15.9) ($17.7) ($32.0) Cumulative Loss ($10.7) ($19.3) ($97.5) ($175.8) ($198.0) ($356.9) ($394. 1) ($710.4)

Total Sales of Goods and Services (millions) Peak Annual Loss ($1.7) ($3.2) ($9.7) ($17.7) ($26.0) ($47.3) ($52.1) ($95. 1) Cumulative Loss ($32.7) ($58.7) ($286.6) ($523.2) ($581.2) ($1,061.4) ($1 ,157.1) ($2,112.9)

State and Local Taxes (millions) Cumulative Loss ($4.0) ($36.0) ($73.2) ($145.6) LNB/SOFA SNCR SCR SCR + Baghouse

Notes: (1) Total impacts include direct, indirect and induced effects.

(2) A job year is equivalent to one full time emplo yee for a period of one year. (3) Total sales of goods and services is equivalent to total economic output. Sources: IMPLAN and Harvey Economics, 2012. 

### Total cumulative losses of sales of goods and servi ces, including indirect and induced effects, range from $58.7M for the LNB/SOFA scenarios up to $2.1B for the SCR plus baghouse scenario between 2012 and 2044. Employment and inco me losses and losses of goods and services relate only to the impacts to affected ele ctric utilities resulting from EPA BART implementation. 

### Total Impacts to the State of Arizona As illustrated in Exhibit 12, the total economic im pacts to the State of Arizona include (1) agricultural impacts to Indian CAP contractors; (2) LCRBDF revenue losses to Indian Tribes; (3) increased CAP costs to Indian contractors for n on-agricultural purposes; (4) increased water costs for non-Indian CAP users (non-Indian CA WCD customers); and (5) increased electric costs for electric utility customers.Harvey Economics Page 29 

### Exhibit 17 presents the direct and total impacts to Arizona’s employment, income and production of goods and services under each EPA BAR T scenario; peak year effects and cumulative effects (2012 through 2044) are shown. T otal impacts include indirect and induced effects, as estimated by IMPLAN.
Exhibit 17. Direct and Total Impacts of EPA BART Implementation on the Arizona Economy, 2012 - 2044

Direct Total Direct Total Direct Total Direct Total
Employment Peak Annual Loss (23) (39) (135) (223) (731) (1,051) (1,076) (1,634) Cumulative Job Years (400) (667) (3,719) (6,197) (13,546) (19,915) (21,211) (32 ,556)

Personal Income (millions)

Peak Annual Loss ($1.2) ($1.9) ($6.6) ($11.0) ($28.5) ($43.8) ($46.1) ($73. 2) Cumulative Loss ($19.3) ($32.8) ($180.1) ($304.0) ($542.5) ($851.0) ($906 .5) ($1,463.9)

Total Sales of Goods and Services (millions)
Peak Annual Loss ($2.8) ($5.2) ($16.1) ($29.6) ($54.1) ($104.1) ($97.5) ($1 83.6) Cumulative Loss ($50.5) ($91.4) ($454.3) ($832.8) ($1,097.0) ($2,090.5) ( $2,007.6) ($3,764.1)

State and Local Taxes (millions) Cumulative Loss ($5.1) ($46.2) ($93.7) ($186.4) SNCR LNB/SOFA SCR SCR + Baghouse

Notes: (1) Total impacts include direct, indirect and induced effects.

(2) A job year is equivalent to one full time emplo yee for a period of one year. (3) Total sales of goods and services is equivalent to total economic output. Sources: IMPLAN and Harvey Economics, 2012. 

### Cumulative losses to the state of Arizona as a resu lt of the EPA BART scenarios include the following:

• Direct employment losses ranging from 400 job years under the LNB/SOFA scenario up to 21,211 job years under the SCR plus baghouse scenario. 16 

### Total employment

16 A job year is equivalent to one full time employee for one year.Harvey Economics Page 30 

### losses ranging from 667 job years (LNB/ SOFA) to ov er 32,550 job years (SCR plus baghouse).

• Direct personal income losses ranging from $19.3M u nder the LNB/SOFA scenario up to $906.5M under the SCR plus baghouse scenario. Total personal income losses ranging from $32.8M (LNB/ SOFA) up to $1.46B (SCR p lus baghouse).

• Direct losses of sales of goods and services rangin g from $50.5M under the LNB/SOFA scenario up to $2.0B under the SCR plus ba ghouse scenario. Total losses of goods and services range from $91.4M to $ 3.8B.

• Cumulative reduction of state and local taxes range s from $5.1M under the LNB/SOFA scenario up to $186.4M under the SCR plus baghouse scenario. Peak year impacts include:

• Direct employment losses ranging from 23 job years under the LNB/ SOFA scenario up to 1,076 job years under the SCR plus baghouse s cenario. Total employment losses ranging from 39 job years to 1,634 job years , under the LNB/ SOFA and SCR plus baghouse scenarios, respectively.

• Direct personal income losses ranging from $1.2M un der the LNB/ SOFA scenario up to $46.1M under the SCR plus baghouse scenario. Total personal income losses ranging from $1.9M to $73.2M.

• Direct losses of sales of goods and services rangin g from $2.8M under the LNB/ SOFA scenario up to $97.5M under the SCR plus bagho use scenario. Total losses of goods and services range from $5.2M to $183.6M. Overall, the effects of the LNB/SOFA scenario are r elatively moderate, as compared to all other scenarios. The implementation of SNCR results in impacts of slightly less than 10 times those of the LNB/SOFA scenario. Under the SCR scena rio, the impacts are more than double those of the SNCR scenario. Impacts are about doubl ed again under the SCR plus baghouse scenario, compared to SCR.Harvey Economics Page 31 

# SECTION 6 Summary and Conclusions of Economic Impacts of EPA BART Implementation

Total economic impacts to the State of Arizona resu lting from the EPA BART implementation scenarios include the following:

• Agricultural impacts to CAP entitlement Tribes due to increased CAP water costs;

• Increased CAP water costs to Tribes for non-agricul tural purposes;

• Lower Colorado River Basin Development Fund revenue losses to Indian Tribes;

• Increased water costs for non-Indian CAP users; and

• Increased electric costs for Arizona electric utili ty customers. Impacts to these entities will result in losses of employment, personal income and the production and sale of various goods and services. These economic impacts will be felt by those parties directly affected by the EPA BART sce narios, as well as by the entire state of Arizona as the effects circulate and multiply throu ghout the region.
CAP entitlement Tribes. 

### Arizona’s CAP entitlement Tribes utilize CAP water for irrigation, as well as non-agricultural purposes, i ncluding commercial use. Increased costs for CAP water will reduce agricultural operating margin s as well as affect business operations and revenues. CAP entitlement Tribes also benefit f rom the Lower Colorado River Basin Development Fund; reduced Fund revenues may result in further increases in CAP water costs to Tribes, as well as lost opportunities to d evelop on-reservation water systems. Exhibit 18 presents the direct and total agricultural and n on-agricultural related impacts to CAP entitlement Tribes resulting from the EPA BART scen arios and the NGS closure scenario.Harvey Economics Page 32 Exhibit 18. Economic Losses to CAP Entitlement Tribes Attributab le to Increased Agricultural and Non-Agricultural Water Costs and L CRBDF Losses under EPA BART Implementation Scenarios, 2012 - 2044

Direct Total Direct Total Direct Total Direct Total Direct Total
Employment Peak Annual Loss (9) (12) (49) (73) (504) (650) (621) (828) (1,852) (2,776) Cumulative Job Years (124) (178) (1,213) (1,759) (8,460) (10,909) (11,093) (14, 641) (30,423) (42,107)

Personal Income (millions) Peak Annual Loss ($0.4) ($0.6) ($2.3) ($3.3) ($17.2) ($23.5) ($23.5) ($32.4 ) ($99.5) ($139.6) Cumulative Loss ($5.6) ($7.9) ($55.2) ($78.8) ($289.0) ($394.0) ($402.1) ( $554.6) ($1,227.6) ($1,730.9)

Total Sales of Goods and Services (millions) Peak Annual Loss ($0.6) ($1.2) ($3.7) ($6.9) ($20.9) ($43.5) ($30.8) ($61.9 ) ($144.0) ($273.7) Cumulative Loss ($8.7) ($16.2) ($87.7) ($163.1) ($353.5) ($732.1) ($527.4 ) ($1,060.5) ($1,819.6) ($3,500.2) LNB/SOFA SNCR SCR SCR + Baghouse NGS Closure

Notes: (1) Direct losses will be on the Indian reservations. Total losses will include on-reservat ion losses plus induced

and indirect effects on the reservations and elsewh ere in Arizona. Total impacts include direct, indir ect and induced effects. (2) A job year is equivalent to one full time emplo yee for a period of one year. (3) Total sales of goods and services is equivalent to total economic output. Sources: IMPLAN and Harvey Economics, 2012.Harvey Economics Page 33 Non-Indian CAP water users. 

### M&I water users, as well as non-Indian agricultura l users, utilize CAP water as a component in their po rtfolios to varying degrees. Increases in the price of CAP water will impact the cost of oper ations for M&I users and reduce the operating margins of non-Indian agricultural operat ions. Exhibit 19 indicates the direct and total impacts to non-Indian CAP water users as a re sult of the EPA BART scenarios.
Exhibit 19. Direct and Total Impacts Attributable to Increased N on-Indian CAP Water Costs under the EPA BART Implementation Scenarios, 2 012 - 2044

Direct Total Direct Total Direct Total Direct Total
Employment Peak Annual Loss (3) (5) (19) (33) (50) (88) (99) (176) Cumulative Job Years (61) (108) (549) (973) (1,114) (1,973) (2,213) (3,919)

Personal Income (millions) Peak Annual Loss ($0.2) ($0.3) ($0.9) ($1.7) ($2.5) ($4.5) ($4.9) ($8.9) Cumulative Loss ($3.0) ($5.5) ($27.4) ($49.4) ($55.5) ($100.1) ($110.3) ($ 198.9)

Total Sales of Goods and Services (millions) Peak Annual Loss ($0.5) ($0.9) ($2.7) ($5.0) ($7.2) ($13.2) ($14.6) ($26.6) Cumulative Loss ($9.1) ($16.5) ($80.0) ($146.5) ($162.3) ($297.0) ($323.1 ) ($590.6)

State and Local Taxes (millions) Cumulative Loss ($1.1) ($10.1) ($20.5) ($40.8) LNB/SOFA SNCR SCR SCR + Baghouse

Notes: (1) Total impacts include direct losses plus induced and indirect effects.

(2) A job year is equivalent to one full time emplo yee for a period of one year. (3) Total sales of goods and services is equivalent to total economic output. Sources: IMPLAN and Harvey Economics, 2012.Harvey Economics Page 34 Arizona electric utilities. 

### SRP, APS and TEP customers will most likely experi ence increases in their electric rates as increases in c apital and operating costs are passed down through the utility owners in NGS. Exhibit 20 shows the direct and total impacts to electric utilities and their customers as a result of the EP A BART scenarios.
Exhibit 20. Direct and Total Impacts Attributable to Increased C osts for Electric Utilities under the EPA BART Implementation Scenarios, 2012 - 2 044

Direct Total Direct Total Direct Total Direct Total
Employment Peak Annual Loss (12) (21) (66) (117) (177) (313) (356) (630) Cumulative Job Years (215) (381) (1,957) (3,465) (3,972) (7,033) (7,905) (13,99 7)

Personal Income (millions) Peak Annual Loss ($0.6) ($1.1) ($3.3) ($6.0) ($8.8) ($15.9) ($17.7) ($32.0) Cumulative Loss ($10.7) ($19.3) ($97.5) ($175.8) ($198.0) ($356.9) ($394. 1) ($710.4)

Total Sales of Goods and Services (millions) Peak Annual Loss ($1.7) ($3.2) ($9.7) ($17.7) ($26.0) ($47.3) ($52.1) ($95. 1) Cumulative Loss ($32.7) ($58.7) ($286.6) ($523.2) ($581.2) ($1,061.4) ($1 ,157.1) ($2,112.9)

State and Local Taxes (millions) Cumulative Loss ($4.0) ($36.0) ($73.2) ($145.6) LNB/SOFA SNCR SCR SCR + Baghouse

Notes: (1) Total impacts include direct losses plu s induced and indirect effects.

(2) A job year is equivalent to one full time emplo yee for a period of one year. (3) Total sales of goods and services is equivalent to total economic output. Sources: IMPLAN and Harvey Economics, 2012.Harvey Economics Page 35 State of Arizona. 

### Total impacts to the State of Arizona include all direct impacts to CAP entitlement Tribes, non-Indian CAP users and electr ic utilities, as well as the indirect and induced effects of those impacts, as described in E xhibits 18 through 20. Exhibit 21 presents the direct and total impact projections on employme nt, personal income and sales of goods and services under each EPA BART scenario; peak yea r effects and cumulative effects (2012 through 2044) are shown.
Exhibit 21. Direct and Total Impacts to the Economy of Arizona un der the EPA BART Implementation Scenarios, 2012 - 2044

Direct Total Direct Total Direct Total Direct Total
Employment Peak Annual Loss (23) (39) (135) (223) (731) (1,051) (1,076) (1,634) Cumulative Job Years (400) (667) (3,719) (6,197) (13,546) (19,915) (21,211) (32 ,556)

Personal Income (millions)

Peak Annual Loss ($1.2) ($1.9) ($6.6) ($11.0) ($28.5) ($43.8) ($46.1) ($73. 2) Cumulative Loss ($19.3) ($32.8) ($180.1) ($304.0) ($542.5) ($851.0) ($906 .5) ($1,463.9)

Total Sales of Goods and Services (millions)
Peak Annual Loss ($2.8) ($5.2) ($16.1) ($29.6) ($54.1) ($104.1) ($97.5) ($1 83.6) Cumulative Loss ($50.5) ($91.4) ($454.3) ($832.8) ($1,097.0) ($2,090.5) ( $2,007.6) ($3,764.1)

State and Local Taxes (millions) Cumulative Loss ($5.1) ($46.2) ($93.7) ($186.4) SNCR LNB/SOFA SCR SCR + Baghouse

Notes: (1) Totals include revenue losses occurring in all years between 2012 and 2044.

(2) A job year is equivalent to one full time emplo yee for a period of one year. (3) Total sales of goods and services is equivalent to total economic output. Sources: IMPLAN and Harvey Economics, 2012. 

### Cumulative losses to the state of Arizona as a resu lt of the EPA BART scenarios include the following:Harvey Economics Page 36 

### • Direct employment losses ranging from 400 job years under the LNB/SOFA scenario up to 21,211 job years under the SCR plus baghouse scenario. 17 

### Total employment losses ranging from 667 job years (LNB/ SOFA) to ov er 32,550 job years (SCR plus baghouse).

• Direct personal income losses ranging from $19.3M u nder the LNB/SOFA scenario up to $906.5M under the SCR plus baghouse scenario. Total personal income losses ranging from $32.8M (LNB/ SOFA) up to $1.46B (SCR p lus baghouse).

• Direct losses of sales of goods and services rangin g from $50.5M under the LNB/SOFA scenario up to $2.0B under the SCR plus ba ghouse scenario. Total losses of goods and services range from $91.4M to $ 3.8B.

• Cumulative reduction of state and local taxes range s from $5.1M under the LNB/SOFA scenario up to $186.4M under the SCR plus baghouse scenario. Overall, the effects of the LNB/SOFA scenario are r elatively moderate, as compared to all other scenarios. The implementation of SNCR results in impacts of slightly less than 10 times those of the LNB/SOFA scenario. Under the SCR scena rio, the impacts are more than double those of the SNCR scenario. Impacts are about doubl ed again under the SCR plus baghouse scenario, compared to SCR.

17 A job year is equivalent to one full time employee for one year.