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 Study ....................................................... 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 Tribes ..................................................... 8 

Agricultural Impacts to Tribes ................................................................................................. 10 

Non-agricultural Impacts to Tribes .......................................................................................... 13 

Impacts to the Lower Colorado River Basin Development 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 Customers ............................................................... 26 

Total Impacts to the State of Arizona ...................................................................................... 28 

SECTION 6: Summary and Conclusions of Economic Impacts 

of EPA BART Implementation ......................................................................... 31
Harvey Economics 

Page ES-1 

Executive Summary 

This report describes the economic impacts associated with certain air emission control 

options under consideration by the U.S. Environmental Protection Agency’s (EPA) as part of 

the pending Best Available Retrofit Technology (BART) determination for the Navajo 

Generating Station (NGS). The EPA BART scenarios evaluated in this report include (1) 

Low NOx 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 estimated under an NGS closure scenario. 

The approach used to conduct this analysis should not be mistaken to imply that NGS would 

continue to operate if EPA were to require SCR or baghouses as BART. In a letter submitted 

to EPA on March 12th, 2012, the NGS owners indicated that if EPA proposes a BART 

emission limit that requires the owners to begin design and construction of SCR or baghouses 

before the multi-year NEPA and ESA compliance process 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 renegotiating the coal supply agreement with 

Peabody Energy. If the EPA proposes a BART emission limit that requires costly additional 

emission controls such as SCR or baghouses, each participant would need to decide whether 

to make large capital investments without any certainty that the plant could continue to 

operate beyond 2019, and without certainty regarding the future costs of operating NGS due 

to the potentially higher lease and coal costs. This 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-agricultural 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 utility customers. 

Impacts to these entities will result in losses of employment, personal income and the 

production and sale of various goods and services throughout the state. 

CAP entitlement Tribes. Arizona’s CAP entitlement Tribes utilize CAP water for 

irrigation, as well as non-agricultural purposes, including commercial use. Increased costs for 

CAP water will reduce agricultural operating margins as well as affect business operations 
Harvey Economics 

Page ES-2 

and revenues. CAP entitlement Tribes also benefit from 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 develop on-reservation water systems. Exhibit 

ES-1shows the employment losses, personal income losses and losses of goods and services 

for the CAP entitlement Tribes under the EPA BART implementation scenarios and the NGS 

closure scenario. 

Exhibit ES-1. 

Economic Losses to CAP Entitlement Tribes Attributable to Increased 

Agricultural and Non-Agricultural Water Costs and LCRBDF 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-reservation losses plus induced 

and indirect effects on the reservations and elsewhere in Arizona. Total impacts include direct, indirect and 

induced effects. 

 (2) A job year is equivalent to one full time employee for one year. 

 (3) Total sales of goods and services is equivalent to total economic output. 

Non-Indian CAP water users. Municipal and industrial (M&I) water users, as well 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 impact the cost of operations for M&I users 

and reduce the operating margins of non-Indian agricultural operations. 

Arizona electric utilities. SRP, APS and Tucson Electric Power customers will 

experience increases in their electric rates as increases 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 electric utilities, as well as the indirect and 

induced effects of those impacts. Exhibit ES-2 presents the direct and total impact projections 

on employment, personal income and sales of goods and 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 under 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) ($183.6)

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)

LNB/SOFA SNCR SCR SCR + Baghouse

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

 (2) A job year is equivalent to one full time employee for one year. 

 (3) Total sales of goods and services is equivalent 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 with certain air emission control options 

under consideration by the U.S. Environmental Protection Agency’s (EPA) as part of the 

pending Best Available Retrofit Technology (BART) determination 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. The purpose of this report is to provide 

economic impact information to the EPA for its consideration 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 economic analysis: 

1) Base Case: 3 generating units, combined 2,250 MW capacity; sulfur dioxide (SO2) 

scrubbers. 

2) Low NOx Burners and Separated Overfire Air (LNB/ SOFA): Installed on all three 

units at NGS between 2009 and 2011; under consideration by EPA as a potential 

BART control option. 

3) Selective Non-Catalytic Reduction (SNCR): Reduces NOx by injection of urea; 

under consideration by EPA as a potential BART control option. 

4) Selective Catalytic Reduction (SCR): Reduces NOx 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 pollutants created by SCR. 

6) NGS Closure: The six NGS owners are currently working to extend the site lease 

beyond its initial term, which expires in 2019. The owners are also renegotiating the 

coal supply agreement with Peabody Energy. If the EPA proposes a BART emission 

limit that requires costly additional emission controls such as SCR or baghouses, each 

participant would need to decide whether to make large capital investments without 

any certainty that the plant could continue to operate beyond 2019, and without 

certainty regarding the future costs of operating NGS 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 facing the plant, NGS closure is a 

distinct possibility. Impacts of the NGS closure scenario were not presented at a 

statewide level since SRP contracted with Arizona State 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 scenarios, focusing on the incremental 

impacts beyond the base case. 

Exhibit 1 indicates the various dates and cost estimates for the LNB/ SOFA, SNCR, SCR and 

SCR plus baghouse scenarios. 

Exhibit 1. 

Construction Plans and Costs of EPA BART Implementation 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 2012. 

(2) Assumes a cost of long-term capital of 6.2% and financing over 20 years. 

(3) Total annual costs are net increases compared to current costs. 

Sources: Sargent & Lundy, "SCR and Baghouse Capital Cost Estimate Report - Revision D", August, 2010; Electric 

 Power Research Institute, Program on Technology Innovation; Integrated Generation Technology Options, 

 June 2011; NREL, “Navajo Generating Station and Air Visibility Regulations: Alternatives and Impacts”, 

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

Annualized capital and operating costs drive the impact 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 Central Arizona Project (CAP) water upon 

which they rely utilizes NGS energy to pump water resources from the Colorado River. 

Similarly, non-Indian agriculture, municipalities and other water users also rely on CAP 

water for a portion of their water resources and will be affected by EPA BART 

implementation. Finally, HE examined the economic impacts of these scenarios on the whole 

State of Arizona, since, in addition to these groups, 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, the Gila River Indian Community (GRIC), 

the Central Arizona Water Conservation District (CAWCD) 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 relied 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, and 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 other economic impacts from EPA BART 

implementation. The findings from that study have been incorporated into this study as well. 

HE relied upon readily available information to conduct its analyses. The projections used in 

various impact models were based upon assumptions concerning water allocation, costs, and 

future market conditions as described in this report. Although these projections are believed 

to be based upon reasonable assumptions and the best 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 not be mistaken to imply that NGS would 

continue to operate if EPA were to require SCR or baghouses as BART. In a letter submitted 

to EPA on March 12th, 2012, the NGS owners indicated that if EPA proposes a BART 

emission limit that requires the owners to begin design and construction of SCR or baghouses 

before the multi-year NEPA and ESA compliance process 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 2019. 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 extended lease will be the same as for the 

current lease; this assumption applies to all scenarios, except the NGS closure scenario. 

Under the NGS closure scenario, the plant is assumed to cease operations on December 31, 

2017; therefore, the site lease would not be renewed. Accordingly, the impact analysis for all 

scenarios extends from 2012 through 2044. 

 

1

 Sargent and Lundy, SCR and Baghouse Capital Cost Estimate Report- Revision D, August 2010. 
Harvey Economics 

Page 4 

IMPLAN model. 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.2

 HE 

relied upon the State of Arizona IMPLAN model to calculate 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 case of the Tribes, estimates of revenue 

losses to the Lower Colorado River Basin Development 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 sales of goods and services. From reduced 

output, IMPLAN was also able to calculate the direct employment and income losses for all 

non-Indian impacts. However, when determining the direct impacts to Tribes associated with 

agricultural operations, HE developed independent estimates of the reduction in operating 

margins (lost output), as well as related direct employment and income losses. These direct 

losses were then input into the IMPLAN model to estimate the total employment and income 

losses resulting from impacts to Tribal agricultural operations. 

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. Although the IMPLAN model is well regarded 

as an impact assessment tool, other models might yield different results. In sum, HE believes 

that the impact projections in this report are reasonable, based upon the available 

information. 

Excluded impacts. HE did not separately evaluate the economic impacts 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 at 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 associated 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 economic 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 Minnesota 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 addressed. 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 the Colorado River and transported via 

canals and transmission facilities which require pumping. Almost 95 percent of the CAP 

pumping power comes from the NGS, under an arrangement with the U.S. Bureau of 

Reclamation (BOR), in which, as part owner of the plant, 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 energy charge to CAP contractors. CAP 

entitlement Tribes, as well as non-Indian agriculture, 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. Preliminary rates are published for five 

years into the future, though subject to change. CAP energy charges have increased by an 

average of 4.7 percent per year over the past 15 years, largely due to fuel cost increases for 

NGS. 

As provided in Exhibit 2, HE calculated the increases in CAP energy charges per acre-foot, 

attributable to cost increases at NGS associated with each of the scenarios. A decline in 

impacts under SNCR, SCR and SCR plus baghouse occurs 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 estimate of $50 per MWH is used in the 

study.3

 

3

 This assumption is based on several sources. According 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.) 
Exhibit 2. Projected Increases in CAP Energy Cost per AF under Alternative EPA BART Implementation Scenaand Percent Change from Base Case 

Year

Cost 

Increase

Percent 

Change

Cost 

Increase

Percent 

Change

Cost 

Increase

Percent 

Change

Cost 

Increase

Percent 

Change

Cost 

Increase

Pe

Ch

2012 $0.4 0.8% $0.5 1.1% $0.4 0.8% $0.4 0.8% $0.4 02015 $0.4 0.7% $2.7 4.9% $4.0 7.2% $7.3 13.2% $0.4 02020 $0.4 0.7% $2.7 4.3% $6.6 10.5% $12.9 20.4% $35.0 52025 $0.4 0.6% $2.7 3.9% $6.6 9.4% $12.9 18.3% $39.0 52030 $0.3 0.3% $2.6 3.3% $6.5 8.2% $12.7 16.2% $43.1 52035 $0.0 0.0% $2.0 2.2% $4.5 5.1% $9.3 10.6% $47.4 52040 $0.0 0.0% $2.0 2.0% $1.2 1.3% $2.1 2.2% $52.9 52044 $0.0 0.0% $2.0 1.8% $1.2 1.2% $2.1 2.0% $57.7 5

LNB/SOFA SNCR SCR SCR + Baghouse NGS Clos

Note: Assumes 2.2 percent annual energy escalation price based on long-term U.S. DOE projections: EIA, AE02011 National Energy Modeling Syst

in addition to the specific costs of each EPA BART scenario. 

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 prices, about 4.9 percent in the highest 

year. Impacts under the SCR scenario are greater, reaching almost a 10.5 percent increase in 

2020, with increases between 5 and 9.4 percent during other periods. Under the SCR plus 

baghouse scenario, the impacts on CAP energy charges 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 than 50 percent. These increases do not 

include other CAP energy cost increases due to other CAWCD operating costs. 

These CAP energy cost increases will have a pervasive negative impact in central Arizona. 

Indian Tribes, non-Indian agriculture, municipalities, other domestic users, and industrial 

users rely on CAP water to some extent. These impacts will be described for each CAP water 

user group and then aggregated to examine the impacts 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 with 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 Tribe 

 Fort McDowell Indian Community Tonto – Apache 

 Gila River Indian Community Tohono O’odham (San Xavier, Schuk Toak, Chui Chu) 

 Pascua Yaqui 

To date, a number of these Tribes do not take CAP water. Additionally, several of these 

Tribes do not practice irrigated agriculture or their present and likely future use is very small. 

These Tribes are: Camp Verde, Pascua Yaqui, Tonto Apache, 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 small relative to others, the economic impact 

of this rulemaking may still be significant to those 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 their results for the CAP entitlement Tribes. 

 

4

 Eleven Arizona tribes have outstanding unresolved water rights claims; the only water that can be used to 

satisfy any Indian claims in Arizona is CAP water. Therefore, it should be noted that (1) the affordability 

of CAP water will create economic consequences for any of the 11 tribes with outstanding unresolved 

claims; and (2) the economic impacts to the remaining 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, diminishing tribes' abilities to secure access to a quantified, 

reliable water supply. 
Harvey Economics 

Page 9 

Exhibit 3. 

Economic Impacts to CAP Entitlement Tribes from EPA BART Implementation 

Source: Harvey Economics, 2012. 

The EPA BART implementation will result in higher costs for NGS power as discussed 

earlier. One effect of that, discussed earlier in Section 2, will be increased CAP energy costs, 

which are the only direct CAP expense Tribes must pay for CAP water. These higher CAP 

energy costs will result in higher agricultural expenses, 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 communities, such as the GRIC, have made 

considerable capital investment, with Federal support, in their agricultural systems, including 

canals and laterals, etc. These investments would be jeopardized if irrigated acreage were 

retired. Tribes also use CAP water for other purposes and the value of these other purposes 

would be diminished with higher energy costs. In other words, higher CAP water costs for 

any enterprise or beneficial activity means that the 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 second 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 revenue inflows from NGS surplus 

power sales. These impacts will be important to the Tribes because reduced monies in the 
Harvey Economics 

Page 10 

LCRBDF will mean less funds are available to help subsidize the cost of water for Tribes. 

Higher water costs would result in job loss and personal income losses. Additionally, 

LCRBDF monies designated for investment in the Indian irrigation systems, according to the 

Water Settlement Act, will also be jeopardized. 

Agricultural Impacts to Tribes 

Exhibit 4 provides descriptive data about the agricultural sector for CAP entitlement Tribes 

in the year 2010. 

Exhibit 4. 

Selected Agricultural Data for CAP Entitlement Tribes, 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 $378 $1,107

Tohono O'odham Nation/San Xavier District 880 4,200 $222 $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 present and likely 

future use was very small. These Tribes are: Camp Verde, Pascua Yaqui, Tonto Apache, Fort McDowell 

Yavapai Nation, Salt River Pima-Maricopa Indian Community, 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 and practice irrigated agriculture have a 

total of about 56,000 irrigated acres and use approximately 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 $25.8M for these Indian communities. 

With the increasing CAP energy costs under the different scenarios, the gross agricultural 

operating margins for the CAP entitlement Tribes will 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 Operating Margins under 

Alternative EPA BART Implementation Scenarios (thousands) 

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 years through 2044. 

Source: Harvey Economics, 2012. 

There are almost no changes in the operating margins under the LNB/ SOFA scenario and 

only minor changes under the SNCR scenario. Reductions in the operating margins of Tribes 

are greater under the SCR and SCR plus baghouse scenarios, reaching a maximum of 5.5 

percent and 11.1 percent, respectively, in 2030 under each of those scenarios. Total losses 

under the SCR and SCR plus baghouse scenarios amount to about $28.1M and $55.8M, 

respectively between 2012 and 2044. For the NGS closure scenario, the total lost operating 

margin is projected to be over $283M between 2012 and 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 water 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 and 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 Scenarios, 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) (16,241) (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-reservation losses plus induced 

and indirect effects on the reservations and elsewhere in Arizona. Total impacts include direct, indirect and 

induced effects. 

 (2) A job year is equivalent to one full time employee 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 the gross product for the affected Arizona 

Indian communities. The direct cumulative loss of total 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 through 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 entitlement Tribes. 

Some agricultural investments on the reservations of CAP entitlement Tribes will become 

uneconomic under certain EPA BART implementation scenarios. 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 that will raise costs higher than gross crop 

revenues. This threatens the viability of irrigating these acres, which means that the 

agricultural canals, pipelines, pumps and turn-outs which required previous investment and 

construction would have been wasted. The threatened investment on the GRIC reservation 

alone amounts to more than $400M. The Federal Government investment, in partnership with 
Harvey Economics 

Page 13 

the Tribes, would be potentially lost, along with the goal of developing agriculture in these 

areas. 

Non-agricultural Impacts to Tribes 

Examining the impacts of CAP water costs more broadly, 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 reservations for golf courses, other businesses 

and groundwater storage, excluding leases to Arizona municipal and industrial customers. 

Direct costs, due to higher CAP energy prices for non-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 to 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 $ 155.8 24,592.63 $ 0.6% $ 45.2 0.2% $ - NA $ - NA $ - NA

2015 $ 140.2 26,356.67 $ 0.5% $ 791.3 3.0% $ 1,222.3 4.6% $ 2,364.0 9.0% $ - NA

2020 $ 124.6 29,118.36 $ 0.4% $ 703.6 2.4% $ 1,881.4 6.5% $ 3,778.9 13.0% $ 10,516.6 36.1%

2025 $ 113.1 32,492.80 $ 0.3% $ 638.3 2.0% $ 1,706.9 5.3% $ 3,428.4 10.6% $ 10,629.9 32.7%

2030 $ 57.4 36,319.11 $ 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 $ 2,361.2 1,173,203.35 $ 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 all 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 different sources, including NGS surplus 

power sales. Those monies are then expended on specific items, including fixed OM&R costs 

for CAP deliveries to entitlement Tribes and a number of water distribution projects for 

various Indian Tribes.5 Exhibit 8 shows the sources and flow of revenues through the Fund. 

 

5

 Fund revenues flow through two separate tiers of cascading priorities, as dictated by the 2004 Arizona 

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 least 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 sales 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 power 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 normal 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 together are assumed to contribute $8M to the Fund each 

year. 
Harvey Economics 

Page 15 

assumed.7 As that occurs, the NGS surplus power proceeds will 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 Indian irrigation and other projects. 

However, if the cost of NGS power would increase due 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 NGS surplus power sales proceeds under 

each EPA BART scenario. 

Exhibit 9. 

Alternative EPA BART Scenario Impacts on Net NGS Surplus 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 + 

SNCR Baghouse

Notes: (1) Totals include losses occurring in all years 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 EPA BART scenarios, as compared to the 

base case. The cumulative reduction in proceeds will range from $6.9M under the LNB/ 

SOFA scenario up to $236.7M under the SCR plus baghouse scenario. Surplus power 

proceeds will be reduced by almost $2B under the NGS 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 scenarios 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 EPA 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 million by the CAWCD repayment requirement. 

Sources: Harvey Economics, 2012. 

Cumulative Fund losses range from $4.2M under the LNB/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 priority for the expenditure of Fund 

revenues, followed by payments for a number of specific Indian water infrastructure and 

development projects. Reductions in LCRBDF revenues may result in the following impacts: 

• Tribes may be responsible for covering any unpaid fixed 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 factors, including the annual increase in 

fixed OM&R costs on a per acre-foot basis. 

 

8

 Annual CAWCD payments offset reductions in NGS surplus power sales proceeds, up to the amount of 

the annual CAP repayment obligation, limiting the revenue losses to the Fund. 
Harvey Economics 

Page 17 

• If Tribes are financially unable to cover any unpaid fixed OM&R costs, they may be 

forced to reduce or eliminate their CAP water deliveries, 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 Tribes 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 entitlements, CAWCD might find 

itself in a dire fiscal circumstance. Other entities might not step up to pay the higher 

costs to take the additional water. Should that happen, CAP water costs would rise 

higher to cover the fixed costs among reduced deliveries. 

• Tribes may be responsible for making some, or all, payments on various water 

development projects, especially those projects with low priority. As a result, these 

projects may be eliminated, scaled back or otherwise 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 entitlement 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 employment losses, personal income losses 

and losses of goods and services for the CAP entitlement 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 impacts are provided. 
Harvey Economics 

Page 18 

Exhibit 11. 

Economic Losses to CAP Entitlement Tribes Attributable to Increased 

Agricultural and Non-Agricultural Water Costs and LCRBDF 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-reservation losses plus induced 

and indirect effects on the reservations and elsewhere in Arizona. Total impacts include direct, indirect and 

induced effects. 

 (2) A job year is equivalent to one full time employee 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 during that same time period. These 

employment, personal income and output losses relate to both the agricultural and nonagricultural enterprises of the CAP entitlement Tribes. 
Harvey Economics 

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SECTION 4 

Economic Impacts of EPA BART 

Implementation on Other CAP Water Users 

In addition to CAP entitlement Tribes, CAWCD also sells 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 overall water portfolios with varying 

degrees of importance for each user. This section of 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 of CAP water used for each purpose and 

the role of CAP as a water source. The impacts of the EPA BART scenarios are discussed 

qualitatively for each water user group. 

Municipal and Industrial Use 

CAWCD maintains subcontracts with a number of municipal 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 the entitlement. M&I subcontracting 

customers include small and large cities and towns; water companies and utilities; and 

mining companies, among others. These entities utilize CAP water for a variety of purposes, 

including sales of potable water to customers for drinking and other purposes, or as part of 

industrial processes. As of October 2011, M&I entitlements ranged from 25 acre-feet per 

year up to 122,120 acre-feet per year for individual 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 amount; 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 may 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 entities, including utilities; groundwater 

savings and underground storage facilities; HOAs; golf 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 groundwater 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 discussed in Section 2, this will result in 

increases in CAP energy prices, and therefore, increases in the overall cost of CAP water 

under each scenario.11 The increased cost of CAP water for M&I users is likely to have a 

variety of effects, including the following: 

• Water rate increases for residential, commercial and 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 other types of goods and services, 

on both a local and statewide level. Residential customers 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 industrial 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 disposable 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 reduced spending, loss of 

employment and associated income losses, at the regional and statewide levels. 

The degree of effect on M&I users will vary under each EPA BART scenario, depending on 

the costs associated with that scenario. 

Non-Indian Agricultural Use 

CAWCD does not currently have any non-Indian agricultural 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 subcontractors and Indian contracts have 

been met; however, non-Indian agricultural users have 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 individuals. CAP water is just one source of total 

supplies for non-Indian agricultural users, although 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 agricultural 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. Under that circumstance, CAWCD may also increase 

the capital charge and property tax components of CAP 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 operating margin becomes negative for any 

particular crop, that acreage may be changed to grow another crop, if possible, or may go out 

of production, thereby reducing agricultural acreage. Reductions in agricultural production 

and activity will result in loss of employment in the 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 contractors, the economy of the State of 

Arizona will also be affected by higher electric and water rates paid by CAWCD and electric 

utility customers.12 Therefore, the total impact to the State of Arizona under the EPA BART 

scenarios includes impacts to: 

• CAP entitlement Tribes; 

• Other CAWCD customers (M&I and non-Indian agriculture); 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 Public Service (APS) and Tucson Electric 

Power (TEP). Total impacts to the state are also discussed, which includes the economic 

impacts to CAP entitlement Tribes, detailed in Section 3. The effects of the NGS closure 

scenario on statewide economic conditions was not evaluated 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 their results for the State of Arizona. 

 

12 Impacts to non-Indian CAP water users (CAWCD customers) were discussed qualitatively in Section 4. 

Those impacts will be quantified in this section. 
Exhibit 12. Overview of Impacts to the Arizona Economy  Source: Harvey Economics, 2012. 
Harvey Economics 

Page 24 

The EPA BART scenarios will result in increased annual capital and operating costs for NGS 

owners, including SRP, APS, TEP and the BOR. As joint owners, these entities will be 

responsible for covering their portion of higher NGS 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 and 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 capital charges or property taxes.14

Increased water and electric rates for Arizona residents and businesses will result in a 

reduction of disposable income and therefore, a reduction of dollars spent within the state. To 

the extent that they cannot reduce usage, households 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 employment and loss of associated income. The 

degree of effect will, of course, vary with each EPA BART scenario and the specific rate 

increases faced by consumers.15 

As discussed in Section 3, increased water costs and impacts to the Indian agricultural sector, 

along with revenue losses to the LCRBDF, will result in additional loss of production, 

employment and income within the state. 

Impacts to CAWCD 

CAWCD obtains its power from NGS through an agreement with the BOR; therefore 

CAWCD would be responsible for covering a portion of 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 by 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 located outside Arizona are also part owners of NGS; the 

economic impacts to these utilities are not included in this study, since they would occur outside the state. 

14 All cost data used to calculate economic impacts to the utilities and CAWCD are increases compared to

the baseline (current capital and operating cost schedules). 

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 utilities and CAWCD at the statewide level. 
Harvey Economics 

Page 25 

Exhibit 13. 

Increased CAWCD Costs Attributable to EPA BART Implementation 

(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 between 2012 and 2044. 

Sources: Sargent and Lundy, “SCR and Baghouse Capital 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 the LNB/SOFA scenario up to 

$414.2M under the SCR plus baghouse scenario. 

The impacts to CAWCD Indian CAP contractors were provided in Section 3; therefore, the 

impacts to CAWCD described below include only the non-Indian portion of total CAWCD 

impacts. Exhibit 14 presents the direct and total impacts 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 cumulative effects (2012 through 2044) are 

shown. Total impacts include indirect and induced effects, as estimated by IMPLAN. 
Harvey Economics 

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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 employee 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 plus baghouse scenario during the 

2012 through 2044 time period. The total loss, including indirect and induced effects, ranges 

from $16.5M up to $590.6M during that same time period. 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 implementation. 

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 ownership in NGS (43.2 percent). Exhibit 15 

provides the costs faced by the utilities under each of the EPA BART scenarios. 
Harvey Economics 

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Exhibit 15. 

Increased Costs for Arizona Electric Utilities Attributable 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 years between 2012 and 2044. 

Sources: Sargent and Lundy, “SCR and Baghouse Capital Cost Estimate Report- Revision D”, August 2010; SRP, 2011; 

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

Increased costs to affected electric utilities range from $32.7M under the LNB/SOFA 

scenario up to $1.16B under the SCR plus baghouse scenario. 

Exhibit 16 presents the direct and total impacts to Arizona’s employment, income and 

production of goods and services resulting from costs 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 

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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) (13,997)

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 employee 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 services, 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 income losses and losses of goods and 

services relate only to the impacts to affected electric utilities resulting from EPA BART 

implementation. 

Total Impacts to the State of Arizona 

As illustrated in Exhibit 12, the total economic impacts 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 non-agricultural purposes; (4) increased 

water costs for non-Indian CAP users (non-Indian CAWCD 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 BART scenario; peak year effects and 

cumulative effects (2012 through 2044) are shown. Total 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) ($183.6)

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)

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 employee 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 result 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 over 32,550 job years (SCR plus 

baghouse). 

• Direct personal income losses ranging from $19.3M under 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 plus baghouse). 

• Direct losses of sales of goods and services ranging from $50.5M under the 

LNB/SOFA scenario up to $2.0B under the SCR plus baghouse scenario. Total 

losses of goods and services range from $91.4M to $3.8B. 

• Cumulative reduction of state and local taxes ranges 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 scenario. 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 under 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 ranging from $2.8M under the LNB/ 

SOFA scenario up to $97.5M under the SCR plus baghouse scenario. Total losses of 

goods and services range from $5.2M to $183.6M. 

Overall, the effects of the LNB/SOFA scenario are relatively 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 scenario, the impacts are more than double 

those of the SNCR scenario. Impacts are about doubled 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 resulting 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-agricultural 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 utility 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 scenarios, as well as by the entire state of 

Arizona as the effects circulate and multiply throughout the region. 

CAP entitlement Tribes. Arizona’s CAP entitlement Tribes utilize CAP water for 

irrigation, as well as non-agricultural purposes, including commercial use. Increased costs for 

CAP water will reduce agricultural operating margins as well as affect business operations 

and revenues. CAP entitlement Tribes also benefit from 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 develop on-reservation water systems. Exhibit 

18 presents the direct and total agricultural and non-agricultural related impacts to CAP 

entitlement Tribes resulting from the EPA BART scenarios and the NGS closure scenario. 
Harvey Economics 

Page 32 

Exhibit 18. 

Economic Losses to CAP Entitlement Tribes Attributable to Increased 

Agricultural and Non-Agricultural Water Costs and LCRBDF 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-reservation losses plus induced 

and indirect effects on the reservations and elsewhere in Arizona. Total impacts include direct, indirect and 

induced effects. 

(2) A job year is equivalent to one full time employee 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 agricultural 

users, utilize CAP water as a component in their portfolios to varying degrees. Increases in 

the price of CAP water will impact the cost of operations for M&I users and reduce the 

operating margins of non-Indian agricultural operations. Exhibit 19 indicates the direct and 

total impacts to non-Indian CAP water users as a result of the EPA BART scenarios. 

Exhibit 19. 

Direct and Total Impacts Attributable to Increased Non-Indian CAP Water 

Costs under the EPA BART Implementation Scenarios, 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 losses plus induced and indirect effects. 

(2) A job year is equivalent to one full time employee 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 experience 

increases in their electric rates as increases in capital 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 EPA BART scenarios. 

Exhibit 20. 

Direct and Total Impacts Attributable to Increased Costs for Electric Utilities 

under the EPA BART Implementation Scenarios, 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) (13,997)

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 plus induced and indirect effects. 

(2) A job year is equivalent to one full time employee 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 electric utilities, as well as the indirect and 

induced effects of those impacts, as described in Exhibits 18 through 20. Exhibit 21 presents 

the direct and total impact projections on employment, personal income and sales of goods 

and services under each EPA BART scenario; peak year effects and cumulative effects (2012 

through 2044) are shown. 

Exhibit 21. 

Direct and Total Impacts to the Economy of Arizona under 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) ($183.6)

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)

LNB/SOFA SNCR 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 employee 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 result 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 over 32,550 job years (SCR plus 

baghouse). 

• Direct personal income losses ranging from $19.3M under 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 plus baghouse). 

• Direct losses of sales of goods and services ranging from $50.5M under the 

LNB/SOFA scenario up to $2.0B under the SCR plus baghouse scenario. Total 

losses of goods and services range from $91.4M to $3.8B. 

• Cumulative reduction of state and local taxes ranges 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 relatively 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 scenario, the impacts are more than double 

those of the SNCR scenario. Impacts are about doubled again under the SCR plus baghouse 

scenario, compared to SCR. 

 

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