Report sees water as utility investment risk factor

The report was released by Ceres, a “national network of investors and environmentalists working to integrate sustainability into capital markets,” and co-authored by PricewaterhouseCoopers and Water Asset Management.

While its findings do not specifically relate to wind power, one of wind farm’s significant advantages as a generation source is that it uses virtually no water, while thermal generation sources (fossil fuels and nuclear) use large amounts for cooling.

The U.S. Department of Energy’s 20% Wind Energy by 2030 Technical Report, for example, estimated that obtaining 20% of U.S. electricity from wind turbines by 2030 would result in cumulative conservation of 4 trillion gallons of water, reducing electric sector water consumption by 17%.

The Ceres report, the group said, “shows that some of the nation’s largest public utilities may face moderate to severe water supply shortfalls in the coming years, yet these risks are not reflected in the pricing or disclosure of bonds that public utilities rely on to finance their infrastructure projects.” There are about 50,000 public water utilities in this country serving an estimated 258 million Americans. The electric power sector is enormously water-intensive – it accounts for 41% of the nation’s freshwater withdrawals.

"Water scarcity is a growing risk to many public utilities across the country and investors owning utility bonds don’t even know it," said Ceres President Mindy Lubber. "Utilities rely on water to repay their bond debts. If water supplies run short, utility revenues potentially fall, which means less money to pay off their bonds. Our report makes clear that this risk scenario is a distinct possibility for utilities in water-stressed regions and bond investors should be aware of it."

Eight existing municipal bonds were examined–six for water utilities and two for electric power utilities, in water-stressed regions in southern California, Arizona, Alabama, Georgia and Texas. Each of the bonds received water scarcity scores, representing their exposure to potential water related risks. Los Angeles and Atlanta water utility system bonds received the highest risk scores.

Among the key findings for the two electric utility bonds:

Alabama’s PowerSouth Energy Cooperative, which provides power to 49 counties in rural Alabama and northwestern Florida, received the higher risk score, primarily due to the system’s potential vulnerability to increased water temperatures and lower flows in the Tombigbee River, the cooling water source for its largest coal-fired plant. The utility’s bond received “A-” ratings with stable outlooks from both Fitch and S&P last year.

The Los Angeles electric power system‘s risks are driven in part by reductions in power generated at the Hoover Dam due to low water flows in the Colorado River Basin. The system may also see reduced power deliveries from one of its major coal- fired power plants in Utah, due to heavy competition for dwindling cooling water flows. The utility’s bond received “AA” and “Aa3” ratings this year from Fitch and Moody’s.

t’s a growing problem, as expanding population, continued high energy use, and drought combine to over-stress water supplies.

Wind energy can’t solve this problem by itself, but it can be a major part of the solution. The details are spelled out in The Wind/Water Nexus, a 2006 fact sheet from the National Renewable Energy Laboratory and the U.S. Department of Energy’s 20% Wind by 2030 Technical Report, which found that supplying 20% of U.S. electricity from wind by 2030 would cut water consumption by the electric sector by 17%, or a cumulative total of roughly 4 trillion gallons.

Use wind power, save water. It’s that simple.

Why so quiet, Mr. Koch?

A Marine Corps vet who resents out-of-state interference in his state’s renewable energy laws is calling out Kansas oil and gas billionaire Charles Koch for backing Proposition 23, which seeks to roll back California’s commitment to clean energy.

Joel Francis, who spent five years in the Marines and is now a senior at California State University-Los Angeles, challenged Koch via video to a debate.

The challenge was issued on behalf of Power Vote California, a project of the California Student Sustainability Coalition. If California voters pass it next Tuesday, Prop. 23 would suspend California’s landmark Global Warming Solutions Act of 2006 (AB 32), which ensures innovation and development of clean energy solutions like solar, wind, electric cars and more. According to Power Vote California,

“Since 2005, California green jobs have grown 10 times faster than the statewide average. Now, 500,000 employees work in clean technology or green jobs in the state. One hundred economists from California and around the world have called for a ‘No’ vote on Prop. 23 and protect AB 32 because of the legislation’s importance to California’s economic stability.”

“As a senior,” Francis said, “I like that clean economy jobs have grown 10 times faster than the statewide average, but I’m deeply concerned that Prop. 23 would jeopardize $10 billion of private investment in the state’s clean economy, the most promising employment sector for young Californians. If you are going to try to hurt the economy of a state you don’t even live in, then you ought to have the courage to explain yourself in person.”

He’s promised to go today to knock on the door of Koch’s office in Wichita, Kansas, if he doesn’t hear back about his challenge.

Why duck the challenge, Mr. Koch? Why not debate him? In an election season that has so far been dominated by advertising, much of it misleading, paid for by groups who keep their donors (and the interests of those donors) a secret, it would be refreshing to see a serious debate over our nation’s energy future.

By Tom Gray,