PG&E power plant may have edge over Moapa competitor with water deal

David Strow

Monday, Oct. 2, 2000 | 11:03 a.m.

Once PG&E Corp. opens a 1,000-megawatt power plant near Moapa in 2004, the natural gas-fired plant will consume as much as 2.9 million gallons of water per year -- enough water for 9,000 households.

But 1,000 megawatts of electricity is enough for 1 million homes -- a key consideration as well in electricity-starved Las Vegas.

PG&E's proposed plant isn't the first to make local officials choose between the precious commodities of water and electricity. Last year, Calpine Energy Co. of San Jose, Calif., proposed constructing a 750-megawatt natural gas-fired plant on the nearby Moapa River Indian Reservation. Calpine's plant, like PG& E's, would be water-cooled, consuming 2.3 million gallons per year.

Calpine's proposal is drawing fire for that very reason, most notably from the Southern Nevada Water Authority. But San Francisco-based PG&E has taken steps to avoid such clashes with its plant, even though it will consume more water than Calpine's.

Natural gas-fired plants can be cooled with air, but water allows the plant to be cooled more efficiently -- and more energy to be pumped out of each turbine.

PG&E is the holding company of Pacific Gas & Electric Co., the dominant electric utility in Northern and Central California. However, the plant will be built and operated by PG&E's National Energy Group, a non-regulated subsidiary separate from the utility. The plant will be PG&E's first in Nevada.

As part of their plans, PG&E officials say they've acquired the water rights to the 8,000-to-9,000 acre-feet of water the plant will need annually. The water rights were held by a farmer near the town of Moapa, in a water table located near the Clark-Lincoln county line.

The water will then be gifted to the Moapa Valley Water District, though PG&E will have the rights to use the water for 20 to 25 years. Once the plant's life cycle is complete, the water district will own the water rights, along with a 16-mile pipeline to the water table. As an extra incentive, the company will make the pipe larger than it needs to transport its water for future use by the water district.

"There's a number of plants proposed in that area," said PG&E project manager J. Michael Snowden. "But it costs a lot less to generate with effective, water-cooled generators."

By comparison, Snowden said, the Calpine plant will need new water rights to operate. And that means the Southern Nevada Water Authority, which objects to Calpine's plans, isn't opposing the PG&E proposal.

"That's what we see as the main difference between the two," said Vince Alberta, spokesman for the Southern Nevada Water Authority. "Based on our initial review, we don't have any objections regarding a plant, but we are going to take a further look at it and get more details."

About 80 percent of water used in the plant will be lost through evaporation. The remainder will be used in the Moapa area for irrigation purposes, said PG&E spokeswoman Sandra McDonough.

The power plant will be located on 160 acres of land currently owned by the Bureau of Land Management. Currently, a land swap is being engineered with BLM that would exchange the Moapa site for 1,600 acres of riparian lands located in Clark and Lincoln counties.

Why build such a massive plant so close to the one proposed for the Moapa reservation? PG&E officials say it's a simple function of Clark County's ever-growing appetite for more electricity. This demand for electricity, both locally and in California, is a big reason power prices are currently soaring.

Currently, Southern Nevada's electricity demand is growing at a rate of 6 percent per year, PG&E officials say. Moreover, the demand for electricity is very steady, due to the heavy consumption of power by casinos, making it a particularly attractive market for a seller of electricity.

"This region has a real need for generation," McDonough said. "It's a basic supply and demand situation. The ultimate solution is more supply. Higher prices provide a signal that it's a good market to provide more supply."

Power from the plant will be primarily sold in the Las Vegas area. Though deregulation would permit PG&E to sell directly to Clark County electricity customers, PG&E will sell the power on the wholesale market to other electric providers, rather than direct retail sales. The one exception, Snowden said, may be sales to very large consumers of electricity, such as the Southern Nevada Water District or large casino operators.

Southern Nevada's peak electricity demand is expected to reach 4,861 megawatts by the 2004 opening date of the plant, according to Nevada Power Co. That's up 632 megawatts -- far less than the 1,750 megawatts the PG&E and Calpine plants would produce together.

But Ron Tanner, utilities analyst with Legg Mason, said the plants will hardly be butting heads to meet the area's electric needs.

"The more the merrier," Tanner said. "If you guys don't use it, they'll find a way to get it over to California. But I'm sure you guys could use 1,700 megawatts, easy.

"The more you get built in Nevada, the lower your prices are going to be."

Calpine plans to sell power from its plant in Nevada, but also in California and Arizona. PG&E's plant will be focused on Southern Nevada, though the company also plans to sell power out-of-state to meet demand.

"You may even see other people wanting to build plants (near Las Vegas) too," Tanner said. "You're close to California, and it's hard to site plants in California, so it wouldn't surprise me if a lot of capacity is built in Nevada and shipped over to California."