The population of Texas is projected to almost double by 2060. Unfortunately, the future water supply to meet our needs is expected to grow a tiny fraction – by only about one-fifth of its current availability. That spells trouble. Clearly the cost of water in our state will be going up significantly.
In the face of this daunting challenge, Texas water suppliers are being asked to plan and budget for their future water needs. As they consider their options, the marketplace provides little guidance with current prices ranging from $25 to $6,000 per acre foot, or more for raw water in the ground.
The large price disparity in the price of water and the certainty of rising prices for this precious commodity raises the questions: “How high will our water costs climb?” and, “What can be done to reduce these costs?”
The answer to the first question lies in five key factors: location, quality, quantity, reliability and competing supplies of available water resources. Each of these factors will influence the cost and value of water within each region of Texas.
- Location – Generally, the further the water from its ultimate place of use, the greater the cost to access the water. The cost to construct the infrastructure to transport the water from where it is located to where it is needed, and the cost of the energy it will take to move the water though the transportation system, is many time more costly than the water in the ground. Today one might pay only $.25 per 1000 gallons to acquire water in place, and well over 20 times that amount to withdraw, store and transport water to its ultimate place of use. Water is heavy and the cost to transport it has a significant impact on cost.
- Quality – Almost every form of water will require treatment to make it useable. These treatment costs will increase dramatically when we desalinate brackish water and seawater.
- Quantity – Where large transportation costs are involved, there must be a large enough quantity of water within an area to justify the capital cost for the collection and delivery system. The quantity of water available for withdrawal will be affected, not only by physical limitation but also by new and increasing regulatory limitations. State permits regulate the availability of surface water that can be withdrawn from our rivers and streams and are challenged by increasing environmental concerns for our river basins. Groundwater districts often have production-limiting regulations that reduce the availability of groundwater. Thus, aggregation of sufficient water for a project significantly increases the cost of new water projects.
- Reliability – Just as the quantity of the water available is necessary to justify the cost of a water transportation and delivery system, it is equally important the quantity of water made available is of a relatively predictable yield. If the available quantity might be reduced due to physical aberrations (e.g. an aquifer that reacts precipitously to drought conditions) or regulatory intervention (due the terms of a permit), this will increase the risk of investment in the infrastructure and cause a corresponding increase in the cost of our water.
- Competition – The large cost for water development project decrease the options for competitive pricing of the available resources. Increasing the availability of competing supply sources, will help to offset these upward cost factors.
Strategy to Reduce the Cost of Water – The single most important investment our State can make to reduce the cost of our water and address out State’s thirst for growth will be the development of regional water transportation systems.
The State should (i) sanction regional water pipeline transportation pipeline systems through those areas of the State where growth will be most dynamic, (ii) cause the spine of this water pipeline transportation system to be constructed and made available to all water purveyors in the region and, (iii) most importantly, exempt the water placed into these State sanctioned transportation systems from any other regulatory area export or transfer restrictions. The cost to the State would be recouped by facility use fees.
These systems will substantially increase completion among available supplies, help to address each of the four other factors that adversely impact the cost of water and provide the State oversight to the development of much needed regional projects under the State Water Plan. The diversification of water supplies may also have the added benefit of disbursing the burden of water withdrawal, thereby reducing stress on our States water resources.
The Big Picture will be the focus of the San Antonio Clean Technology Forum program, Energy/Water Nexus, at the Pearl Stable on Oct. 15. Robert Rivard will moderate a panel that includes Mayor Julián Castro, County Judge Nelson Wolff, State Rep. Lyle Larson, CPS Energy’s Doyle Beneby, and SAWS’ Robert Puente.
Frank Z. Ruttenberg of Haynes and Boone, LLP has been practicing commercial, real estate and water rights law in San Antonio for 28 years. frank.ruttenberg@haynesboone.com
Full disclosure: The Arsenal Group conducted a four-month review of CPS Energy communications for the utility starting in June 2012. Monika Maeckle, a former member of the The Arsenal Group and wife of Robert Rivard, now works at CPS as its Director of Integrated Communications.
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