Longform

Shock Treatment

Page 6 of 7

Residents argue that SRP's San Tan property is zoned incorrectly and that, regardless of zoning, SRP had a duty to inform nearby residents that the small, intermittently operated plant on the property could be expanded in the future.

Environmental activists argue that the massive natural gas-fired plant isn't as clean as proponents say. Of particular concern is ammonium sulfide, a byproduct of the technology the San Tan plant will use to cut down other harmful emissions.

"Plenty of people are allergic to these sulfides and they've been proven to shorten lives," says Steve Brittle, head of Don't Waste Arizona. "But it's a byproduct of this technology that hasn't been properly studied."

But Steve Branoff, the EPA engineer, says the plant is safe. Because SRP is supposed to improve emissions on the plant's existing generators, the plant will actually be cleaner, he says.

Borger also doesn't buy SRP's claim that the San Tan facility is an absolute must. Like most everyone opposed to the project, Borger doesn't question that the East Valley is growing and that more power is needed. He and others simply believe the plant could have been placed farther from a heavy concentration of people.

"They could bring it in from around Coolidge," he says. "Coolidge wants the plants, the lines are there and being built and you would only lose about 1 percent of the power transporting it only 20 miles."

In fact, SRP has already contracted with one of the new merchant plants for the plant's total output, according to SRP's Bonsall. He would not divulge the company.

But that isn't enough, he argues.



SRP does need the Gilbert plant, Bonsall says -- badly.

"San Tan is just part of a larger picture," Bonsall says.

SRP officials scoff at the idea that they are using Gilbert as a power farm for California.

As a public utility, SRP doesn't have a profit motive, utility officials say. Its only motive is to provide cheap, reliable electricity for customers.



Basically, SRP, officials say, like a lot of other Valley planners, didn't foresee that the East Valley would grow so big so quickly. Residents are using more power for everything from computers to swimming pools.

Industry, too, is sucking up more power. For example, Intel's expanded plant in south Chandler will increase its power needs from 40 megawatts to 100 megawatts.

And if the East Valley hopes to attract more high-tech companies, it must have an ample source of reliable, affordable power.

Utilities in the Southwest have traditionally swapped power with utilities in the Pacific Northwest. The Southwest needs power for the summer, the Northwest needs power in the winter. SRP would trade with Northwest utilities at low prices to provide extra summer power for the Valley.

"It was a good deal for both sides," says Bonsall. "It meant both sides didn't have to build as much capacity."

But with shortages in California, and everybody selling to California, "those kinds of deals are pretty rare if not impossible to find," he says.

And ample power generation means ample market power. The more power SRP generates, the less it must buy. The less it must buy, the less it is at the mercy of volatile markets and merchant predators.

SRP says it can build the San Tan power plant for less money and in less time than bringing in electricity from outside the Valley. The utility says that also means less opportunity for system failure and less loss of power than shipping power over long distances.

And if it doesn't have to transport that existing energy to the Valley, it can sell it. And if it can sell power in the present inflated market, SRP can hedge against price spikes to its customers or use that money to pay for new power plants.

"If there is one fundamental lesson here, it is that no matter what market structure you create, you must have sufficient supply," Bonsall says. "If you get a limited supply coming up against an elastic demand, watch out."

"The bottom line," says Evans, the Gilbert councilman, "is that SRP's customers will benefit on the backs of the people close to the plant. It's not fair, and the process was awful. But that's power politics in Arizona."

Actually, that's power politics everywhere.

"As far as how they treat people, you've got to remember the context," says Mary Novac, an energy industry analyst. "SRP is a bunch of angels compared to some of the people operating out there. You don't know how good you have it."


Whether the California crisis was an accidental conspiracy or a coordinated conspiracy, things sure are working out well for natural gas companies and electricity providers. Profits are at record levels.

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Robert Nelson