METROPOLITAN TUCSON ENERGY ASSESSMENT
Community Energy Assessment for the Tucson-Pima Metropolitan Area,
by Dr. Helmut J. Frank.
Unfortunately, energy for Tucson does not come without problems. These stem from the almost exclusive reliance on hydrocarbons-natural gas and petroleum products and on coal- based electricity-which account for the great bulk of the area's energy supplies. Petroleum and coal, in particular, contribute to air pollution in the form of particulates (fine dust particles), ozone (which can cause breathing problems), nitrous and sulfur oxides (acid rain), and carbon dioxide (threatening global warming). However, most of Tucson Electric Power Company's coal-fired generating stations are located several hundred miles distant from the city, minimizing the direct impact on local air quality.
Arizona is a state that is poor in conventional energy sources. Thus Tucson has to obtain virtually all its supplies of petroleum products and natural gas, and also most of the fuel for operating its power plants, from out-of-state. This results in very large dollar expenditures for energy supplies shipped in from other states. It also entails vulnerability to supply interruptions since oil and gas have to be shipped over long distances via pipelines, which could potentially be cut from both natural causes (like earthquakes) and man-made actions (like sabotage).
Predictions that the world would run out of oil and gas in a short time have not been borne out: proved world oil reserves have risen some 50 percent in the past 20 years to a 95-year supply while gas reserves have more than doubled. After two sharp increases in the 1970s, oil prices collapsed in the mid-1980s and are now far lower in actual dollars, let alone after adjustment for inflation, than at the peak of the second crisis, in 1980. So are natural gas prices; and inflation adjusted U.S. pump prices of gasoline are lower than before the first energy crisis (1973). Nevertheless, oil and gas are depletable raw materials and are bound to become scarcer and more expensive at some point, however far away in time.
Moreover, U.S. domestic reserves and production have fallen steadily in the past ten years as low prices and restrictions on drilling drove investment overseas. Exploration has spread throughout the globe some two-thirds of proved reserves are located in the ever volatile Middle East. Although U.S. oil demand fell in the early 1980s and has risen only slowly since then, dependence on imported sources begun to rise again and is now nearly half of total demand.
Petroleum is by far the largest energy source used by Tucsonans, with 56 percent of the total. The transportation fuels constitute the bulk of this. Natural gas, at 23 percent, is the second largest source, followed by electricity, at 18 percent.
Tucson's energy consumption per capita, at 181 million Btu in 1992, was 26 percent lower than that for the state as a whole, due to such factors as somewhat lower temperatures than the Phoenix area; lower humidity which permits greater use of evaporative coolers; lesser concentration of industrial plants; and shorter average driving distances for commuters. Not surprisingly for a desert city, the largest single use of electricity is cooling of all types, with operating refrigerators second. Electric space heating in Tucson is a comparatively small portion of the total load since the most buildings are heated with natural gas. This also applies to water heating. A large part of total usage consists of the many items-from washer and dryers to radios, TV sets and VCRs-which are not heavy users individually but add to a large share of total consumption (36 percent). Perhaps unexpectedly, lighting uses only 1-2 percent of the total.
Net consumption of major energy sources in Tucson increased by 21 percent during 1980-92, or an average of 1.6 percent per year. The fastest growth occurred in petroleum (4.1 percent per year). Electricity increases also were large (3 percent a year). Natural gas sales by Southwest Gas declined significantly but total usage did not as large customers began to purchase gas directly from producers, under revised federal regulations. Tucson's total energy use grew less rapidly during the 12-year period than its population (32 percent) so that per capita energy use fell by 9 percent. Increased automobile efficiency alone accounts for much of this improvement; however, this has been more than offset by the growth in the number of vehicles plus increased miles driven per vehicle. The major reason has been increased energy efficiency, spread over all major user groups.
Energy expenditures by Tucsonans totaled some $1.2 billion in 1991. Residential users accounted for over one-fourth of this; adding purchases of motor gasoline brings residential energy spending to over half of the total ($642 million), equivalent to some $2,343 per household or 6 percent of average family income. The largest expenditure by energy type was for petroleum fuels (46 percent), with electricity close behind (42 percent) and natural gas much smaller (11 percent). Some 70 percent of the money spent on energy is estimated to leave the metropolitan area, and is thus not available for paying for local labor, materials or investment. The real issue is, however, whether a Btu can be obtained more cheaply and cleanly from local or outside sources, or whether it can be saved by practicing energy conservation at lower cost than it can be made or purchased.
Natural gas supplies for the Tucson market are transported to the city by El Paso Natural Gas Company (EPG) from various fields in the southwestern United States. The system also supplies southern California and its carrying capacity far exceeds the needs of the Tucson market. Tucson's local gas distribution company, Southwest Gas (SWG), sells the bulk of the gas consumed in the Tucson area. However, recent changes in federal regulation require gas pipeline and distribution companies to provide open access to third parties, and several large Tucson industrial users are purchasing supplies directly from competing sources and having EPG and SWG transport it for them. This change, plus deregulation of field prices, establishment of a gas futures market and increased competition from electricity, have dramatically altered the nature of the formerly heavily regulated industry. Natural gas prices, which had already been held down by the surplus of crude oil worldwide, have fallen sharply, and this in turn has contributed to a long-term decline in domestic drilling and reserves. Unlike oil, domestic gas supplies cannot be readily augmented by supplies from overseas, even though world reserves are very large. But they are increasingly supplemented by shipments from Canada, whose reserves are large and growing.
The Tucson area receives some 80 percent of its petroleum products via a pipeline system owned and operated by Santa Fe Pacific Pipeline Partners. It consists of an East Line originating in El Paso and ending in Phoenix, and a West Line running from Los Angeles to Phoenix and Tucson. Of the total 10.4 million barrels transported to Tucson in 1992, some 83 percent were shipped through the East Line. The East Line's capacity was recently expanded and is well in excess of actual shipments. Supplies originate with refineries in El Paso, Odessa, Texas and Artesia, NM. The West Line obtains supplies from a number of terminals and refineries in the Los Angeles area, including four of the five major companies operating in the Tucson market.
The U. S. Department of Energy (DOE) projects domestic crude oil reserves and production to fall over the next 16 years. With demand continuing to grow, though fairly slowly, further large increases in imports seem inevitable. The precise numbers will depend on such factors as the growth rate of the American economy, technological improvements in finding and recovery techniques, government policies and, critically, the trend of world oil prices. According to the DOE model, the price in 2010 could range between $20 and $34 a barrel (in 1992 dollars), and import dependence could rise to between 55 percent and 68 percent from less than 50 percent currently. There have been no major interruptions in the flow of Middle East oil during the past 15 years, but the danger of turmoil in the ever volatile region certainly cannot be discounted, and with it the possibility of a repeat of the energy crises of the 1970s.
The Tucson area's major supplier of electricity is Tucson Electric Power (TEP). The company owns a large coal-fired generating station at Springerville, AZ, shares of three others in the Four Corners region, and several steam plants and gas turbines in the Tucson area. At the peak demand day this past summer, its generating capacity exceeded local demand by 26 percent, though much of the surplus is sold short-term to wholesale customers. TEP participates in interchange agreements and other arrangements giving it access to some 63 utilities in the California and elsewhere in the West. It is a member of WSCC, a group of utilities that works cooperatively to assure the reliability of the region's power systems, and of the Western Systems Power Pool, a group experimenting with ways of achieving greater generating and transmission efficiencies.
The company has recently emerged from a period of heavy financial writeoffs and restructuring to regain marginal profitability. Its future is still considered subject to many uncertainties and its ability to raise capital, therefore, is limited. These prospects are reinforced by several major changes the electric industry generally is undergoing. These include increased competition in wholesale markets due to low prices of competing energy sources (in TEP's case natural gas), greater availability of power from independent producers, and continuing large excess generating capacity in the region (e.g., at the Palo Verde nuclear plant). Several of TEP's large industrial customers recently were given rate concessions to discourage them from installing cogeneration plants. Most important, perhaps, was the enactment of the Energy Policy Act of 1992, which will enable competing electricity producers to access TEP customers directly, by requiring utilities to transmit third party power over their transmission lines, thus greatly increasing competition in the market for power.
Few places on this planet can match Pima County when it comes to generosity of sunshine, the chief renewable energy source within the 20-year planning period. Solar energy comes in various forms-passive (placing buildings to take advantage of the sun, planting trees, using appropriate building materials etc), active systems for water and space heating and cooling, and photovoltaics (PV) which convert solar rays directly into electricity. Solar systems can also be used to produce electricity, either dispersed on individual buildings or concentrated at central power stations.
During the early 1980's, many Arizonans installed solar hot water heaters but the boom ended with the expiration of generous federal and state tax credits. Since then, great technical progress has been made, leaving the solar industry smaller but healthier. Costs for residential water systems now are competitive with electric water heating, and costs of central solar power stations are within the range of nuclear power plants, though not yet with fossil fuel units. Assuming oil and gas prices rise in coming years, solar energy is expected to become economical in a wide range of applications some time after the year 2000. For its potential to be fully realized, however, solar energy will need overcome a number of existing barriers, including lack of information and restrictive building codes and association rules.
IMPLICATIONS AND OPPORTUNITIES
Since the energy crises of the 1970's Tucsonans have modified their energy spending in the wake of higher prices and environmental awareness. Energy use per capita has fallen and total energy consumption has risen at a much reduced rate. New automobiles, appliances and buildings all are significantly more energy efficient than those produced earlier. With the exception of electric rates, however, energy prices have fallen again since the mid-1980s and may not rise much for a number of years. Current policies are inadequate to reverse past trends in a growing community like Tucson, in the absence of stronger economic pressures. Thus one must expect the growth of energy consumption and the heavy reliance on fossil fuels to continue for some years to come. But continuing along the present path carries several serious risks. Increased burning of fossil fuels would worsen air pollution problems and contribute to global warming, and roadways would become ever more congested: Tucson would follow the path of Los Angeles and Phoenix. New power plants would have to be built eventually, when current surplus capacity is absorbed. Prices of fossil fuels are bound to turn up at some point, perhaps sharply. Energy expenditures thus would continue to rise, with much of the money flowing to out-of-state suppliers. Growing dependence on imported oil would leave consumers vulnerable to supply interruptions.
Beyond these dangers, continuation along the present path would mean that Tucson would miss a unique opportunity: the chance to be a leader in the transition to a new age, the age of clean, renewable energy sources. Tucson can wait until these sources, and the technologies for applying them, are more fully developed by others, and then adapt them to suit its local conditions. Or it can "get to the future first," by becoming a national, and even world, leader in conservation and application of renewable energy sources. It can demonstrate how forward thinking, planning, and use of state of the art technologies can point to a better way of living in a fragile desert environment, to a more sustainable future.
There is much to be gained from choosing this second course-not only a cleaner, healthier environment but also a healthier, stronger economy-attracting new well paid jobs, many more visitors, and substantial investment capital. Tucson can and should seize a unique opportunity that now presents itself, an opportunity to become an exciting, forward looking community moving full speed into the 21st century.