Central Arizona Project
Central Arizona Project
News Article | May 1, 2017
"As the small Cessna airplane flies above Tucson, its passengers see the rugged, low-lying Tortolita Mountains to the east, followed by the huge green blocks of cotton fields. Over to the west, the bright blue Central Arizona Project canal slices through the desert. Farther south rise the untrammeled desert mountains of Saguaro National Park-West. This aerial view showcases both the conservation successes and failures in the Sonoran Desert surrounding Tucson, whose population totals about 1 million. In the past 17 years, Pima County has spent nearly $200 million, raised through voter-approved bond issues, to preserve more than 200,000 acres of deserts, mountain parks, riparian areas and grasslands. Though red-tile roofs dominate much of the land, which is surrounded by five publicly owned mountain ranges, you can still see plenty of open desert dotted with dark green mesquite and palo verde and gray-green cactus. The county’s preservation efforts have also put it in the cattle business. The protected lands include 140,000 acres on which the county controls grazing leases. Ranchers who once feared that their remote mesquite flats and grasslands would be gobbled up by speculators still ply their trade, albeit with much-reduced cattle numbers."
News Article | May 2, 2017
"It's been said that water is the new oil, and if we want to ensure that future generations have adequate supplies, we have to understand the intimate connection between land and water," said George W. "Mac" McCarthy, president and CEO of the Lincoln Institute. "It's a two-way street: how we plan and use land has an impact on water, and water availability has an increasing impact on how we can use land. We seek to bridge these two worlds to better meet the needs of people, agriculture, and nature." The Babbitt Center will gather data, develop indicators, and build and test new tools for fair, efficient, and sustainable management of water resources. An initial activity will be to develop a map, using satellite imagery, for selected tributaries of the Colorado River Basin. The aim is to provide a foundation – potentially scaled up to the entire basin, serving seven states and some 30 million people – that illustrates the relationship between land and water, and can be used for better projections, modeling, and scenario planning. "We hope that conversations with communities and decision-makers throughout the basin might bring together stakeholders who don't necessarily talk to each other," said McCarthy. "We seek to help state and local officials integrate land and water policies across an entire geography, to imagine better futures." At the same time the Babbitt Center is launched, the longstanding joint program between the Lincoln Institute and the Sonoran Institute, previously known as Western Lands and Communities and now renamed Resilient Communities and Watersheds, will aim to better integrate land use planning and water management at the local level. The partnership with the Sonoran Institute will be an important part of the work of the Center. Ultimately, it is hoped that the Babbitt Center will become a hub that connects the people and practices of the arid American West to people and practices in the rest of the world. By 2025, the United Nations predicts that 1.8 billion people – nearly one-quarter of the planet's population by that time – will be living in regions with severe water scarcity. The Center will become part of the emerging global footprint of the Lincoln Institute, from Beijing, where long aqueducts are planned as the sprawling city confronts rapidly draining aquifers, to the megacities of Latin America, which struggle to provide water to citizens through cycles of drought and floods. "I am honored to be associated with this initiative and vision," said Bruce Babbitt, who is currently advising state government in California on water issues. "The Lincoln Institute has emphasized the importance of land and land policy in addressing the world's toughest problems, and the stewardship of water resources is at the top of the list. We all need to be aware of the connection between water and land." "We are optimistic as we all share the goal of ensuring water for future generations," said Holway, formerly director of the Lincoln Institute-Sonoran Institute joint program and assistant director of the Arizona Department of Water Resources, who currently serves on the board of the Central Arizona Project. The Lincoln Institute of Land Policy is an independent, nonpartisan organization whose mission is to help solve global economic, social, and environmental challenges to improve the quality of life through creative approaches to the use, taxation, and stewardship of land. To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/lincoln-institute-launches-babbitt-center-for-land-and-water-policy-300449707.html
News Article | May 16, 2017
With the western United States still recovering from a historic drought, lower basin states of the Colorado River are considering a plan designed to protect Lake Mead from dropping to critical levels that would trigger delivery reductions as Arizona formulates its own separate agreement on how to distribute its allocation. The proposed interstate agreement, known as the Drought Contingency Plan, will define when insufficient supplies in the Colorado River will trigger restrictions to Arizona, California and Nevada. Arizona’s potential intrastate agreement is known as DCP-Plus. The agreements will likely result in very little direct construction impacts, but it will further enhance certainty for current lower-basin inhabitants and allow for future business expansion and relocations, as well as population growth. “We will be able to demonstrate to people and businesses that want to move here that we have the measures to combat (drought),” says Thomas Buschatzke, director of the Arizona Department of Water Resources. “The DCP between the states is essentially done. We have some lawyerly word sniffing to do but we are 99 percent done.” He says thanks to 1980s legislation mandating guaranteed, 100-year water supply certifications for all new development and decades of “water banking” Colorado River water in aquifers, Arizona has not over-allocated. “Our viewpoint is we are going to be more resilient compared to other places that have not done those things,” Buschatzke says. Lake Mead is the depository of Colorado River water that is distributed to California, Nevada and Arizona, also known as the lower-basin states of the Colorado River. Current agreements among the lower-basin states were established in 2007. According to the 2007 agreement, when levels at Lake Mead dip below 1,075 ft above sea level based on a 24-month project and determined on Jan. 1, automatic triggers result for Nevada and Arizona. If Lake Mead is declared below 1,075 ft above sea level, Nevada would experience a 4 percent cut of 13,000 acre-ft if Lake Mead reaches 1,075 ft. However, under the 2007 agreement, if Lake Mead drops below the restriction trigger level under the current agreement, impacts would be most felt in Arizona, which would have 370,000 acre-ft of water stripped from its annual allotment of 2.8 million acre ft. At the AZ Water Association Annual Conference in early May, several key stakeholders participated in a panel discussion about the Drought Contingency Plan and why it is necessary to replace or augment the 2007 agreement. According to all members of the panel, the goal for all Arizona stakeholders is to make sure Lake Mead does not drop below 1,075 feet, something that many think is unavoidable under the current agreement. “It is paramount that we keep Lake Mead over 1,075 for as long as possible” says Paul Orme, an attorney who represents many agriculture-based clients and their water interests. Many expected the basin states to agree to the Drought Contingency Plan framework at the annual conference of Colorado River Water Users Association in December. That framework would have set a goal of insuring Lake Mead does not get below 1,025 ft above sea level and finding stabilization at levels above 1,045 ft. The DCP framework also established a first-ever acquiescence from the state of California to phased reductions of up to 350,000 acre-ft that, as the senior water-rights holder, the state does not have to make. The DCP framework also says “shortage” would be declared at 1,090 ft—above the current elevation—and Arizona would begin with a reduction of 192,000 acre-ft at the new shortage level. If Lake Mead water levels continued to drop, Arizona would eventually lose 720,000 acre-ft in a series of incremental steps. At shortage levels in Lake Mead, Nevada would take an immediate cut of 8,000 acre-ft, eventually increasing to 30,000 acre-ft. But as the framework did not find complete consensus, major Arizona stakeholder Central Arizona Project has floated additional changes, followed by dueling op-eds from CAP board members and Buschatzke in the local newspaper, the Arizona Republic. “There have been major differences in opinion that have come out into the public sphere,” says Ted Cooke, general manager, Central Arizona Project. Last week, however, all stakeholders regretted that so much of the process had made it into the public sphere. “I think we will all get past that and find an agreement,” says Jason Hauter, attorney at Akin Gump Strauss Hauer & Feld, and who represents tribal interests in certain matters. In addition to the DCP, Arizona stakeholders are also working on an internal Arizona agreement, known as DCP-Plus. That agreement would further refine how Arizona’s water-rights holders fulfill commitments made to the lower-basin states, specifically compensation for leaving water in Lake Mead and agreements on water banking. “At the end of the day, (Central Arizona Project) and (Arizona Department of Water Resources) must find a way to benefit all of their stakeholders,” Cooke says. In March, the city of Phoenix entered into an agreement with the state’s largest holder of water rights, the Gila River Indian Community. The city is sending 3,800 acre-ft to the community’s updated Oldberg Dam Underground Storage Facility, east of Sacaton, Ariz. The facility’s aquifer has the capacity to hold 40,000 acre-ft. If any construction projects come from DCP or DCP-Plus, Buschatzke says they will be similar pipeline and water banking projects. “There are no specific construction project related to DCP or DCP-Plus but indirectly there are some things that will be built because of the DCP because of the commitments we made to the people of Arizona,” he says. Most stakeholders, including Cooke and Buschatzke, agree that a finalized form of DCP and DCP-Plus will be presented for approval at the Arizona Legislature at the next session, beginning in January 2018. “We are not as far away from an agreement as it may seem,” Cooke says. “We feel we have been confident to take action from an infrastructure standpoint,” Mack says.
News Article | May 15, 2017
A recent third-party study shows that the power plant can continue to be competitive with natural gas and other coal-fueled power plants through 2040, while saving hundreds of millions of dollars for Arizona ratepayers. The study, presented during an Arizona Corporation Commission meeting, finds that continued operation of NGS is more economically viable than replacement alternatives in the near and long term. It projects a cost of nearly $400 million below the cost of market replacement of energy and capacity from 2020 to 2040. "NGS delivers affordable energy for Arizona water and power users, creates thousands of direct and indirect jobs, and provides significant benefits for tribal communities," said Congressman Paul Gosar (AZ-04). "For years, we fought to save the plant from job-killing mandates and nonsensical regulations sought by the Obama Administration. While the future of NGS now resides on the business decisions of private companies, the new Congress and Trump Administration can help by uniting stakeholders and facilitating an environment for economic growth. I am hopeful good people will step up to the plate and find a long-term solution for the plant and local communities." "Arizona is at risk of becoming overly reliant on natural gas, when virtually all our natural gas has to be imported," said Arizona Corporation Commissioner Andy Tobin. "Keeping the plant operating will protect ratepayers from volatile natural gas price swings, protect against supply disruptions and would be far more cost-effective than prematurely retiring the plant." Together NGS and the Kayenta Mine create thousands of direct and indirect jobs, and provide 22 percent of the Navajo Nation's annual general budget and 85 percent of the Hopi Tribe's general fund budget. Keeping the plant operating well into the future would mean $18 billion in economic benefits for Arizona from the mine and power plant between 2011 and 2044, according to a study by Arizona State University (ASU). For the Navajo, operations would drive nearly $13 billion in gross Navajo Nation product between 2020 and 2044, according to another ASU study. "The Central Arizona Project relies on the Navajo Generating Station for 80 percent of its power," said Arizona State Representative Mark Finchem. "Premature plant closure would create economic hardship for the Navajo and Hopi. It also puts at risk the state's energy diversity and does not address the full cost impacts to CAP and its customers." "NGS has been a major contributor to the state's growth and prosperity over the decades," said Arizona Mining Association President Kelly Shaw Norton. "It is essential for the state's leaders to come together to make sure we make smart decisions about the state's energy future." Additional sponsors for the event included Friends of Coal, AMIGOS and the Southern Arizona Business Coalition. To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/arizona-mining-association-brings-together-arizona-leaders-to-support-continued-operation-of-navajo-generating-station-at-local-rally-300457863.html
Gastelum J.R.,Central Arizona Project
International Journal of Water Resources Development | Year: 2012
An analysis of Arizona's water resources system has been implemented. This study uses a qualitative system analysis approach to evaluate the most important components of the system: water supply, water demand, laws and regulations, stakeholders, decision makers, etc. Moreover, the investigation centres on some key components of the water resources system such as water conservation in active management areas (AMA), rural Arizona, population growth, and water rights transfers. This study provides insights on these important components, identifies factors that can be enhanced and offers suggestions for improving them. The overall goal of this analysis is to contribute ideas that will help to establish a more efficient and holistic programme to secure sustainable development of water resources. © 2012 Copyright Taylor and Francis Group, LLC.
News Article | February 15, 2017
Hardworking Parents that Supply our Energy Should Never Have to Leave their Kids Behind This summer, when desert temperatures soar well into the triple digits, Phoenix residents will have no real worry about overheating. Lawns will stay freshly watered, air conditioners will continue to whir, and the economic opportunity that has defined the city’s incredible growth will remain. Phoenix will be just fine, no matter what happens hundreds of miles away in Page, Arizona, where the great 2,250 MW Navajo Generating Station is on the verge of being shut down decades well before its time. Unfortunately, the same can’t be said for the Navajo Nation and Hopi Tribe – which stand to suffer most if the plant’s owners decide unilaterally to decommission decades prematurely. Loss of the Navajo Generating Station would mean economic catastrophe for already burdened tribal communities and would lead to much greater worries than just a passing notice on the power plant’s closure. The Southwest region has depended on the Navajo Generating Station for affordable and reliable electricity for decades. The plant also provides 90 percent of the power used by the Central Arizona Project to pump water from the state’s largest single renewable source of water. If the Navajo Generating Station shuts down, no doubt the lights will stay on in central and southern Arizona because power will come from other sources – albeit more expensively and less reliably.
News Article | February 20, 2017
KYKOTSMOVI, AZ, February 20, 2017-- "I am very happy and relieved that Black Mesa Trust's struggle to save the sacred waters on Black Mesa will finally end in 2019," said Black Mesa Trust Executive Director Vernon Masayesva."Black Mesa Trust was founded in 1998 with the singular mission of saving drinking water stored deep under our sacred land. We will succeed, but the price for allowing industrial use of pristine drinking water has been unconscionably high," he continued.- Over 45 billion gallons of water stored in ancient aquifers is gone forever. This would have been enough water to sustain a Hopi population of 10,000 people for over 300 years, but it was gone in just 47 years.- Many springs are now dry and an unknown number of others are contaminated. Some of the springs were used to conduct ceremonies.- An unknown number of Hopi ancestral villages, burial sites, sacred shrines and petroglyphs have been destroyed. These were footprints of our ancestors who settled on Black Mesa over 1,000 years ago.- Hundreds of acres of cedar trees have been uprooted by bulldozers. Cedars are used for purification and medicine.- The dynamiting of coal seams has released an unknown quantity of methane gas. Coal fires may have been ignited and if so they are still burning, creating cave-like tunnels within the mesa.- The extraction of billions of waters stored in highly-pressurized aquifers has caused thousands of sinkholes in the landscape.- Impacts on the health of Dine (Navajo people) living downwind from the mine area and their livestock, their main source of livelihood, have never been objectively investigated.- Nor has the impact of groundwater pumping on Siipapu, place of Emergence from the Third World to the Fourth World, located near the convergence of Little Colorado River and the main Colorado River been examined.- Over 165 impoundment ponds built by the mining company have blocked the rainwater and snowmelt that used to flow through washes to Siipa'pu.- Moencopi Wash, which once provided water for fields and crops, is bone dry most of the year. The impoundments were authorized by U.S. Army Corp of Engineers without full investigation of the environmental or cultural impacts or the possible effects on Moencopi farmers and endangered species. An investigation must be conducted and must include the outright sale of water leased from Hopi Tribe and Navajo Nation to owners of Mohave Generating Station without the knowledge of the Hopi Tribe.Now that Peabody Energy's coal strip mining has ended, we begin a new chapter. It is time to begin healing the ecological-cultural landscape.We must hold the federal government, Peabody, and owners of Navajo Generating Station, which includes U.S. Bureau of Reclamation, accountable for leaving us with a devastated landscape, the irretrievable loss of drinking water, compromised aquifers and the destruction of cultural sites and artifacts, not to mention desecration of our ancestors' burial sites.A full investigation and congressional hearing on the scope, extent and damages caused by coal mining on Black Mesa must be held.The Hopi and Dine must work together to call for economic restitution. We deserve to be compensated for the economic benefit bestowed on millions of Arizona rate-payers and utility companies while Hopi and Dine are living in abject poverty. Arizona State University's Morrison Institute conducted an economic impact study that shows Arizona reaped over a trillion dollars in benefits due to delivery of water from the Colorado River to Phoenix and Tucson through the 330-mile open canal called Central Arizona Project. Not a penny went to Hopi and Dine on whose backs this was done, even though it was coal and water from Black Mesa that powered Navajo Generating Station, which was built in part to pump water for the Central Arizona Project.For Hopi people the healing process must begin. The modern Hopi Tribal Council must take responsibility for approving the coal lease, which treated water like a commodity that could be negotiated, leased and sold in direct violation of ancient Hopi beliefs that water is life, therefore sacred.We thank the many environmental, religious organizations and individuals who helped us achieve this victory.We thank the founders and members of Black Mesa Trust, some of whom have joined the spirit world.Black Mesa Trust, a non-profit 501(c)3 organization, has submitted a proposal to mitigate the impact of the loss of jobs and revenues generated by NGS and coal mining. It is available upon request to firstname.lastname@example.org For further information, contact Vernon Masayesva, 928 255-2356, email@example.com and visit http://www.blackmesatrust.org Black Mesa Trust is a non-profit 501(c)3 organization that was founded in 1998 with the singular mission of saving the drinking water stored deep under the sacred land of Black Mesa, Arizona on the Hopi and Navajo reservations.Vernon Masayesva is the Executive Director of Black Mesa Trust, a Hopi Leader of the Coyote Clan and a former Chairman of the Hopi Tribal Council from the village of Hotevilla, one of the oldest continuously inhabited human settlement in the Americas in Arizona.Masayesva received his B.A. degree from Arizona State University in Political Science and a Masters of Arts from Central Michigan University in 1970. He returned to Black Mesa of the Hotevilla Bacavi Community School, the first Indian controlled school on Hopi as the lead educator of the school systems. In 1984, he was elected to the Hopi Tribal Council and then served as Chairman from 1989. He immersed himself in the tangled intricacies of the mining on Black Mesa and the Hopi - Navajo land dispute, and is widely respected on and off the reservation.In 1998, he founded the Black Mesa Trust and currently serves as its Executive Director. Vernon is an international speaker on the subject of Water and is honored among many scientists, physicists and water researchers including renown author and water researcher Dr. Masaru Emoto from Japan. Among other things, he is beginning a serious study of Hopi symbols and metaphors to understand who he is and what he can do to help his people lay a vision of a future Hopi society.As a result of his commitment to preserving our water, former President William Clinton honored him as an "Environmental Hero." Charles Wilkinson, a distinguished Professor of Law at the University of Colorado said, "You will gain a strong sense of history, of millennia, from listening to Vernon, but my guess is you will also see something else-the future-for Vernon embodies personal qualities and philosophical attitudes that can serve our whole society well in the challenging years that lie ahead."To learn more about Black Mesa Trust visit www.blackmesatrust.org
News Article | November 7, 2016
This story was originally published by Mother Jones and is reproduced here as part of the Climate Desk collaboration. The climate didn’t get much attention in this year’s debates, but Tuesday’s election will still have major consequences for the fight against global warming. Donald Trump thinks climate change is a hoax; he’s pledged to withdraw from the historic Paris climate accord and to repeal President Barack Obama’s Clean Power Plan, which is intended to cut greenhouse gas emissions from coal plants. Hillary Clinton has said she will continue Obama’s climate legacy and has called for installing half a billion solar panels by the end of her first term. The debate isn’t restricted to the top of the ticket; there are a number of state races that will play a key role in determining U.S. climate policy, along with a handful of ballot initiatives covering everything from rooftop solar to a proposed carbon tax. The situation in each state is unique. Some races — New Hampshire’s Senate contest, for instance — feature two candidates who want to act on climate change. Others, such as West Virginia’s gubernatorial election, feature two candidates who are champions of the coal industry. The impacts of climate change also vary from state to state: Alaska faces wildfires and melting permafrost; Florida is confronting rising seas; Iowa could be hit with falling corn yields. And of course, the voters in each state are different, too. Coloradans overwhelmingly acknowledge that humans are warming the planet. Their neighbors in Utah: not so much. Below, we’ve listed every state with a competitive presidential, Senate, or gubernatorial race — as well as ones that are voting on climate-related initiatives. And we’ve included a few key facts: namely, where the candidates stand on climate, the specific consequences of warming in each state, and the percentage of each state’s residents who are climate science deniers (according to research from the Yale Program on Climate Change Communication). One final note: For the sake of consistency, we included every Senate and gubernatorial race that the Cook Political Report rates as “toss up,” “lean,” or “likely.” Many of these elections will probably be close, but a few (see: Alaska’s Senate race) almost certainly won’t be. Impacts of climate change: “Alaska has warmed twice as fast as the rest of the nation, bringing widespread impacts. Sea ice is rapidly receding and glaciers are shrinking. Thawing permafrost is leading to more wildfire and affecting infrastructure and wildlife habitat. Rising ocean temperatures and acidification will alter valuable marine fisheries.” [National Climate Assessment, 2014] Percentage of residents who are climate deniers: 47 percent Sen. Lisa Murkowski (R): “I do believe that our climate is changing. I don’t agree that all the changes are necessarily due solely to human activity.” [Senate Energy and Natural Resources Committee session, 8 Jan 2015] Ray Metcalfe (D): “Every [Alaskan] has witnessed climate change over the past 50 years. Our winters are warmer, our summers are longer, and our Arctic Village shores, once protected by sea ice, are eroding. Bold clean energy action is needed to stave off a climate hostile to human life. Unfortunately, Congress is protecting the profits of those opposed to protecting the planet.” [Metcalfe Facebook post, 2 Aug 2016] Impacts of climate change: “Annual precipitation has decreased in Arizona during the last century, and it may continue to decrease. So soils are likely to be drier, and periods without rain are likely to become longer, making droughts more severe … Increasing droughts and higher temperatures are likely to affect Arizona’s top agricultural products: cattle, dairy, and vegetables.” [EPA, August 2016] Percentage of residents who are climate deniers: 43 percent Sen. John McCain (R): “I think we need to address greenhouse gas emissions. But I try to get involved in issues where I see a legislative result … So I just leave the issue alone because I don’t see a way through it, and there are certain fundamentals, for example nuke power, that people on the left will never agree with me on. So why should I waste my time when I know the people on the left are going to reject nuclear power?” [Time, 2 Mar 2014] Rep. Ann Kirkpatrick (D): “The EPA’s [Clean Power Plan] is another example of Washington’s lack of understanding when it comes to rural and Western energy issues. I oppose this new rule because it hurts my district, which has four coal-fired plants that power Arizona’s big cities, small towns, businesses, and residences. These plants also provide good-paying jobs in our tribal and rural regions. The Navajo Generating Station in Page, for example, employs hundreds of people, mostly Native Americans, and provides nearly all of the power for the Central Arizona Project. That means our entire state has a big stake in the energy production and economic stability of these plants. We need to find a balance between protecting our local economies while pursuing the longer-term goal of producing clean, affordable, and reliable power. I will not support efforts that kill jobs in my district and lack provisions for responsibly transitioning us toward a clean-energy economy.” [Kirkpatrick press release, 2 June 2014] Impacts of climate change: “Rising temperatures have and will continue to impact the state’s resources in a variety of ways, including more rapid snowmelt, longer and more severe droughts, and longer growing seasons … Moreover, Colorado experiences numerous climate-related disasters, such as [tornadoes], hailstorms, and wildfires, that will continue to occur and may be exacerbated by climate change.” [University of Colorado and Colorado State University, January 2015] Percentage of residents who are climate deniers: 41 percent Sen. Michael Bennet (D): “Colorado’s economy is already being threatened by unchecked climate change … [The Clean Power Plan] is an important step toward curbing carbon pollution and addressing climate change.” [Bennet press release, 3 Aug 2015] Impacts of climate change: “There is an imminent threat of increased inland flooding during heavy rain events in low-lying coastal areas such as southeast Florida, where just inches of sea-level rise will impair the capacity of stormwater drainage systems to empty into the ocean. Drainage problems are already being experienced in many locations during seasonal high tides, heavy rains, and storm surge events.” [National Climate Assessment, 2014] Percentage of residents who are climate deniers: 42 percent Sen. Marco Rubio (R): “I do not believe that human activity is causing these dramatic changes to our climate the way these scientists are portraying it … And I do not believe that the laws that they propose we pass will do anything about it — except, they will destroy our economy.” [ABC News, 13 May 2014] Rep. Patrick Murphy (D): “Everywhere I go in Florida, I see the effects of [climate change]. Sen. Rubio denies science.” [WFTV debate via Media Matters, 17 Oct 2016] Rooftop Solar (Amendment 1): This is a confusing initiative that could actually undermine rooftop solar in the Sunshine State. As we reported in March, “Amendment 1 was created by an organization with a grassroots-sounding name: Consumers for Smart Solar. In reality, though, the organization is financed by the state’s major electric utility companies as well as by conservative groups with ties to the Koch brothers … The amendment says state and local governments have the authority ‘to ensure that consumers who do not choose to install solar are not required to subsidize the costs of backup power and electric grid access to those who do.'” That’s widely seen as an attack on net metering, the policy requiring utilities to pay consumers for the extra power produced by their solar panels. Impacts of climate change: “Sea level is rising more rapidly in Georgia than along most coasts because the land is sinking. If the oceans and atmosphere continue to warm, sea level is likely to rise one to four feet in the next century along the coast of Georgia. Rising sea level submerges wetlands and dry land, erodes beaches, and exacerbates coastal flooding … [H]urricane wind speeds and rainfall rates are likely to increase as the climate continues to warm. Whether or not storms become more intense, coastal homes and infrastructure will flood more often as sea level rises, because storm surges will become higher as well.” [EPA, August 2016] Percentage of residents who are climate deniers: 45 percent Sen. Johnny Isakson (R): “I’ve done everything I can as a United States Senator to educate myself on the carbon issue and the climate change issue. Seven years ago, I went with Sen. Boxer from California to Disko Bay in Greenland with Dr. [Richard] Alley who’s the leading glaciologist in the world to study for a while what he says about the possibility of carbon being the cause of climate change. And there are mixed reviews on that; there’s mixed scientific evidence on that.” [Atlanta Journal Constitution, 18 Mar 2015] Jim Barksdale (D): “Climate change is a reality and if left unchecked, rising ocean tides will harm Georgia’s Atlantic coast and threaten our state’s robust tourism and shipping industries.” [Barksdale campaign website, accessed 28 Oct 2016] Allen Buckley (L): “Change the gas tax to be an energy tax with the following general concept — the cleaner a fuel is, the less tax it bears and the dirtier a fuel is, the more tax it bears. For example, the current federal excise tax is 18.4 cents per gallon of gasoline. If, in the future, one-third of our vehicles run on gasoline, one-third run on batteries, and one-third run on hydrogen, and the respective ‘well to wheels’ carbon dioxide output is 6, 3, and 1, then the 18.4 cent excise tax should be allocated so that gasoline bears 33.1 cents per gallon, battery-powered cars pay 16.6 cents per gallon in gasoline-equivalent terms, and hydrogen vehicles pay 5.5 cents per gallon in gasoline-equivalent terms … Concerning global warming, while I believe it is happening, the degree to which it is man-made is very hard to gauge.” [Buckley campaign website, accessed 28 Oct 2016] Impacts of climate change: “Changing climate is likely to increase the frequency of floods in Illinois. Over the last half century, average annual precipitation in most of the Midwest has increased by 5 to 10 percent. But rainfall during the four wettest days of the year has increased about 35 percent, and the amount of water flowing in most streams during the worst flood of the year has increased by more than 20 percent. During the next century, spring rainfall and average precipitation are likely to increase, and severe rainstorms are likely to intensify. Each of these factors will tend to further increase the risk of flooding … In Lake Michigan, changing climate is likely to harm water quality. Warmer water tends to cause more algal blooms, which can be unsightly, harm fish, and degrade water quality.” [EPA, August 2016] Percentage of residents who are climate deniers: 39 percent Sen. Mark Kirk (R): “I have voted that climate change is happening and it’s also caused by man … The best thing that we can do on climate change is make sure that China converts to a more nuclear future to limit those — that one coal-burning plant coming on a week that we expect — that would really help the planet … We need to work cooperatively with developing countries to make sure they emit less.” [WICS debate via Media Matters, 27 Oct 2016] Rep. Tammy Duckworth (D): “Of course climate change is real. And I support an all-of-the-above approach attacking climate change — everything from moving our country towards being carbon-neutral, moving our country towards clean energy … My opponent has not been consistent … Depending on whether or not he’s up for election … he’s either voted for the Clean Power Plan or against the Clean Power Plan. He’s switched back and forth.” [WICS debate via Media Matters, 27 Oct 2016] Impacts of climate change: “Changing the climate is likely to increase the frequency of floods in Indiana … During the next century, spring rainfall and average precipitation are likely to increase, and severe rainstorms are likely to intensify. Each of these factors will tend to further increase the risk of flooding … Although springtime in Indiana is likely to be wetter, summer droughts are likely to be more severe … Longer frost-free growing seasons and higher concentrations of atmospheric carbon dioxide would increase yields for some crops during an average year. But increasingly hot summers are likely to reduce yields of corn and possibly soybeans.” [EPA, August 2016] Percentage of residents who are climate deniers: 46 percent Former Sen. Evan Bayh (D): “Evan Bayh supports Indiana’s coal industry, including opposing the EPA’s coal rules. Pointing out that the coal industry contributed $2 billion to Indiana’s economy, Evan argued that the EPA’s rules would put ‘tens of thousands’ of Hoosier jobs at risk. In the Senate, Evan not only voted twice against cap-and-trade legislation, he signed a letter stating that he would not support any climate change bill that did not protect Indiana jobs.” [Bayh campaign website, accessed 28 Oct 2016] Rep. Todd Young (R): “My mind remains open about the various scientific questions and so forth. We’re often told that there is a consensus among scientists, and I’ve come to discover — as the number of scientists I’ve talked to and the number of things I read — that’s not necessarily the case. But I think we need to prepare for the worst, and so I support energy efficiency measures. I think natural gas has been a big part of the solution if in fact we need to reduce man-generated carbon dioxide emissions. And I think any public policy that doesn’t account for the fact that most CO2 emissions don’t come from the United States, but they come from other countries, is a flawed policy. So let’s not unilaterally tax our power, our people, to solve a global problem.” [WLKY, 8 Oct 2014] John Gregg, former Indiana Speaker of the House and former coal lobbyist (D): “Like my family, I’ve worked in the coal industry. And I’ve opposed federal rules impacting coal jobs.” [Gregg campaign ad, 11 Aug 2016] Lt. Gov Eric Holcomb (R): “[Holcomb will] stand strong against unreasonable Federal EPA rules, like the so-called Clean Power Plan, that continue to lead to higher prices for Hoosiers.” [Holcomb campaign website, accessed 28 Oct 2016] Impacts of climate change: “[Iowa] will face the highest likely losses of any Midwest state from climate-related commodity crop yield declines. By the end of this century, absent significant adaptation by Iowa farmers, the state could face likely declines in its signature corn crop of 18 percent to 77 percent — a huge hit for a corn industry worth nearly $10 billion.” [Risky Business, January 2015] Percentage of residents who are climate deniers: 44 percent Sen. Chuck Grassley (R): “We had global warming between 1940 and 1998. Since then, we haven’t had a rise in temperature. That doesn’t mean we don’t have a problem. If that problem is going to be solved, it ought to be solved by an international treaty.” [Iowa Agribusiness Radio Network, 17 May 2014] Former Lt. Gov. Patty Judge (D): “Climate change is very real. It is a serious issue it should be treated that way … It is not just ours here in Iowa or even in the United States. One of the things that we need to do immediately is try to move our self away from petroleum-based or fuels from carbon-based fueling of this country, and, you know, we started doing that here in Iowa and we’ve been very successful with developing our alternative energy programs.” [Iowa Public Radio, 31 May 2016] Impacts of climate change: “Heatwaves, more powerful storms, and rising seas are increasingly transforming Maine — effects that most climate scientists trace to greenhouse gases warming the planet … Over the past 100 years, temperatures throughout the Northeast have risen by about 2 degrees Fahrenheit … Precipitation has increased by more than 10 percent, with the worst storms bringing significantly more rain and snow. And sea levels have climbed by a foot. A study by the Gulf of Maine Research Institute this year found that coastal waters are warming at a rate faster than 99 percent of the world’s other oceans.” [Boston Globe, 21 Sep 14] Percentage of residents who are climate deniers: 42 percent Presidential battleground? Yes. (Maine allocates electoral votes by congressional district, and the 2nd district is competitive.) Impacts of climate change: “Changing the climate is likely to harm water quality in Lake Erie and Lake Michigan. Warmer water tends to cause more algal blooms, which can be unsightly, harm fish, and degrade water quality. During August 2014, an algal bloom in Lake Erie prompted the Monroe County Health Department to advise residents in four townships to avoid using tap water for cooking and drinking. Severe storms increase the amount of pollutants that run off from land to water, so the risk of algal blooms will be greater if storms become more severe. Severe rainstorms can also cause sewers to overflow into lakes and rivers, which can threaten beach safety and drinking water supplies.” [EPA, August 2016] Percentage of residents who are climate deniers: 43 percent Impacts of climate change: “The state has warmed 1 to 3 degrees F in the last century. Floods are becoming more frequent, and ice cover on lakes is forming later and melting sooner. In the coming decades, these trends are likely to continue. Rising temperatures may interfere with winter recreation, extend the growing season, change the composition of trees in the North Woods, and increase water pollution problems in lakes and rivers. The state will have more extremely hot days, which may harm public health in urban areas and corn harvests in rural areas.” [EPA, August 2016] Percentage of residents who are climate deniers: 43 percent Impacts of climate change: “Seventy years from now, Missouri is likely to have more than 25 days per year with temperatures above 95 degrees F, compared with 5 to 15 today. Hot weather causes cows to eat less, produce less milk, and grow more slowly — and it could threaten their health. Even during the next few decades, hotter summers are likely to reduce yields of corn. But higher concentrations of atmospheric carbon dioxide increase crop yields, and that fertilizing effect is likely to offset the harmful effects of heat on soybeans, assuming that adequate water is available. On farms without irrigation, however, increasingly severe droughts could cause more crop failures. ” [EPA, August 2016] Percentage of residents who are climate deniers: 45 percent Sen. Roy Blunt (R): “Electric service providers in Missouri have warned that the EPA’s so-called Clean Power Plan will raise energy costs for Missourians, reduce jobs, and hurt our state’s economic competitiveness. As a member of the Senate Appropriations Committee, I’ve fought hard to ensure provisions that would defund this harmful power grab were included in the final appropriations bill. I also support legislation to block this harmful rule and protect workers and families from the damaging effects of the Obama Administration’s executive overreach and costly energy regulations.” [Blunt press release, 3 Aug 2015] Missouri Secretary of State Jason Kander (D): “He understands that climate change is a real consequence of human activity and we have a moral obligation to address this challenge. That means reducing carbon pollution and accelerating our transition to clean energy, not only to protect our planet, but also to ensure our national security.” [Kander campaign website, accessed 31 Oct 2016] Eric Greitens (R): “Federal overreach from agencies like the EPA is hurting family farms. I will fight against these crippling regulations, and always side with the hard working farmers and ranchers of Missouri.” [Greitens campaign website, accessed 31 Oct 2016] Missouri Attorney Gen. Chris Koster (D): “The EPA’s Clean Power rule effectively eliminates Missouri’s competitive advantage as a low energy-cost state … A significant question exists whether the final rule goes beyond EPA’s authority to set emission standards … For these reasons, I have decided to file suit against the EPA as soon as the final rule is published. Look folks, I believe that climate change is real, and cleaner energy production is an important state goal, one Missouri’s energy producers are already aggressively working toward … However, it is essential that we achieve these goals in a responsible way that makes sense for Missouri’s economy and Missouri’s future.” [Koster speech transcript, 9 Oct 2015] Impacts of climate change: “Since the 1950s, the snowpack in Montana has been decreasing. Diminishing snowpack can shorten the season for skiing and other forms of winter tourism and recreation … More than one thousand glaciers cover about 26 square miles of mountains in Montana, but that area is decreasing in response to rising temperatures. Glacier National Park’s glaciers receded rapidly during the last century.” [EPA, August 2016] Percentage of residents who are climate deniers: 46 percent Gov. Steve Bullock (D): “Steve believes Montanans should control our own energy future. He introduced a balanced and responsible plan that builds upon Montana’s traditional base of energy generation, like coal in Colstrip, while sparking a new generation of clean technology development, investing in renewables like wind and solar and encouraging innovation, savings, and energy efficiency for homes and businesses.” [Bullock campaign website, accessed 31 Oct 2016] Greg Gianforte (R): “This [the Supreme Court’s decision to halt the Clean Power Plan] is great news for Montana, but the fight isn’t over. We cannot rest. We must keep up the pressure and work to defeat this “costly power plan” once and for all.” [Gianfote press release, 9 Feb 2016] Impacts of climate change: “The number of high temperature stress days over 100 degrees F is projected to increase substantially in Nebraska and the Great Plains region. By mid-century (2041‐2070), this increase for Nebraska would equate to experiencing typical summer temperatures equivalent to those experienced during the 2012 drought and heatwave.” [University of Nebraska-Lincoln, September 2014] Percentage of residents who are climate deniers: 47 percent Presidential battleground? Trump will win Nebraska, but the state awards its electoral votes by congressional district, and the 2nd district might be up for grabs. Impacts of climate change: “Much of Nevada’s tourist income comes from attractions that will be vulnerable to climate impacts. For instance, Las Vegas’ 45 golf courses, which are used by one-third of all visitors, could see a sharp decline in golfers due to rising temperatures and decreased water supplies … Lower water levels in Lake Mead significantly reduced recreational visitors, especially boaters, as marinas and docks were left high and dry.” [Demos, 19 Apr 2012] Percentage of residents who are climate deniers: 41 percent Former Nevada Attorney Gen. Catherine Cortez Masto (D): “The Clean Power Plan is a bold step not just in lowering carbon emissions, but also in creating the clean energy jobs of the future. With our abundance of wind, solar, and geothermal energy, Nevada has been a leader in moving away from carbon emissions and embracing a clean energy economy that has created good-paying jobs in our state that can’t be shipped overseas.” [Cortez Masto campaign press release, 3 Aug 2015] Rep. Joe Heck (R): “To maintain our economic and national security, we must maximize all of our nation’s energy resources, including renewable sources, alternative fuels, and fossil fuels, all in a way that balances economic development and protecting our environment. Nevada is poised to lead our nation in renewable development and we must harness those resources. However, we shouldn’t penalize those that depend on fossil fuels for energy and the jobs they provide. [The Clean Power Plan] is not the all-of-the-above energy strategy needed to boost job creation and reduce energy prices for families.” [Heck press release, 3 Aug 2015] Electricity Deregulation (Question 3): Nevadans will be voting on a state constitutional amendment that would dismantle the monopoly held by NV Energy, the state’s biggest utility. If Question 3 passes — and then passes again in 2018 — consumers will be able to purchase power from any electricity retailer willing to sell it. The measure is backed by a number of large, energy-intensive businesses in the state, including Tesla and Sheldon Adelson’s Sands casinos. Proponents argue that deregulation will allow them to purchase cheaper renewable energy. According to the Wall Street Journal, one of Questions 3’s supporters, a Nevada data-storage company called Switch, “estimates it is currently paying NV Energy as much as 80 percent more for green power than it would pay a competitive supplier.” Opponents, including the state’s AFL-CIO chapter, counter that the measure could harm consumers and cost jobs, according to the Journal. (For more on the problems surrounding energy deregulation, read our investigation.) Impacts of climate change: “The frequency of extreme heat days is projected to increase dramatically, and the hottest days will be hotter, raising concerns regarding the impact of extreme, sustained heat on human health, infrastructure, and the electrical grid … Southern New Hampshire can also expect to experience more extreme precipitation events in the future. For example, under the high emissions scenario, events that drop more than four inches of precipitation in 48 hours are projected to increase two- to three-fold across much of southern New Hampshire by the end of the century.” [University of New Hampshire, 2014] Percentage of residents who are climate deniers: 43 percent Gov. Maggie Hassan (D): “Yes, I do [believe climate change is man-made]. I have been fighting climate change and working to improve our environment. Sen. Ayotte, when she first ran for the United States Senate, doubted whether climate change was real. And I have the endorsement of the Sierra Club, and I’m very proud of that.” [NH1 TV debate via Media Matters, 27 Oct 2016] Sen. Kelly Ayotte (R): “I do believe that [climate change] is real, and Gov. Hassan again needs to understand that I was the first Republican in the country to support the president’s Clean Power Plan, that I’ve crossed party lines, even taken criticism from my own party to protect New Hampshire’s environment, and that goes back to my time as attorney general.” [NH1 TV debate via Media Matters, 27 Oct 2016] Chris Sununu, member of the New Hampshire Executive Council (R): “I’m an environmental engineer … The Earth has been slowly warming since the mid-1800s; there’s not doubt about that. Is it man-made or not? Look, one thing I do know: Nobody knows for sure … One of the biggest concerns of this entire issue is that we’ve created all this regulation that pushes down on businesses and pushes down on individuals. I’m going to free that up and do it smart and responsibly.” [WMUR debate, 7 Sep 2016] Colin Van Ostern, member of the New Hampshire Executive Council (D): “Van Ostern is a strong advocate for clean energy, and he’ll increase investment in solar and renewable energy. He believes clean energy projects are critical for boosting our clean tech economy, limiting energy costs, protecting our environment, and creating thousands of jobs.” [Van Ostern campaign website, accessed 3 Nov 2016] Impacts of climate change: “Most of the state has warmed 0.5 to 1 degree F in the last century, and the sea is rising about one inch every decade. Higher water levels are eroding beaches, submerging low lands, exacerbating coastal flooding, and increasing the salinity of estuaries and aquifers.” [EPA, August 2016] Percentage of residents who are climate deniers: 44 percent Sen. Richard Burr (R): “US Sen. Richard Burr, R-N.C., voted against legislation in January 2015 that declared in part that ‘human activity contributes to climate change.’ … ‘Senator Burr believes that climate change is real and humans do contribute to those changes,’ said spokesman Jesse Hunt. ‘However, it is his belief that the best way to reduce emissions and pollution is not through partisan political theater but through developing consensus on areas that will bring about effectual change.'” [Citizen-Times, 4 Oct 2016] Former State Rep. Deborah Ross (D): “[Ross] voted repeatedly to support clean energy, oppose fracking, address climate change, and protect North Carolina’s land, air, and water … Deborah knows that we need to slow the harmful effects of climate change. The best ways to do this are to invest in renewable energy and clean technology.” [Ross campaign website, accessed 1 Nov 2016] Gov. Pat McCrory (R): “I believe there is climate change. I’m not sure you can call it climate warming anymore, especially here in the Carolinas. I think the big debate is how much of it is man-made and how much of it will just naturally happen as Earth evolves.” [ABC, 16 Feb 2014] North Carolina Attorney Gen. Roy Cooper (D): “A strong economy and a healthy environment go hand-in-hand. I am glad North Carolina has become a leader in renewable energy technology and that energy companies are shifting toward more sustainable power supplies than coal. As Attorney General, I have disagreed with the state environmental regulators who were focused on scoring political points rather than protecting our water, air, and other natural resources.” [Cooper campaign website, accessed 1 Nov 2016] Impacts of climate change: “In Lake Erie, the changing climate is likely to harm water quality. Warmer water tends to cause more algal blooms, which can be unsightly, harm fish, and degrade water quality. During August 2014, an algal bloom in Lake Erie prompted the City of Toledo to ban drinking and cooking with tap water. Severe storms also increase the amount of pollutants that run off from land to water, so the risk of algal blooms will be greater if storms become more severe. Increasingly severe rainstorms could also cause sewers to overflow into the Great Lakes more often, threatening beach safety and drinking water supplies.” [EPA, August 2016] Percentage of residents who are climate deniers: 45 percent Sen. Rob Portman (R): “[Portman voted] ‘yes’ this week on an amendment declaring that climate change is real, caused by human activity, and Congress should do something about it. In January, Portman voted ‘no’ on a similar amendment, which said ‘human activity significantly’ contributes to climate change … Portman, who is seeking reelection in a key swing state, said he opposed the January measure because he’s not sure how much of a factor human activity is in global warming. ‘I’m not going to quantify it because scientists have a lot of different views on that,’ he told reporters Thursday … Portman has been a vocal opponent of the Obama administration’s new regulations designed to reduce carbon dioxide emissions from power plants 30 percent from 2005 levels by 2030.” [Cincinnati Enquirer, 29 Mar 2015] Former Gov. Ted Strickland (D): “Strickland supports Obama’s plan to cut carbon dioxide emissions from coal-burning power plants while boosting clean-energy jobs. He says he wants to be sure its implementation doesn’t hurt Ohio, although it is unclear how he or anyone could do anything about it if that happens. But one way, he and other Democrats say, is to support expansion of alternative energy sources — wind, solar, biomass — and help those industries become catalysts for jobs. As governor, Strickland signed a bill with the goal of getting 25 percent of electricity sold in Ohio to come from alternative energy sources by 2025 — a plan that Gov. John Kasich, who defeated Strickland in 2010, put on ice.” [Cleveland Plain Dealer, 3 Sep 2015] Impacts of climate change: “Reduced snowpacks, less water for irrigation, drought-related wildfires, rising sea levels and insect-infested timber. Those are just a few of the impacts of climate disruption that could affect Oregonians, two environmental groups warned Tuesday.” [The Oregonian, 6 May 2014] Percentage of residents who are climate deniers: 40 percent Gov. Kate Brown (D): “This year, Oregon became the first state to envision a future without coal-powered electricity when Kate signed the nation’s first ‘coal-to-clean’ law, which will completely phase out dirty coal power by 2030 and double Oregon’s reliance on renewable energy by 2040. In 2015, she stood up to Big Oil and signed a law that bolsters the use of cleaner-burning vehicle fuels in Oregon. Kate will continue the fight to reduce greenhouse gas emissions and support innovation that reduces Oregon’s reliance on fossil fuels.” [Brown campaign website, accessed 1 Nov 2016] Bud Pierce (R): “Repeal the Low-Carbon Fuel Standard Law so ordinary Oregonians will not have to spend an extra 19 cents to a dollar per gallon of gasoline in a hidden gas tax whose proceeds will go to state-favored, out-of-state green energy companies.” [Pierce campaign website, accessed 1 Nov 2016] Impacts of climate change: “The commonwealth has warmed more than half a degree F in the last century, heavy rainstorms are more frequent, and the tidal portion of the Delaware River is rising about one inch every eight years. In the coming decades, changing the climate is likely to increase flooding, harm ecosystems, disrupt farming, and increase some risks to human health.” [EPA, August 2016] Percentage of residents who are climate deniers: 44 percent Sen. Pat Toomey (R): “Senator Toomey believes that coal is an essential part of America’s energy future, not to mention an important part of Pennsylvania’s economy. Unfortunately, the Environmental Protection Agency (EPA) has been especially aggressive in pursuing regulations that specifically target coal power plants. These regulations have already put hundreds of Pennsylvanians out of work and will continue to cause economic distress while yielding negligible benefits for our environment.” [Toomey Senate website, accessed 1 Nov 2016] Katie McGinty, former Pennsylvania Secretary of Environmental Protection (D): “Climate change presents a serious global threat to our health, economic well-being and national security. In the Senate, I will lead the way to a healthier and safer environment by working to pass commonsense climate protections with investments in energy efficiency and clean energy.” [McGinty campaign website, accessed 1 Nov 2016] Impacts of climate change: “[Utah] has warmed about 2 degrees F in the last century. Throughout the western United States, heatwaves are becoming more common, and snow is melting earlier in spring. In the coming decades, the changing climate is likely to decrease the flow of water in Utah’s rivers, increase the frequency and intensity of wildfires, and decrease the productivity of ranches and farms.” [EPA, August 2016] Percentage of residents who are climate deniers: 48 percent Impacts of climate change: “High nighttime temperatures are increasingly common and have widespread impacts on humans, recreation and energy demand. In winter months, warmer nighttime temperatures threaten snow and ice cover for winter recreation. In summer months, this causes increased demand for cooling. An increase in high-energy electric (lighting) storms is projected to continue particularly threatening infrastructure and transportation systems.” [Vermont Climate Assessment, 2014] Percentage of residents who are climate deniers: 38 percent Sue Minter, former Vermont Secretary of Transportation (D): “I’m opposed to a carbon tax. But I am very concerned about climate change. And I think it is clear that change is not just real — it is here; it is having an enormous effect on all of us … I have plans to address climate change, focusing on our clean, green energy future here. Looking at collaborating with other northeastern states like we’ve done before to reduce carbon emissions.” [WPTZ debate via Media Matters, 25 Oct 2016] Lt. Gov. Phil Scott: “I would veto [a carbon tax] if it hit my desk. I believe that this would just ratchet up the cost of living across Vermont. I don’t think that we can afford it. I’m not looking to do anything that would raise the cost of living on already-struggling Vermonters.” [WPTZ debate via Media Matters, 25 Oct 2016] Former baseball player Bill Lee (Liberty Union Party): Um, well, just watch this video: Impacts of climate change: “The combination of land subsidence, sea-level rise, flat and low tidewater topography and intensive coastal real estate and infrastructure development puts southeastern Virginia, namely the Virginia Beach/Norfolk/Hampton Roads region, at extreme risk from storm surges … Climate change will make the situation much worse.” [Demos, 19 Apr 2012] Percentage of residents who are climate deniers: 43 percent Impacts of climate change: “During the next century, average annual precipitation and the frequency of heavy downpours are likely to keep rising. Average precipitation is likely to increase during winter and spring but not change significantly during summer and fall. Rising temperatures will melt snow earlier in spring and increase evaporation, and thereby dry the soil during summer and fall. As a result, changing the climate is likely to intensify flooding during winter and spring, and droughts during summer and fall.” [EPA, August 2016] Percentage of residents who are climate deniers: 49 percent Jim Justice, billionaire coal baron (D): “Until we have really accurate data to prove [that humans contribute to climate change] I don’t think we need to blow our legs off on a concept. I welcome the scientific approach to it and the knowledge. I would not sit here and say, ‘absolutely now, there’s no such thing’ or I would no way on Earth say there is such a thing. I believe there’s an awful lot of scientist that say, ‘no, no, no, this is just smoke and mirrors.’ I welcome the discussion, but I don’t know, I just don’t know.” [The Register-Herald, 27 Apr 2016] State Senate President Bill Cole, (R): “West Virginia must continue to lead the fight for our energy industry against an Obama administration that’s dead set on destroying the development of fossil fuels. The rich history of our state has always been tied to its abundance of natural resources. Those whose motives are highly questionable — will say that the days of coal, oil and gas are over and that we need to move on to solar, wind and other alternative sources of power … Bill Cole supports Donald Trump for President because he will allow our miners to go back to work, let us harness our natural gas, and free us of the impossible roadblock to growth that is the EPA.” [Cole campaign website, accessed 3 Nov 2016] Impacts of climate change: “In Washington and Oregon, more than 140,000 acres of coastal lands lie within 3.3 feet in elevation of high tide. As sea levels continue to rise, these areas will be inundated more frequently … Ocean acidification threatens culturally and commercially significant marine species directly affected by changes in ocean chemistry (such as oysters) and those affected by changes in the marine food web (such as Pacific salmon) … Warmer water in regional estuaries (such as Puget Sound) may contribute to a higher incidence of harmful blooms of algae linked to paralytic shellfish poisoning.” [National Climate Assessment, 2014] Percentage of residents who are climate deniers: 40 percent Carbon Tax (I-732): Washington voters will decide whether to adopt a carbon tax to reduce greenhouse gas emissions. Revenue from the tax would be offset through a sales tax reduction, as well as through tax rebates and credits to individuals and businesses. A number of environmentalists support I-732, but other environmentalists oppose it; they argue that it won’t do enough to support clean energy, that it will disproportionately hurt low-income residents, and that communities of color didn’t have enough input in developing the proposal. Impacts of climate change: “Research suggests that warming temperatures in spring and fall would help boost agricultural production by extending the growing season across the state. However, increased warming during the summer months could reduce yields of crops such as corn and soybeans, with studies suggesting that every 2 degrees F of warming could decrease corn yields by 13 percent and soybean yields by 16 percent.” [Wisconsin Initiative on Climate Change Impacts, 2011] Percentage of residents who are climate deniers: 43 percent Sen. Ron Johnson (R): “I’ve never denied climate change. It’s always changed, always will. I would ask the questioner: What would happen if we had no sun? It would be a cold, hard rock orbiting in space. So obviously the sun has the primary effect on weather and climate on planet Earth. So I’m just not a climate change alarmist … The jury’s out [on man-made climate change] … I’m a skeptic.” [Milwaukee Journal Sentinel interview, 21 Oct 2016] Former Sen. Russ Feingold (D): “This is enormously threatening to the future of our country and our planet. Anyone who talks about children, grandchildren, great grandchildren has to take this seriously. The climate is obviously changing dramatically.” [WUWM Milwaukee Public Radio, 2 Nov 2016]
News Article | February 14, 2017
This story was originally published by High Country News and is reproduced here as part of the Climate Desk collaboration. The smokestacks of the Navajo Generating Station rise 775 feet from the sere landscape of the Navajo Nation in northern Arizona, just three miles away from the serpentine, stagnant blue wound in sandstone known as Lake Powell. Red rock cliffs and the dark and heavy hump of Navajo Mountain loom in the background. Since construction began in 1969, the coal plant and its associated mine on Black Mesa have provided millions of dollars to the Navajo and Hopi tribes and hundreds of jobs to local communities, as well as electricity to keep the lights on and air conditioners humming in the metastasizing cities of Phoenix, Tucson, Las Vegas, and Los Angeles. Yet, they’ve also stood as symbols of the exploitation of Native Americans, of the destruction of the land, and of the sullying of the air, all to provide cheap power to the Southwest. But coal power is no longer the best energy bargain. And on Monday, the plant’s four private utility owners, led by the Salt River Project, voted to shut down the plant at the end of 2019, some 25 years ahead of schedule. When the giant turbines come to a halt and the towers topple in the coming years, the plant will become a new symbol, this one of a transforming energy economy and an evolving electrical grid that is slowly rendering these soot-stained, mechanical megaliths obsolete. Here’s what you need to know about the plant, the mine, and the coming closure: In addition to these jobs, both mine and plant have contractors for various purposes and each of the power plant’s three units requires a major overhaul every three years, which temporarily employs an additional 400 or more people. These are highly coveted jobs on the Navajo Nation, which deals with high unemployment and chronic poverty. Both the Hopi and Navajo tribes got the short end of the stick — a royalty rate of just 3.3 percent — when Peabody Coal first got the leases to mine Black Mesa in the 1960s. The attorney representing the Hopi tribe, John Boyden, was actually on Peabody’s payroll at the time, and managed to get a sham tribal government to sign over mining rights against the objections of traditional Hopis, as chronicled by writer and law professor Charles Wilkinson. The mines — Black Mesa and Kayenta — forced families to relocate, destroyed grazing land, dried up springs, and wrecked ancestral Hopi shrines and other sites. The tribes fought back and eventually negotiated better terms. Both tribes now rely heavily on royalty and lease payments from the mine and the power plant, even as tribal members fight against the polluting and water-gulping ways of plant and mine. Prior to Monday’s announcement, the plant’s owners and the Navajo Nation were refashioning the lease, which runs out in 2019, to make it more favorable for the tribe. Peabody also hoped to expand the mine. Both the Kayenta Mine and the Navajo Generating Station use large amounts of water. The Bureau of Reclamation owns a large share of the plant, and uses most of its electricity to run the pumps for the Central Arizona Project, which delivers Colorado River water to Arizona cities. Salt River Project officials have been very clear on this point. They note that it’s now cheaper for them to buy power for their 1 million customers from other sources than it is to generate power at Navajo, thanks mostly to low natural gas prices. A November 2016 study by the National Renewable Energy Laboratory found that the Central Arizona Project pays about 15 percent more for electricity from the power plant — of which it is part owner — than it would if it bought power wholesale from the Mead trading hub located near Las Vegas. None of this will change even if President Donald Trump rolls back the Clean Power Plan or other regulations put in place by the Obama administration. In fact, if a drill-heavy energy policy is put into place, it will increase natural gas supplies, thus increasing the spread between natural gas and coal. Having said that, California’s move away from coal power lowers the value of the plant’s power, and the requirement that the plant install nitrous oxide-reducing equipment increases costs — so environmental protections do play a role, albeit a smaller one than economics. Although it’s happening slowly, the electrical landscape is evolving. The days of vertically integrated utilities that own huge, centralized power stations and their own balkanized grids are giving way to a new era in which utilities purchase power generated by smaller plants that are connected to larger, regional grids. California’s independent grid operator has already joined up with NV Energy, PacifiCorp, and other Western utilities to form an energy imbalance market, which allows the utilities to share generators — be they wind, solar, natural gas, or coal — to “balance” their grids in real time, rather than having to rely only on their own generators. These utilities are hoping to expand this market and then take it to the next level of a regional, integrated grid in coming years. The closure of Navajo Generating Station adds new urgency to this effort. The decision to close the plant came as a surprise. Until several weeks ago, the plant’s owners were negotiating a new lease with the Navajo Nation and considering shutting one of three units and replacing it with other energy sources. Meanwhile, the mine was looking to expand. Outright closure this soon was not on anyone’s radar, so there is no firm transition plan in place. The Bureau of Reclamation and Peabody are looking for ways to keep the plant running beyond 2019, but they’d have to do it without the other owners and against economic headwinds. When the Mohave Generating Station and the Black Mesa Mine closed in 2005, environmentalists and tribes pushed the California Public Utilities Commission to create a revolving “just transition” fund with money earned from the sale of sulfur dioxide credits from the shuttered plant. The fund, the value of which dwindled as sulfur credit prices fell, is supposed to help develop renewable energy on the reservations. There are little or no such credits available for Navajo Generating Station, however, so that approach won’t work here. The owners of the plant could work with the tribes to replace some of the lost electricity generation by building new solar, wind, or other plants on the reservations, where there is ample potential for renewable energy development. Two major transmission systems are associated with the plant, and could be taken over by the tribes to move solar or wind power to the south and west. The water rights could be turned over to the tribes, for use in agriculture or other purposes.
News Article | March 2, 2017
EDMONTON, ALBERTA--(Marketwired - March 2, 2017) - EPCOR Utilities Inc. (EPCOR) today filed its annual and fourth quarter results for 2016. "2016 was a defining year for EPCOR with consolidated net income at the highest in a decade reaching $309 million. This, in part, reflected a gain on the sale of EPCOR's remaining ownership interest in Capital Power Corporation," said Stuart Lee, EPCOR President & CEO. "As well, EPCOR entered Texas with its investment in the 130 Pipeline, a water supply pipeline, near Austin and is set to re-enter the Ontario market with the pending acquisition of the assets of Natural Resource Gas Limited utility in southwestern Ontario. EPCOR also reached substantial completion of the City of Regina's upgraded wastewater treatment plant - on time and on budget. EPCOR will operate and finance the new infrastructure under a 30-year contract with the City." Backed by a strong and sustainable long-term growth outlook, EPCOR increased its annual dividend to its Shareholder, the City of Edmonton, by $5 million to $146 million commencing in 2017. "In addition to a strong growth outlook and excellent financial results, EPCOR recorded its best safety performance and highest employee engagement scores in company history. These results were among the most gratifying of the year," said Mr. Lee. Highlights of EPCOR's financial performance are as follows: Management's discussion and analysis (MD&A) of the annual and fourth quarter results are shown below. The MD&A and the audited annual consolidated financial statements are available on EPCOR's website (www.epcor.com) and SEDAR (www.sedar.com). EPCOR's wholly owned subsidiaries build, own and operate electrical transmission and distribution networks, water and wastewater treatment facilities and infrastructure in Canada and the United States. The Company's subsidiaries also provide electricity, natural gas and water products and services to residential and commercial customers. EPCOR, headquartered in Edmonton, is an Alberta Top 70 employer. EPCOR's website address is www.epcor.com. This management's discussion and analysis (MD&A), dated March 2, 2017, should be read in conjunction with the audited consolidated financial statements of EPCOR Utilities Inc. for the years ended December 31, 2016 and 2015, including related party transactions (note 27) and financial instruments (note 28), and the cautionary statement regarding forward-looking information at the end of this MD&A. In this MD&A, any reference to "the Company", "EPCOR", "it", "its", "we", "our" or "us", except where otherwise noted or the context otherwise indicates, means EPCOR Utilities Inc., together with its subsidiaries. In this MD&A, Capital Power refers to Capital Power Corporation and its directly and indirectly owned subsidiaries including Capital Power L.P., except where otherwise noted or the context otherwise indicates. Financial information in this MD&A is based on the audited consolidated financial statements, which were prepared in accordance with International Financial Reporting Standards (IFRS), and is presented in Canadian dollars unless otherwise specified. In accordance with its terms of reference, the Audit Committee of the Company's Board of Directors reviews the contents of the MD&A and recommends its approval by the Board of Directors. This MD&A was approved and authorized for issue by the Board of Directors on March 2, 2017. EPCOR is wholly owned by The City of Edmonton (the City). EPCOR, through wholly owned subsidiaries, builds, owns and operates electrical transmission and distribution networks and provides Regulated Rate Option (RRO) and default supply electricity related services. EPCOR sells electricity and natural gas to Alberta residential consumers under contracts through its Encor brand. In addition, EPCOR builds, owns and operates water and wastewater treatment facilities and infrastructure in Canada and the Southwestern United States (U.S.). The water business includes design, build, finance, operating and maintenance services for municipal and industrial customers in Western Canada. Net income was $88 million and $309 million for the three and twelve months ended December 31, 2016, respectively, compared with net income of $65 million and $260 million, for the comparative periods in 2015, respectively. The increase of $23 million in the quarter is primarily due to the recognition of the fair value gain resulting from the sale of Capital Power shares (also referred to as the "available-for-sale investment in Capital Power") and greater favorable fair value adjustments related to financial electricity purchase contracts and interest rate swaps, partially offset by lower income from core operations, as described below. The increase of $49 million for the twelve months ended December 31, 2016 was primarily due to the recognition of the fair value gain resulting from the sale of Capital Power shares, greater favorable fair value adjustments related to financial electricity purchase contracts and higher income form core operations as described below. Net income from core operations was $51 million and $255 million for the three and twelve months ended December 31, 2016, respectively, compared with $74 million and $251 million for the comparative periods in 2015, respectively. The decrease of $23 million in the quarter is primarily due to lower transmission customer rates, lower billing charge rates, higher depreciation, and lower income related to industrial services contracts, partially offset by higher approved distribution and water customer rates. The increase of $4 million for the twelve months ended December 31, 2016 was primarily due to higher approved distribution, transmission and water customer rates, gains on sale of surplus land, and water customer growth, partially offset by higher depreciation, lower billing charge rates and lower water volumes in Canada due to higher precipitation. EPCOR's vision is to be a premier essential services utility company in North America, trusted by our customers and valued by our shareholder. To achieve this vision, EPCOR must excel at its utility operations and be successful in its pursuit of new business growth opportunities. EPCOR's electricity strategy includes maintaining and developing new distribution and transmission infrastructure in its franchise service area as well as the development and / or acquisition of new rate-regulated or contracted assets and operations outside of its service area. EPCOR's water strategy includes maintaining and developing new water and wastewater infrastructure within its municipal franchise service areas and the development and / or acquisition of new rate-regulated or contracted assets and operations outside of its service areas. This includes design, build, finance and operate services for municipal water and wastewater treatment infrastructure and the provision of water and wastewater treatment services and potable and process water for industrial customers. We believe the long-term outlook for the North American electricity and water and wastewater treatment businesses remains strong. The demand for electricity and water and wastewater infrastructure in North America is expected to increase due to population growth, aging infrastructure, water scarcity and increased consumer expectations for reliable power, safe, high quality water and environmentally responsible wastewater treatment. Over the next five years we plan to invest in electricity and water and wastewater treatment assets where appropriate returns are expected, operational excellence can be delivered and the environmental impact is acceptable. We will seek growth opportunities within our existing utility footprint, in addition to the new geographies in which we have made recent acquisitions. This includes exploring opportunities in natural gas distribution through acquisitions and greenfield development. EPCOR also intends to invest in the area of renewable energy generation, including solar and bio gas facilities to enhance our environmental performance. Maintaining our investment grade credit rating to ensure access to capital through existing and new credit facilities and public or private debt financing offerings remains a priority. We recognize that we are not immune to recessionary trends and will remain vigilant to maintain a prudent balance of rate-regulated and contracted operations within our financial capacity. Operational and financial performance is measured through financial and non-financial measures that are approved by the Board of Directors. The measures fall under four broad categories composed of: health, safety and environment; people; growth (financial); and operational excellence, and are applied across the Company. There are specific measures established for each business unit and the corporate shared service group in alignment with the Company's strategy. For example, under the health, safety and environment category, safety performance is based on total recordable injury frequency. Business unit measures under the operational excellence category are focused on customer related measures relevant to the particular business unit, such as customer satisfaction survey results and service reliability. Recordable injury frequency rates for EPCOR overall were better (lower) in 2016 as compared to 2015. We remain committed to building a culture that supports a workplace free of occupational injury and illness with minimized harm to the environment. Segment performance measures are discussed under Segment Results of this MD&A. The Company sold 5,901,850 and 9,141,636 common shares of Capital Power, respectively, for net proceeds of $135 million and $204 million for the three and twelve months ended December 31, 2016, respectively. As a result of the sale of Capital Power shares, for the three months and twelve months ended December 31, 2016, the Company reclassified fair value gains of $30 million and $42 million, respectively, from other comprehensive income to net income. These sales were consistent with the Company's intention to sell the shares over time as market conditions permit. At December 31, 2016, the Company owned 249,364 common shares of Capital Power which were subsequently sold for net proceeds of $6 million in January 2017. Acquisition of the Assets of Blue Water Project 130 L.P. and Cross County Water Supply Corporation On August 19, 2016, the Company completed the acquisition of the assets of Blue Water Project 130 L.P. (Blue Water) and Cross County Water Supply Corporation (CCWSC) through EPCOR 130 Project Inc., a wholly owned U.S. subsidiary, and 130 Regional Water Supply Corporation, a Texas Water Supply Corporation of which EPCOR 130 Project Inc. is the sole member. The total consideration was $82 million (US$64 million). The Blue Water and CCWSC assets include an 85 kilometer water supply pipeline, near Austin, Texas, U.S., with designed capacity of nearly 68 million liters per day, along with groundwater well production systems and long term wholesale water supply agreements (collectively the EPCOR 130 Pipeline). $48 million (US$37 million) of the total consideration was paid at closing with the balance to be paid in the future, the majority of which is contingent on securing new long term contracts for the supply of water. The Company has recorded the full amount of this contingent consideration at fair value based on expected growth in the region. The Company funded the closing payment by issuing US$40 million of private debt notes with a 25-year term. The allocation of the purchase price was determined based on the relative fair values of the acquired assets and liabilities. For further information on the fair value estimates, refer to the audited consolidated financial statements of EPCOR Utilities Inc. for the years ended December 31, 2016 and 2015. During 2016, Water Services reached substantial completion of the wastewater treatment facility for the City of Regina under a public-private partnership. The construction was completed on time and on budget and the Company continued to operate the existing wastewater treatment facility during the construction period. The upgraded facility meets higher effluent standards as established by the Saskatchewan Water Security Agency, in response to the Federal Wastewater Systems Effluent Regulations, in addition to meeting the needs of a growing population. Water Services will continue to operate the wastewater treatment facility for the City of Regina for a total term of 30 years. In February 2015, Suncor gave the Company notice that it would exercise its contractual rights to buy back the leased assets and terminate the related financing and operating agreements including the transfer of assets and operations back to Suncor over an 18-month period. The transfer of assets and operations back to Suncor was completed in August 2016 in accordance with the terms of the notice. This event did not have a material impact on the Company or its operations. Consolidated revenues were lower by $49 million and $64 million for the three and twelve months ended December 31, 2016, respectively, compared with the corresponding periods in 2015 primarily due to the net impact of the following: We use income from core operations to distinguish operating results from the Company's water and electricity businesses from results with respect to its investment in Capital Power and changes in the fair value of financial instruments. In the first quarter of 2016, the definition of income from core operations was revised to exclude changes in the fair value of financial instruments. The change in the fair value of financial instruments is the difference between the opening fair value of the derivative instruments for the period and the closing fair value of the derivative instrument. Income from core operations is a non-IFRS financial measure which does not have any standardized meaning prescribed by IFRS and is unlikely to be comparable to similar measures published by other entities. However, it is presented below as it provides a useful income performance measure of the Company's core operations and may be referred to by debt holders and other interested parties in evaluating the Company's financial performance and in assessing its creditworthiness. Changes in each business segment's operating results compared with the corresponding periods in 2015 are described in Segment Results below. Explanations of the remaining variances in net income for the three and twelve months ended December 31, 2016 are as follows: EPCOR's Water business segment's primary objective is to provide safe and reliable water and wastewater services while meeting or exceeding all environmental requirements and delivering value to customers and the shareholder. Water Services operates in Canada and the U.S. The majority of Water Services' income in Canada is earned through a performance based rate tariff charged to its Edmonton customers. The performance based rate (PBR) tariff is intended to allow Water Services the opportunity to recover its costs and earn a fair rate of return while providing an incentive to manage costs below inflation and other prescribed adjustments built into the tariff. In October 2016, EPCOR's Water Services segment received the decision related to its 2017 - 2021 Edmonton water and wastewater PBR application. The decision reduced the return on equity (ROE) from 10.875% to 10.175%. The decision is not expected to have a material impact on the Company's results. Water Services also operates in the U.S. states of Arizona, New Mexico and Texas. Customer rates in Arizona and New Mexico are subject to approval by the Arizona Corporation Commission and the New Mexico Public Regulation Commission respectively. Customer rates are intended to allow EPCOR the opportunity to recover costs and earn a reasonable rate of return under a historical cost-of-service framework. At December 31, 2016, Water Services owned three and operated 14 other water treatment and / or distribution facilities in Alberta and British Columbia. Additionally, Water Services owned one wastewater treatment facility and operated 18 other wastewater treatment and / or collection facilities in Alberta, British Columbia and Saskatchewan. In Arizona and New Mexico, EPCOR owned operations in 14 water utility districts, each containing one or more water treatment and / or distribution facilities, and six wastewater utility districts, each containing one or more wastewater treatment and / or collection facilities. The EPCOR 130 Pipeline delivers water through a 30 inch pipeline to four municipal customers near Austin, Texas under long-term contracts. While these wholesale water contracts are technically subject to Texas Public Utilities Commission appellate review, they are considered to be effectively unregulated. Water Services' core market is stable as Water Services is the supplier of water and provider of wastewater services within its various operating districts. Operationally, the facilities owned or managed by Water Services generally performed according to plan in 2016. In the third quarter of 2016, persistent rainfall throughout the North Saskatchewan River watershed significantly impacted the river's water quality. Edmonton and region residents were asked to reduce water consumption for a short period of time. EPCOR was able to maintain the required quality of Edmonton's drinking water throughout the period. In addition, Water Services provides competitive contract-based water and wastewater services, including financing, in certain arrangements, to municipal and industrial customers. In August 2016, several agreements with Suncor were terminated and all financing arrangements and leases were settled and repaid to the Company. Work on several significant projects within Edmonton progressed in 2016. These projects include the annual water main renewal program to improve Edmonton's water distribution system, water distribution line relocation as a result of the City's light rail transit expansion, construction of a hydrovac sanitary grit treatment facility at Gold Bar and upgrades to pre-treatment and other infrastructure at the Gold Bar wastewater treatment facility. Water Services' operating income decreased by $4 million for the three months ended December 31, 2016, compared with the corresponding period in 2015 primarily due to lower income related to industrial services contracts, higher chemical and power costs, and higher depreciation, partially offset by higher approved customer rates and growth. Water Services' operating income increased by $13 million for the twelve months ended December 31, 2016, compared with the corresponding period in 2015 primarily due to higher approved customer rates and growth, gains on sale of surplus land, higher income related to industrial services contracts and foreign exchange translation gains, partially offset by higher chemical and power costs, lower municipal service margin, lower water volumes in Canada due to higher precipitation and higher depreciation. Edmonton water sales decreased in 2016 compared with 2015 mainly due to higher precipitation, partially offset by customer growth. Arizona and New Mexico water sales increased in 2016 compared with 2015 primarily due to higher average temperatures and lower precipitation during the summer months. In addition, water sales were higher due to the acquisition of the EPCOR 130 Pipeline which delivers wholesale water to customers in Texas. Distribution and Transmission's priority is to be a trusted provider of safe and reliable electricity, known for operational excellence through innovative and practical solutions. Distribution and Transmission earns income principally by transmitting high-voltage electricity through its facilities that form part of the Alberta Interconnected Electrical System to points of distribution, and from there, distributing lower voltage electricity to end-use customers. The transmission services are provided to the Alberta Electric System Operator (AESO). The distribution services are provided to electricity retailers such as Energy Services and other competitive retailers. Distribution and Transmission's assets are located in and around Edmonton and are rate-regulated by the Alberta Utilities Commission (AUC). Transmission charges a rate-regulated tariff intended to allow recovery of prudent costs and earn a fair rate of return on invested capital. Distribution earns income through a performance based rate tariff charged to its customers. The PBR tariff is intended to allow Distribution the opportunity to recover its costs and earn a fair return on capital while providing an incentive to manage costs below inflation and other prescribed adjustments built into the tariff. This segment also provides competitive contract-based commercial services related to installation, maintenance and repair of street lighting, traffic signals and light rail transit, primarily to the City. The AUC issued its 2016 Generic Cost of Capital decision in October 2016. The AUC directed that the ROE for 2016 remain at 8.3% and increase to 8.5% in 2017 for all Alberta natural gas and electricity distribution and transmission utilities. The AUC also set a deemed equity ratio of 37% for both distribution and transmission utilities targeting the utilities' maintenance of a credit rating in the A category. This decision results in a 3% decrease and a 1% increase in the deemed equity ratios for the EPCOR distribution and transmission utilities, respectively. The various true-ups related to the decision will occur over the next several years. The decision will not have a material impact on the financial results of the Company. Distribution and Transmission's operating income decreased by $13 million for the three months ended December 31, 2016, compared with the corresponding period in 2015 primarily due to lower transmission customer rates resulting from an interim to final rate true-up in 2015 and higher depreciation in 2016. This was partially offset by higher distribution approved customer rates and higher net system access collections. Distribution and Transmission's operating income increased by $11 million for the twelve months ended December 31, 2016, compared with the corresponding period in 2015, primarily due to higher distribution approved customer rates, higher net system access collections and higher transmission customer rates. This was partially offset by higher depreciation. Distribution and Transmission's primary measure of distribution system reliability is the System Average Interruption Duration Index (SAIDI), which it focuses on minimizing. This measure captures the annual average number of hours of interruption experienced by Distribution and Transmission's customers, including scheduled and unscheduled interruptions to its primary distribution circuits. In 2016, the SAIDI was 0.92 hours which is comparable to 0.91 in 2015. Distribution and Transmission will continue with its reliability improvement programs to further address controllable factors and help maintain and improve overall system reliability. Electricity distribution volumes in 2016 were relatively flat year over year. The Energy Services' business focuses on providing cost effective retail electricity service and efficient customer care through a highly skilled, knowledgeable, caring and engaged customer service team. Energy Services earns income from selling electricity to customers under a regulated rate tariff (RRT) and default rate (customers with higher electricity volumes that are not under a competitive contract) in the EPCOR Distribution and Transmission Inc. and FortisAlberta Inc. service areas and several Rural Electrification Association service territories. The RRT is intended to allow Energy Services to recover its prudent costs and earn a return margin. Customers under the RRT are residential, farm and small commercial customers who are not under a competitive contract and receive their electricity under the RRO. Energy Services also provides billing, collection, and contact center services to other EPCOR operations and the City Waste and Drainage Services departments. Energy Services focuses on providing excellent service experiences for its customers and measures call answer performance, billing performance, and customer satisfaction. These results are reported to the AUC on a quarterly basis. Energy Services' allowed electricity revenue is determined in accordance with an energy price setting plan (EPSP) approved by the AUC. Under the EPSP, Energy Services manages its exposure to customer load and fluctuating wholesale electricity spot prices by entering into financial electricity purchase contracts up to 120 days in advance of the month of consumption under a well-defined risk management process. Energy Services received approval of their 2016 - 2018 EPSP in the first quarter of 2016 and the Company implemented the new plan in the third quarter of 2016. The plan will adapt more quickly to changes in wholesale market conditions thereby reducing EPCOR's risk with commensurately lower risk compensation. Energy Services filed the next iteration of the EPSP applicable for 2018 - 2021 in January 2017. In May 2014, Energy Services entered the competitive retail market by offering electricity and natural gas contracts to Alberta consumers under the Encor brand in order to mitigate the impact of RRO customer attrition. The expanded service offering, including green energy options, provides customers wishing to move from the RRO to a competitive contract with an EPCOR offering. Energy Services' operating income, excluding change in the fair value of contracts-for-differences, decreased by $9 million for the three months ended December 31, 2016, compared with the corresponding period in 2015 primarily due to lower billing charge rates and lower EPSP margins. Energy Services' operating income excluding change in the fair value of contracts-for-differences decreased by $8 million for the twelve months ended December 31, 2016, compared with the corresponding period in 2015 primarily due lower billing charge rates, partially offset by higher EPSP margins and growth in competitive business. Energy Services' retail sales volumes were as follows: Energy Services' RRT sales volume decreased in 2016 compared with 2015 primarily due to a decrease in the average consumption per site. The increased default and competitive supply sales volume was primarily due to an increase in the number of competitive supply sites served, partially offset by a decrease in the number of default sites served. In 2016, we continued to invest in our infrastructure assets to improve reliability and meet increasing electricity and treated water and wastewater demands. Total capital spending and investment was higher in 2016 compared with 2015 primarily due to the acquisition of the assets of Blue Water and CCWSC, increased spending in the Distribution and Transmission segment on the installation of advance meter infrastructure for customers in Edmonton and renovations to its major work centre, and increased spending in the Water Services segment on lifecycle projects. This was partially offset by decreased spending in the Distribution and Transmission segment on growth projects and decreased spending in the Water Services segment primarily due to the completion of construction of the new laboratory and office building at the Rossdale location in 2015 as well as decreased spending at Gold Bar and at the Walker and Big Lake booster stations in Edmonton. The Company maintains its financial position through rate-regulated utility and contracted operations which generate stable cash flows. The Company expects to have sufficient liquidity to finance its plans and fund its obligations in 2017 with a combination of cash on hand, cash flow from operating activities, interest and principal payments related to long-term loans receivable from Capital Power, the issuance of commercial paper, public or private debt offerings and draws upon existing credit facilities described below under Financing. Cash flows from operating activities would be impaired by events that cause severe damage to our facilities and would require unplanned cash outlays for system restoration repairs. Under those circumstances, more reliance would be placed on our credit facilities for working capital requirements until a regulatory approved recovery mechanism or insurance proceeds were in place. EPCOR's projected capital requirements for 2017 include $500 million to $650 million for investment in existing businesses and new business development. The following table represents the Company's contractual obligations by year: Under the terms of the lease, the Company's annual lease commitments, net of annual payments to be paid to the Company by Capital Power and another company under the sub-leases receivable are as follows: All of the Company's operating lease obligations for premises, net of subleases receivable, are included in the contractual obligations table above. If Drainage is transferred to EPCOR under the current proposal, as described in more detail in the Outlook section, EPCOR will assume assets and liabilities of approximately $3.3 billion and $0.7 billion, respectively. As well, EPCOR has proposed an increase in the dividend of $20 million subject to Board and Shareholder approval. For the first year of operations, capital spending is expected to be approximately $120 million to $200 million. As a result of the acquisition of the Blue Water and CCWSC assets, the Company is committed to pay Blue Water a fee which is contingent on securing new long term contracts for the supply of water. This fee is capped at US$32 million with no time limit for payment of the fee. The Company is reasonably certain that it will be required to settle this commitment by way of cash payment and has accordingly recognized the liability for contingent consideration in the consolidated statement of financial position. During the year, the Company terminated the long term "pay fixed, receive floating" interest rate swap, related to Regina, by settlement of the outstanding liability of $14 million to the counterparty. Subsequent to the year ended December 31, 2016, the remaining short term interest rate swap was also settled. As at March 3, 2016, there were three common shares of the Company outstanding, all of which are owned by the City. In 2016, the annual dividend was set at $141 million (2015 - $141 million). As a result of EPCOR's consistent and sustainable performance, EPCOR's Board of Directors proposed to EPCOR's shareholder that the EPCOR annual dividend paid to the City be increased by $5 million to $146 million commencing in 2017. EPCOR's Shareholder approved this recommendation, and in accordance with the EPCOR Dividend Policy, this amount will remain in effect until such time as the EPCOR Board recommends that it be changed. In the normal course of business, EPCOR provides financial support and performance assurances, including guarantees, letters of credit and surety bonds, to third parties in respect of its subsidiaries. Generally, our external capital is raised at the corporate level and invested in the operating business units. Our external financing has consisted of commercial paper issuance, borrowings under committed syndicated bank credit facilities, debentures payable to the City, publicly issued medium-term notes, U.S. private debt notes and issuance of preferred shares. In the third quarter of 2016, the Company issued US$40 million private debt notes to fund the acquisition of the Blue Water and CCWSC assets. The U.S. dollar denominated private debt notes were issued with a term-to-maturity of 25 years and three months and an interest rate of 3.63% per annum. The Company has bank credit facilities, which are used principally for the purpose of backing the Company's commercial paper program and providing letters of credit, as outlined below: Letters of credit are issued to meet the credit requirements of energy market participants and conditions of certain service agreements. Letters of credit totaling $73 million (2015 - $48 million) were issued and outstanding at December 31, 2016. The committed syndicated bank credit facilities cannot be withdrawn by the lenders until expiry, provided that the Company operates within the related terms and covenants. The extension feature of EPCOR's committed syndicated bank credit facilities gives the Company the option each year to re-price and extend the terms of the facilities by one or more years subject to agreement with the lending syndicate. The Company regularly monitors market conditions and may elect to enter into negotiations to extend the maturity dates. In November 2016, the $200 million committed syndicated bank credit facility was extended by one year to November 2019. At this time, the covenants attached to both credit facilities were renegotiated. The Company has a Canadian base shelf prospectus under which it may raise up to $1 billion of debt with maturities of not less than one year. At December 31, 2016, the available amount remaining under this base shelf prospectus was $1 billion (December 31, 2015 - $1 billion). The base shelf prospectus expires in December 2017. No commercial paper was issued and outstanding at December 31, 2016 (December 31, 2015 - $98 million). If the economy were to deteriorate in the longer term, particularly in Canada and the U.S., the Company's ability to extend the maturity or revise the terms of bank credit facilities, arrange long-term financing for its capital expenditure programs and acquisitions, or refinance outstanding indebtedness when it matures could be adversely impacted. We believe that these circumstances have a low probability of occurring. We continually monitor our capital programs and operating costs to minimize the risk that the Company becomes short of cash or unable to honor its debt servicing obligations. If required, the Company would look to reduce capital expenditures and operating costs. In August 2016, DBRS confirmed its A (low) / stable senior unsecured debt and R-1 (low) / stable short-term debt ratings for EPCOR and Standard & Poor's Ratings Services confirmed its A- / stable long-term corporate credit and senior unsecured debt ratings for EPCOR. These credit ratings reflect the Company's ability to meet its financial obligations given the stable cash flows generated from the rate-regulated water and electricity businesses. The Company's continued sell-down of its interest in Capital Power in addition to the initial sale of the power generation assets in 2009 served to improve certain creditworthiness measures. The Company will continue to be indirectly exposed to power generation related risks primarily through its remaining long-term loans receivable from Capital Power until they are entirely repaid to EPCOR in 2018. Once the long-term loans receivable are repaid, the Company's creditworthiness is expected to improve even further. Improvement in the Company's creditworthiness may not result in further credit rating upgrades. A credit rating downgrade for EPCOR could result in higher interest costs on new borrowings and reduce the availability of sources and tenor of investment capital. EPCOR is currently in compliance with all of its financial covenants in relation to its syndicated bank credit facilities, Canadian public medium-term notes and U.S. private debt notes. Based on current financial covenant calculations, the Company has sufficient borrowing capacity to fund current and long-term requirements. Although the risk is low, breaching these covenants could potentially result in a revocation of EPCOR's credit facilities causing a significant loss of access to liquidity or result in the Company's publicly issued medium-term notes and private debt notes becoming immediately due and payable causing the Company to find a means of funding which could include the sale of assets. The key financial covenants and their thresholds, as defined in the respective agreements, and EPCOR's actual measures at December 31, 2016 and December 31, 2015 were as follows: In 2017, we will continue to focus on growth in rate-regulated water and electricity infrastructure. We expect this investment to come from new infrastructure to accommodate customer growth and lifecycle replacement of existing infrastructure primarily related to the Edmonton and U.S. based operations. EPCOR intends to expand our water and electricity commercial services activities and to invest in the area of renewable energy generation, including solar and bio gas facilities to enhance our environmental performance. Demand for water is expected to continue to increase and we anticipate escalating requirements for better water management practices including watershed management and conservation. We will pursue expansion of our portfolio of commercial water contracts. In January 2017, Edmonton City Council asked its administration to prepare a Letter of Intent (LOI) for the potential transfer of its Drainage Utility Services (Drainage) to EPCOR. The LOI is intended to outline the terms of a possible transfer, and is to include assurances from EPCOR on matters such as transparency into operations, public consultation, audit rights and the requirement for a public hearing should a divestiture occur in the future. It will be brought back to Council in April 2017 for further consideration. EPCOR currently operates three of the four components of the City's water utility cycle - water treatment, water distribution and wastewater treatment. The City's Drainage department operates the fourth component of the water system, the wastewater and storm water collection system. In November 2016, the Alberta government released several announcements impacting the electricity industry including the details of its Climate Change Plan. Among other things, these announcements included a cap on the RRO, a ban on door-to-door sales, and a shift to a capacity market framework from the existing energy-only market regime. These initiatives may lower the risk of RRO customer attrition in the long term. EPCOR's preliminary view is that these changes will not have a material impact. Energy Services will continue to evaluate these changes and determine any further course of action after consultations with the government and the AUC. Also in November 2016, the Company entered into a definitive asset purchase agreement to acquire substantially all of the assets of Natural Resource Gas Limited (NRGL) for consideration of $21 million, subject to certain adjustments. NRGL is a natural gas distributor in southwestern Ontario near London, providing services to approximately 8,000 residential, commercial and industrial customers in the counties of Elgin, Middlesex, Oxford and Norfolk. The arrangement requires regulatory approval from the Ontario Energy Board, for which an application has been filed. The Company expects to complete the transaction by mid-2017. EPCOR has been awarded franchises by three municipalities in the Southern Bruce region of Ontario near Kincardine to build and operate a natural gas distribution system. In March 2016, EPCOR applied to the Ontario Energy Board (OEB) for the approval of these franchise agreements. In January 2017 the OEB requested indications of interest from any parties interested in servicing these areas. A single company did indicate an interest and the OEB is now developing a process for hearing competing applications. To view an image associated with this release, please visit the following link: http://media3.marketwire.com/docs/1087660_image.jpg Our approach to Enterprise Risk Management (ERM) is to manage the key controllable risks facing the Company and consider appropriate actions to respond to uncontrollable risks. ERM includes the controls and procedures implemented to reduce controllable risks to acceptable levels and the identification of the appropriate management actions in the case of events occurring outside of management's control. Acceptable levels of risk and risk appetite for EPCOR are established by the Board of Directors, representing the shareholder, and are embodied in the decisions and corporate policies associated with risk management. EPCOR's framework for ERM is aligned with the Committee of Sponsoring Organizations 2004 Integrated ERM Framework and the ERM process follows CAN / CSA ISO 31000-10 Risk Management - Principles and Guidelines. EPCOR's ERM program and the risk management framework and process it supports is designed to identify, assess, measure, manage, mitigate and report on EPCOR's significant risks. The goal is to create and sustain business value by helping the Company reach its business objectives and strategies through better management of risk. The program promotes a common framework and language for managing risk across EPCOR. General ERM framework oversight, reviews and recommendations of risk compliance are provided by management and are based upon the objectives, targets and policies approved by the Board of Directors. The Corporate Treasurer is responsible for developing the framework and assessing risk at an enterprise level and in conjunction with the Company's internal audit function, monitoring compliance with risk management policies. The Corporate Treasurer provides the Board of Directors with an enterprise risk assessment quarterly. The business units and shared service units are responsible for carrying out the risk management and mitigation activities associated with the risks in their respective operations. These risk management activities are integral aspects of the business units' and shared service units' operations. EPCOR believes that risk management is a key component of the Company's culture and we have put into place cost-effective risk management practices. At the same time, EPCOR views risk management as an ongoing process and we continually review our risks and look for ways to enhance our risk management processes. Large scale emergencies resulting from various events discussed below may have a significant impact on the Company's ability to provide services that are considered essential services to the public. Maintaining essential services is critical to EPCOR's customers and EPCOR's reputation. The Company manages its ability to continually deliver services with emergency response protocols and business continuity plans which are periodically tested through various exercises and scenarios. These procedures provide assurance that the Company has the coordination, capacity and competence to respond appropriately to emergency situations arising from various forms of risk. The Company's Ethics Policy includes procedures which provide for confidential disclosure of any wrong-doing relating to accounting, reporting and auditing matters. The policy prohibits any retaliation against any person making a complaint. During 2016, no significant substantiated complaints with respect to accounting, financial reporting and auditing matters were received under the Ethics Policy. Our growth strategy is dependent on the development, acquisition and operation of linear infrastructure for municipal, commercial and industrial customers in Canada and the U.S. Opportunities in Canada may be impacted by depressed oil prices and the weak Canadian economy for the foreseeable future. This could slow or delay the Company's growth plans. Such growth is dependent on opportunities in the marketplace which will be impacted by the willingness of parties to sell such assets, political and public sentiment regarding third party ownership and EPCOR's cost competitiveness. These risks could result in delays or curtailment of EPCOR's growth plans. Business development projects, including acquisitions, can take a relatively long period of time to execute, exposing such projects to event and external factor risks that may emerge and thereby alter project economics or completion. For each new business development project, EPCOR seeks to ensure project success by addressing project risks, including events and external factors, as part of its due diligence process and project execution. EPCOR is subject to risks associated with changing political conditions and changes in federal, provincial, state, local or common law, regulations and permitting requirements in Canada and the U.S. It is not always possible to predict changes in laws or regulations that could impact the Company's operations, income tax status or ability to renew permits as required. In December 2016, the Government of Alberta enacted Bill 21: the Modernized Municipal Government Act which could impose restrictions on the ability of a municipally controlled corporation (MCC) to conduct its business. EPCOR, which is a MCC of the City of Edmonton, was previously exempted from the MGA and a similar exemption is not present in the new MGA. EPCOR is working to ensure the previous exemption is re-instated as the related regulations are developed. The risk could materially impact EPCOR's ability to execute on its Long Term Plan. EPCOR is subject to risks associated with the rate regulation of the majority of its operations. Such processes can result in significant lags between the time when customer rates or tariffs are applied for and the time that regulatory decisions are received. Furthermore, the regulator may deny or alter the applied for customer rates or tariffs. EPCOR's water treatment and distribution services to customers within Edmonton are rate regulated by Edmonton City Council pursuant to the 2012 - 2016 PBR Bylaw. In October 2016, EPCOR's Water Services segment received the decision related to its 2017 - 2021 Edmonton water and wastewater performance-based rate application for the five year period commencing April 1, 2017. The renewal also incorporated the costs associated with the provision of wastewater treatment services supplied from the Gold Bar wastewater treatment plant. Our ability to fully recover operating and capital costs and to earn a fair return is dependent upon achieving the performance targets prescribed in the bylaw, maintaining cost increases below inflation, managing operational risks and not exceeding approved capital additions. Rates for water sales to regional water commissions surrounding Edmonton are regulated by the AUC on a complaints-only basis. EPCOR sets the rates it charges to the regional water commissions to recover actual operating and capital costs including a fair rate of return. Water and wastewater services provided by EPCOR's U.S. subsidiaries are subject to state laws and regulation by the state regulatory commissions within Arizona, New Mexico and Texas. Our ability to fully recover operating and capital costs and earn a fair return is dependent upon achieving our capital and operating cost targets built into the rates, and meeting the customer growth and water usage targets built into the rates. Since rates are established on a historical cost basis, any new capital additions for water or wastewater infrastructure must be carefully planned and evaluated before commencement since the addition of such costs to the regulatory rate base for subsequent recovery will only take place after the new infrastructure is built and the regulator approves the rate base additions through the rate application process. The AUC utilizes a PBR structure for electricity and natural gas distribution utilities in Alberta. Under PBR, EPCOR's annual electricity distribution rates are set by a formula that is generally equal to last year's rate plus an inflation factor less a productivity factor plus a provision for additional approved capital additions. Capital projects may be applied for annually in a separate capital application (capital tracker). Our ability to recover the actual costs of providing service and to earn a fair return is dependent upon maintaining cost increases at or below inflation, achieving the productivity factor and not exceeding the approved capital additions, all as defined by the PBR formula or approved in a capital tracker application. The current performance based framework will set rates to December 31, 2017. In December 2016, the AUC issued its 2018-2022 PBR decision (Next Generation PBR) continuing the use of a performance based framework to December 31, 2022. EPCOR's electricity distribution rates for 2018 will be based on approved capital additions to the end of 2017 and actual operating and capital expenditures incurred during the 2013-2017 PBR term. The productivity factor in the Next Generation PBR term will be 0.3%, down from 1.16% currently. In addition, the Next Generation PBR decision also revised the criteria for capital tracker applications which will limit the volume of eligible capital projects. In November 2013, the AUC issued a decision in the Utility Asset Disposition Review proceeding directing that certain gains or losses due to extraordinary retirement of assets be borne by shareholders and not to be reflected in customer rates. In September 2015, the Alberta Court of Appeal (the Court) upheld the AUC's decision. The Company is responsible for ensuring that the potable water it sells to customers is safe to drink. Water Services performs continuous and rigorous quality control testing of water purification consistent with government and industry standards to prevent public health issues due to inadequately treated, stored or distributed drinking water. The ability of the water treatment plants to meet potable water quality standards is dependent on continuous water testing in order that the prescribed requirements under regulation or conventional industry standards are met. Failure to properly maintain fully functioning treatment and measurement systems could result in regulatory fines or the occurrence of public health issues. In Alberta, water quality for EPCOR's operations is regulated under the provincial Environmental Protection and Enhancement Act (EPEA). Regulation under the EPEA takes the form of an "Approval to Operate" which, among other things, specifies the quality of the treated water, the number, frequency and form of water quality testing, as well as mandatory standards for the water treatment process. The drinking water quality requirements in Alberta meet or exceed the National Guidelines for Canadian Drinking Water Quality recommended by Health Canada. Raw water quality is an important factor in the treatment of potable water. In Edmonton, we obtain surface water from the North Saskatchewan River to treat and sell to customers in the greater Edmonton area. The North Saskatchewan Watershed Alliance, among other things, aims to protect and improve North Saskatchewan River water quality by developing and sharing knowledge and facilitating workshops with members and interested parties. Drinking water quality and wastewater standards for EPCOR's U.S. operations are regulated by the U.S. Environmental Protection Agency (U.S. EPA) under the Safe Drinking Water Act and Clean Water Act, respectively. Among other things, the U.S. Environmental Protection Agency sets drinking water standards specifying the treatment, source water protection, operator training and funding for water system improvement and relies on the states and localities to carry out the standards. Oversight of water and wastewater systems is conducted by state and county authorities to the degree that they establish standards at least as stringent as the U.S. EPA. In Arizona, we obtain surface water primarily from the Central Arizona Project canal to treat and sell to customers. The Central Arizona Project conducts water quality testing upstream of the take-off points and has a formal notification process in place to notify our Arizona operations of any water quality issues that may arise. Process and compliance sampling results are stringently analyzed and trended for all groundwater and surface water systems in Arizona and New Mexico to ensure systems continue to meet all regulatory standards. Each system in Arizona and New Mexico has an Emergency Operations Plan which addresses water quality issues and provides further risk mitigation. There are no formal watershed protection groups in the Arizona and New Mexico service areas. The Arizona Department of Environmental Quality and New Mexico Environment Department oversee the water systems in their states, respectively. Water wells in Arizona, New Mexico and Texas are protected from contamination by proper well construction and system operation and management. Our operations have hazardous elements, such as high voltage electricity and hazardous chemicals that could have adverse health and safety consequences to our employees, on-site suppliers and customers. We manage health, safety and environment (HSE) risks through a management system and measure HSE performance against recognized industry and internal performance measures. We conduct external and internal compliance and conformance audits to verify that we meet or exceed all regulatory requirements. We are committed to working with industry partners to share and improve health, safety and environment practices within the industry. In 2016, all of our Edmonton water and wastewater treatment facilities, and electricity distribution and transmission operations remain OHSAS 18001 registered. We use several key information technology systems to support our core operations such as electricity and water distribution network control systems, electricity and water plant control systems and electricity settlement and utility billing systems. These systems and the associated hardware are vulnerable to malfunction and unauthorized access including cyber-attacks, which could lead to loss or unauthorized disclosure of sensitive customer or EPCOR information or extortion or otherwise disrupt operations. We take measures to reduce the risk of malicious corruption or failure of these systems, data and the hardware and network infrastructure on which they operate. EPCOR's security program is based on the ISO 27002 control framework. In applying this framework, EPCOR has implemented a series of complementary defense mechanisms, starting from the external IT perimeter down to the end user. Each layer is designed to prevent, detect and report on malicious activity. We regularly monitor our information technology protection systems and periodically employ third-party security providers to test the effectiveness and to strengthen the system as new cyber threats arise. Financial exposures associated with cyber-attacks are partly mitigated through our insurance programs. EPCOR has controls and strategies in place to mitigate the exposure to the various risks that could result in damage to EPCOR's reputation should an event occur. The company proactively maintains positive and transparent interactions with stakeholders. In addition, EPCOR communicates with stakeholders and the media when issues first arise and actively monitors social media in order to address reputational matters before they escalate. There are a variety of environmental risks associated with EPCOR's water and wastewater operations and its electricity distribution and transmission businesses. EPCOR's power and water operations are subject to laws, regulations, and operating approvals which are designed to reduce the impacts on the environment. An environmental event could materially and adversely impact EPCOR's business, prospects, reputation, financial condition, operations or cash flow. Furthermore, such incidents could result in spills or emissions in excess of those permitted by law, regulations or operating approvals. Environmental risks associated with water and wastewater operations include wastewater discharge, biogas release, and residuals management. EPCOR's wastewater operations are regulated with stringent wastewater treatment standards and controls covering quality of treated wastewater effluent as well as mandatory improvements to the wastewater treatment processes. Water and wastewater technologies and supporting processes are continuing to evolve and are influenced by more stringent regulation and environmental challenges. Failure to identify and deploy viable new technologies to meet these regulations and challenges could undermine the competitiveness of EPCOR's market position and exclude it from some market opportunities. Risks associated with electricity distribution and transmission operations include the unintended environmental release of substances such as oil from its oil-filled pipe-type cable, hydraulic oil and polychlorinated biphenyl transformer fluid. To the best of our knowledge we comply, in all material respects, with the laws, regulations and operating approvals affecting our facilities, and minimize the potential for incidents by incorporating environmental management practices in our strategy, policies, processes and procedures. To achieve this, we require each facility to have an environmental management system (EMS) which is based on the ISO 14001 standard. These systems encompass the identification of the scope, objectives, training and stewardship of our environmental responsibility. Each plant and facility is also subject to third party environmental audits to help ensure conformance with the EMS and compliance with all regulations. The Edmonton waterworks system (including the Rossdale and E.L. Smith water treatment plants) achieved EnviroVista Champion status as of June 2011. In 2016, all of our Edmonton water treatment facilities and reservoirs, the Gold Bar wastewater treatment plan, the Evan-Thomas water and wastewater treatment facility in Kananaskis, Alberta, our electricity distribution and transmission operations and our street lighting, traffic signal, light rail transit, hydrovac and cathodic protection operations remain ISO 14001 registered. The Company is also in the process of obtaining ISO 14001 registration for its Canadian water distribution and transmission operations. Compliance with future environmental legislation may require material capital and operating expenditures. Failure to comply could result in fines and penalties or the regulator could force the curtailment of operations. There can be no assurances that compliance with or changes to environmental legislation will not materially and adversely impact EPCOR's business, prospects, financial conditions, operations or cash flow. A variety of intentional, accidental or natural occurrences could cause interruption of EPCOR's operations and result in lost revenues or additional costs to resume operations including repair costs. Business interruption due to operational failure in Water Services and Distribution and Transmission is managed through inherent redundancy and sound maintenance practices. The quality of raw source water can be affected by such things as hydrocarbons and other inorganic or organic contaminants entering water ways and aquifers. Depending on the type and concentration of the contaminant, their removal may be beyond the capabilities of water treatment plant processes. This could result in the water treatment plants being shut down until the contaminants become diluted to the point where they can be treated within the water treatment plant capabilities. The ability of the water treatment plants to meet potable water quality standards is dependent on continuous water testing in order that the prescribed requirements under regulation or conventional industry standards are met. Failure to properly maintain fully functioning treatment and measurement systems could result in regulatory fines, lost revenue or the occurrence of public health issues. Our maintenance practices are augmented by an inventory of strategic spare parts, which can reduce down-time considerably in the event of power or water system interruptions. Maintenance and capital plans are determined annually based on rigorous assessment of its equipment and by continually monitoring the condition of assets. Although water and power facilities have operated in accordance with expectations, there can be no assurance that they will continue to do so. To the extent we experience insufficient raw water supply or extreme raw water conditions, delivery of water and associated revenues may be negatively affected. To the extent our electricity facilities experience outages due to equipment failure, blackouts or constraints on the transmission system, delivery of power and associated revenues may be negatively affected. The Company's business continuity plans aim to enable EPCOR to continue providing critical services to customers in the event a crisis. The Company's emergency response protocols are designed to ensure EPCOR can expeditiously resume operations following a business interruption. Financial exposures associated with business interruption are partly mitigated through our insurance programs. Our ability to continuously operate and grow the business is dependent upon attracting, retaining and developing sufficient labor and management resources. As with most organizations, the Company is facing the demographic shift where a large number of employees are expected to retire over the next few years. Failure to secure sufficient qualified technical and leadership talent may impact EPCOR's operations or increase expenses. We believe that we employ good human resource practices and in 2016, we were named a top 70 employer in Alberta, by Mediacorp Canada Inc. We continue to monitor developments and review our human resource strategies so that we have an adequate supply of labor and management. EPCOR plans to diversify its utility infrastructure investments across investment types and North American geographies to reduce investment risk. The Company is planning to accomplish this through expansion into natural gas distribution and its pursuit of the Drainage transfer from the City to EPCOR. These types of utility businesses are new to EPCOR which introduces risk to the Company due to unfamiliarity with the associated operational, safety and regulatory risks in addition to the risks associated with integrating these businesses into EPCOR. EPCOR develops comprehensive integration plans and ensures that personnel with appropriate skills are in place to manage all of the various risks when integrating any new businesses into the Company. Water scarcity is the risk of inadequate raw water supply, particularly in the desert region of the Southwestern U.S. This is primarily related to drought conditions which could potentially impact EPCOR's water operations in Arizona, New Mexico and Texas. In Arizona in particular, a number of water management and supply augmentation strategies are employed to mitigate this risk including enacting some very progressive policies to protect groundwater supplies. While EPCOR is not obligated to demonstrate long term water adequacy for new customer growth, EPCOR actively manages its sources of water including replenishing reserves by injecting water into its wells when opportunity arises and working with regulators on rate rebalancing to mitigate the effects of declining consumption should it occur. Despite these efforts, continued drought in the Southwestern U.S. could result in legislated measures to further reduce customer water consumption, potentially impacting financial performance in Arizona and New Mexico. EPCOR sells electricity to RRO customers under a RRT. All electricity for the RRO customers is purchased in real time from the AESO in the spot market. Under the RRT, the amount of electricity to be economically hedged, the hedging method and the electricity selling prices to be charged to these customers is determined by the EPSP. Under the EPSP, the Company uses financial contracts to economically hedge the RRO requirements and incorporate the price into customer rates for the applicable month. Fixed volumes of electricity are economically hedged using financial contracts-for-differences up to 120 days in advance of the month in which the electricity (load) is consumed by the RRO customers. The volume of electricity economically hedged in advance is based on load (usage) forecasts for the consumption month. When consumption varies from forecast consumption patterns, EPCOR is exposed to prevailing market prices when the volume of electricity economically hedged is short of actual load requirements or greater than the actual load requirements (long). Exposure to variances in electricity volume can be exacerbated by other events such as unexpected generation plant outages and unusual weather patterns. Under contracts-for-differences the Company agrees to exchange, with a single creditworthy and adequately secured counterparty, the difference between the AESO electricity spot market price and the fixed contract price for a specified volume of electricity up to 120 days in advance of the consumption date, all in accordance with the EPSP. The contracts-for-differences are referenced to the AESO electricity spot price and any movement in the AESO price results in changes in the contract settlement amount. If the risks of the EPSP were to become untenable, EPCOR could test the market and potentially re-contract the procurement risk under an outsourcing arrangement at a certain cost that would likely increase procurement costs and reduce margins. The Company may enter into additional financial electricity purchase contracts outside the EPSP to further economically hedge the price of electricity. Our construction and development of water and wastewater treatment facilities and electricity transmission and distribution infrastructure and acquisition activities are subject to various engineering, construction, stakeholder, government and environmental risks. These risks can translate into performance issues, delays and cost overruns. Project delays may defer expected revenues and project cost overruns could make projects uneconomic. Many of the water and wastewater growth projects currently pursued by the Company require design and construction capabilities that are provided by third parties. In order to pursue these projects, strategic partnerships have been established with reputable firms that have an established track record of infrastructure design and construction. Should these partnerships dissolve or are not recognized by the market as a viable approach, the Company's growth plans could potentially be curtailed. We attempt to mitigate project risks by performing detailed project analysis and due diligence prior to and during construction or acquisition, and by entering into appropriate contracts for various services to be provided as required. Our ability to complete projects successfully depends upon numerous factors such as weather, civil disobedience, availability of skilled labor, strikes and regulatory matters. Weather can have a significant impact on our operations. Melting snow, freeze / thaw cycles and seasonal precipitation in the North Saskatchewan River watershed affect the quality of water entering our Edmonton water treatment plants and the resulting cost of purification. Weather variability and seasonality also impact the demand and supply of water and electricity in our respective businesses in Canada and the U.S. Extreme weather can cause damage to electricity distribution and transmission equipment and wires, temporarily disrupting the reliable supply of power to customers and can cause unpredictability in the demand for power. Unseasonal temperature changes can cause water main breaks temporarily disrupting the reliable supply of water to customers. Weather that varies significantly from historical norms can result in changes in the quantity of provincial power consumption. EPCOR procures power to service its RRO customers in advance of the consumption month and the quantity procured is based on historical weather and usage patterns. Unseasonal temperatures can cause a mismatch between the power procured in advance of the consumption month and actual customer usage, resulting in unexpected variances in income from the RRO business. Financial exposures associated with extreme weather are partly mitigated through our insurance programs. EPCOR's internally generated cash flows from operating activities do not provide sufficient capital to undertake or complete ongoing or future development, enhancement opportunities or acquisition plans and accordingly, the Company requires additional financing from time to time. The ability of the Company to arrange such financing will depend in part upon prevailing market conditions at the time and the Company's business performance. If the Company's revenues or cash flows decline, it may not have the capital necessary to undertake or complete all the initiatives. There can be no assurance that debt or equity financing will be available or sufficient to meet these requirements or for other corporate purposes. Furthermore, if financing is available, there can be no assurance that it will be on terms acceptable to the Company. The inability of the Company to access sufficient capital for its operations could have a material adverse effect on the Company's business, prospects and financial condition. Further discussion is included in Liquidity and Capital Resources in this MD&A. The Company manages liquidity risk through regular monitoring of cash and currency requirements by preparing short-term and long-term cash flow forecasts and also by matching the maturity profiles of financial assets and liabilities to identify financing requirements. EPCOR's financial risks are governed by a Board-approved financial exposure management policy, which is administered by EPCOR's Treasurer. Counterparty and credit risk is the possible financial loss associated with the ability of counterparties to satisfy their contractual obligations to EPCOR, including payment and performance including the long-term loans receivable from Capital Power. We manage credit risk and limit exposures through our credit policies and procedures. These include an established credit review, rating and monitoring process, specific terms and limits, appropriate allowance provisioning and use of credit mitigation strategies, including collateral arrangements. EPCOR's credit risks are governed by a Board-approved counterparty credit risk management policy, which is administered by EPCOR's treasury function. Significant reliance is placed on the capacity of Capital Power to honor its remaining back-to-back debt obligations with EPCOR. Should Capital Power fail to satisfy these obligations, EPCOR's capacity to satisfy its debt obligations would be reduced and would need to be satisfied by other means. The back-to-back debt obligations may be called for repayment by EPCOR at any time now that the principal outstanding is less than $200 million and the repayment must occur within 180 days of notice. Capital Power has indemnified EPCOR for any losses arising from its inability to discharge its liabilities, including any amounts owing to EPCOR in relation to the long-term loans receivable. Exposure to credit risk for residential RRO customers and commercial customers under default electricity supply rates are generally limited to amounts due from the customers for electricity consumed but not yet paid for. This portfolio is reasonably well diversified with no significant credit concentrations. Historically, credit losses in these customer segments have not been significant and depend in large part on the strength of the economy and the ability of the customers to effectively manage their financial affairs through economic cycles and competitive pressures. While electricity is considered an essential service, EPCOR may experience credit losses in the future should economic conditions deteriorate. EPCOR's exposure to RRO and default customer credit risk, which is primarily the risk of non-payment for electricity consumed by these end-use customers, is summarized below. Exposures represent the accounts receivable value for this portfolio. The year-over-year decrease in exposure relates to lower customer rates and consumption. Exposures to credit risk in our rate-regulated and non-rated-regulated water businesses are generally limited to amounts due from the customers for water consumed and wastewater discharged but not yet paid for, as well as amounts for water management services provided under contracts to municipal and industrial customers. This portfolio is reasonably well diversified with no significant credit concentrations. While water is considered an essential service, EPCOR may experience credit losses in the future should economic conditions deteriorate. EPCOR's exposure to rate-regulated and non-rate-regulated customer credit risk, which is primarily the risk of non-payment for water consumed by these end-use customers, is summarized below. Exposures represent a 60-day potential accounts receivable value for this portfolio. The customer consumption data used to bill utility customers is voluminous plus the sources and types of customer billing data are varied, requiring large, complex systems to process customer billings. In addition, the Company relies on third parties to provide customer meter data in certain circumstances and to produce bills for its U.S. customers. All of this contributes to the potential for billing errors caused by poor customer consumption data quality, billing system computational errors, incorrect customer rates being used or transactions and adjustments being applied incorrectly to customer accounts. The Company applies numerous manual and automated controls to ensure the quality of customer billings including a routine to identify various exceptions in the electricity meter data used to produce bills. The Company is exposed to foreign exchange risk on foreign currency denominated transactions, firm commitments, monetary assets and liabilities denominated in a foreign currency and on its net investments in foreign entities. The Company's financial exposure management policy attempts to minimize economic and material transactional exposures arising from movements in the Canadian dollar relative to the U.S. dollar or other foreign currencies. The Company's direct exposure to foreign exchange risk arises on capital expenditure commitments denominated in U.S. dollars or other foreign currencies and U.S. operations. The Company coordinates and manages foreign exchange risk centrally, by identifying opportunities for naturally occurring opposite movements and then dealing with any material residual foreign exchange risks. The Company's exposure to foreign exchange risk on its investment in foreign entities is partially mitigated by foreign-denominated financing. The Company may use foreign currency forward contracts to fix the functional currency of its non-functional currency cash flows thereby reducing its anticipated U.S. dollar denominated transactional exposure. The Company looks to limit foreign currency exposures as a percentage of estimated future cash flows. Certain conflicts of interest could arise as a result of EPCOR's relationship with the City, EPCOR's sole common shareholder and regulator for water and wastewater utility rates in Edmonton. The following factors could materially adversely impact EPCOR's business, prospects, financial condition, results of operations or cash flows: fluctuations in interest rates, product supply and demand, market competition, risks associated with technology, general economic and business conditions, EPCOR's ability to make capital investments and the amounts of capital investments, risks associated with existing and potential future lawsuits and other regulations, assessments and audits (including income tax) against EPCOR and its subsidiaries, political and economic conditions in the geographic regions in which EPCOR and its subsidiaries operate, difficulty in obtaining necessary regulatory approvals, a significant decline in EPCOR's reputation and such other risks and uncertainties described from time to time in EPCOR's reports and filings with the Canadian Securities authorities. The following table outlines our estimated sensitivity to specific risk factors as at December 31, 2016. Each sensitivity factor provides a range of outcomes assuming all other factors are held constant and current risk management strategies are in place. Under normal circumstances, such sensitivity factors will not be held constant but rather, will change at the same time as other factors are changing. In addition, the degree of sensitivity to each factor will change as the Company's mix of assets and operations subject to these factors changes. The Company is not involved in any material litigation at this time. For purposes of certain Canadian securities regulations, EPCOR is a venture issuer. As such, it is exempt from certain of the requirements of National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings. The Chief Executive Officer and Chief Financial Officer have reviewed the annual information form, annual financial statements and annual MD&A, for the year ended December 31, 2016. Based on their knowledge and exercise of reasonable diligence, they have concluded that these materials fairly present in all material respects the financial condition, results of operations and cash flows of the Company for the periods presented. A number of new standards, amendments to standards and interpretations have been issued by the IASB and the International Financial Reporting Interpretations Committee the application of which is effective for periods beginning on or after January 1, 2017. Those which may be relevant to the Company and may impact the accounting policies of the Company are set out below. The Company does not plan to adopt these standards early. The extent of the impact of adoption of the standards has not yet been determined. IFRS 9 - Financial Instruments (IFRS 9), which replaces IAS 39 - Financial Instruments: Recognition and Measurement, eliminates the existing classification of financial assets and requires financial assets to be measured based on the business model in which they are held and the characteristics of their contractual cash flows. Gains and losses on re-measurement of financial assets at fair value will be recognized in profit or loss, except for an investment in an equity instrument which is not held-for-trading. Changes in fair value attributable to changes in credit risk of financial liabilities measured under the fair value option will be recognized in other comprehensive income with the remainder of the change recognized in profit or loss unless an accounting mismatch in profit or loss occurs at which time the entire change in fair value will be recognized in profit or loss. Derivative liabilities that are linked to and must be settled by delivery of an unquoted equity instrument must be measured at fair value. The impairment model has also been amended by introducing a new 'expected credit loss' model for calculating impairment, and new general hedge accounting requirements. The effective date for implementation of IFRS 9 has been set for annual periods beginning on or after January 1, 2018. IFRS 15 - Revenue from Contracts with Customers (IFRS 15), which replaces IAS 11 - Construction Contracts and IAS 18 - Revenue and related interpretations, is effective for annual periods commencing on or after January 1, 2018. IFRS 15 introduces a new single revenue recognition model for contracts with customers and two approaches to recognizing revenue: at a point in time or over time. The model features a contract-based five-step analysis of transactions to determine whether, how much and when revenue is recognized. New estimates and judgmental thresholds have been introduced, which may affect the amount and / or timing of revenue recognized. The requirements of the standard also apply to the recognition and measurement of gains and losses on sale of some non-financial assets that are not part of the entity's ordinary activities. IFRS 16 - Leases (IFRS 16), which replaces IAS 17 - Leases (IAS 17), is effective for annual periods commencing on or after January 1, 2019. IFRS 16 combines the existing dual model of operating and finance leases in IAS 17 into a single lessee model. Under the new single lessee model, a lessee will recognize lease assets and lease liabilities on the statement of financial position initially measured at the present value of unavoidable lease payments. IFRS 16 will also cause expenses to be higher at the beginning and lower towards the end of a lease, even when payments are consistent throughout the term. Leases for duration of twelve months or less and leases of low value assets are exempted from recognition on the statement of financial position. Lessors will continue with a dual lease classification model and the classification will determine how and when a lessor will recognize lease revenue and what assets will be recorded. In preparing the consolidated financial statements, management necessarily made estimates in determining transaction amounts and financial statement balances. The following are the items for which significant estimates were made in the financial statements. Due to the lag time between customer electricity consumption and receipt of final billing consumption information from the load settlement agents, the Company must use estimates for determining the amount of electricity consumed but not yet billed. These estimates affect accrued revenues and accrued electricity costs of the Energy Services segment. There are a number of variables and judgments required in the computation of these significant estimates, and the underlying electricity settlement processes within EPCOR and the Alberta electric systems are complex. Such variables and judgments include the number of unbilled sites, and the amount of and rate classification of the unbilled electricity consumed. Owing to the factors above and the statutory delays in final load settlement determinations and information, adjustments to previous estimates could be material. Estimates for unbilled consumption averaged approximately $51 million at the end of each month in 2016 (2015 - $53 million). These estimates varied from $35 million to $68 million (2015 - $42 million to $67 million). Adjustments of estimated revenues to actual billings were not higher than $5 million per month in 2016 (2015 - $6 million). We are required to estimate the fair value of certain assets or obligations for determining the valuation of certain financial instruments, asset impairments, asset retirement obligations and purchase price allocations for business combinations, and for determining certain disclosures. Significant judgment is applied in the determination of fair values including the choice of discount rates, estimating future cash flows, and determining goodwill. Following are the descriptions of the key fair value methodologies relevant for 2016. Fair values of financial instruments are based on quoted market prices when these instruments are traded in active markets. In illiquid or inactive markets, the Company uses appropriate price modeling to estimate fair value. Fair values determined using valuation models require the use of assumptions concerning the amounts and timing of future cash flows and discount rates. The Company reviews the valuation of long-lived assets subject to amortization when events or changes in circumstances may indicate or cause a long-lived asset's carrying amount to exceed the total undiscounted future cash flows expected from its use and eventual disposition. An impairment loss, if any, will be recorded as the excess of the carrying amount of the asset over its fair value, measured by either market value, if available, or estimated by calculating the present value of expected future cash flows related to the asset. Estimates of fair value for long-lived asset impairments are mainly based on depreciable replacement cost or discounted cash flow techniques employing estimated future cash flows based on a number of assumptions, including the selection of an appropriate discount rate. The cash flow estimates will vary with the circumstances of the particular assets or reporting unit and will primarily be based on the lives of the assets, revenues and expenses, including inflation, and required capital expenditures. EPCOR follows the asset and liability method of accounting for income taxes. Income taxes are determined based on estimates of our current taxes and estimates of deferred taxes resulting from temporary differences between the carrying values of assets and liabilities in the financial statements and their tax values. Deferred tax assets are assessed and significant judgment is applied to determine the probability that they will be recovered from future taxable income. For example, in estimating future taxable income, judgment is applied in determining the Company's most likely course of action and the associated revenues and expenses. To the extent recovery is not probable a deferred tax asset is not recognized. Estimates of the provision for income taxes and deferred tax assets and liabilities might vary from actual amounts incurred. Estimated fair values and useful lives are used in determining potential impairments for each long-lived asset, which will vary with each asset and market conditions at the particular time. Similarly, income taxes will vary with taxable income and, under certain conditions, with fair values of assets and liabilities. Accordingly, it is not possible to provide a reasonable quantification of the range of these estimates that would be meaningful to readers. Although the current condition of the economy has not impacted our methods of estimating accounting values, it has impacted the inputs in those determinations and the resulting values. Future cash flow estimates for assessing long-lived assets (cash generating units or CGUs) for impairment were updated to reflect any increased uncertainties of recoverability. The assessments did not result in any impairment losses because a large portion of the Company's long-lived assets are subject to rate-regulation. Similarly, the assessment of the useful lives of our long-lived assets did not change since many of our distribution and transmission assets and water assets are amortized based on rates approved by the applicable regulator. Our valuation models for estimating the fair value of long-lived asset impairments depend partly on discount rates which were updated to reflect changes in credit spreads and market volatility. Our methods for determining the allowance for doubtful accounts are based on historical rates of bad debts in relation to the aged accounts receivable balances by customer group for RRO and default customer bases. These analyses did not reveal any significant changes in our assessment of the recoverability of accounts receivable at December 31, 2016. For the three and twelve months ended December 31, 2016, the Company's transactions in other comprehensive income included the following: Events for the past eight quarters compared to the same quarter of the prior year that have significantly impacted net income included: The comparative information in the line of business information have been reclassified, where applicable, to conform to current year presentation. Certain information in this MD&A is forward-looking within the meaning of Canadian securities laws as it relates to anticipated financial performance, events or strategies. When used in this context, words such as "will", "anticipate", "believe", "plan", "intend", "target", and "expect" or similar words suggest future outcomes. The purpose of forward-looking information is to provide investors with management's assessment of future plans and possible outcomes and may not be appropriate for other purposes. Material forward-looking information within this MD&A, including related material factors or assumptions and risk factors, are noted in the table below: The following table provides a comparison between actual results and future-oriented-financial information previously disclosed: Whether actual results, performance or achievements will conform to the Company's expectations and predictions is subject to a number of known and unknown risks and uncertainties, which could cause actual results to differ from expectations and are discussed in the Risk Factors and Risk Management section above. Readers are cautioned not to place undue reliance on forward-looking statements as actual results could differ materially from the plans, expectations, estimates or intentions expressed in the forward-looking statements. Except as required by law, EPCOR disclaims any intention and assumes no obligation to update any forward-looking statement even if new information becomes available, as a result of future events or for any other reason. Additional information relating to EPCOR, including the Company's 2016 Annual Information Form, is available on SEDAR at www.sedar.com.