Coolidge Expansion Project FAQ

Without the expansion of Coolidge Generating Station, power reliability is at risk starting in the summer of 2024.

The Arizona Corporation Commission (ACC) recently voted to deny the Certificate of Environmental Compatibility (CEC) for the expansion of Coolidge Generating Station, a peak-demand, natural gas facility in Coolidge in Pinal County.

In doing so, the ACC rejected the CEC issued by the Power Plant and Transmission Line Siting Committee (Committee) approving the Project. This Line Siting Committee is tasked to do a deep dive into the facts and data of each project. In this case, for eight days, the Line Siting Committee pored over details of the proposed Project, listened to public comment and took testimony from all parties prior to making their decision to issue a CEC. The Line Siting Committee found that the need for the Coolidge Expansion Project is critical and urgent and that the project was environmentally compatible.

SRP has requested that the ACC reconsider its decision and vote to approve the CEC, thereby helping to ensure our customers have reliable and affordable power in the years to come.

SRP continues to see higher-than-average increasing customer demand across our service area, one of the fastest-growing regions in the country. Our service territory continues to see a population increase more than three times the national average. In addition, SRP is experiencing major industrial and manufacturing growth from large companies establishing and expanding operations in the region.

This growth causes SRP's peak electricity demand to increase significantly. Specifically, we are forecasting growth in peak electricity demand of approximately 2,645 megawatts (MW) by 2030, which represents a 35% increase from today.

A combination of this growth and the region's overall resource constraints means that without proper planning, Arizona utilities will be challenged to meet customers' needs in the very near future.

Third-party energy consulting group E3 recently concluded that the Southwest is facing "a significant and urgent need" for new power resources due to growing demand and planned fossil fuel plant retirements.

California officials reported a 1,700 MW potential shortfall in 2022, which could go even higher if environmental factors like fires continue to impact generation. The reports indicated that those kinds of supply gaps could leave between 1 million and 4 million people without power. And, the New Mexico Public Service Co. recently told regulators it does not have any capacity reserve margin for July or August.

Supply chain and other issues are also contributing to constraints. A U.S. Commerce Department investigation has negatively impacted solar panel supply chains, and all of the solar projects that SRP has under contract to begin operation in 2024 are at risk of delays and cost increases. Lithium costs are skyrocketing, and the supply chain for batteries is also experiencing challenges, resulting in potential delays and higher costs.

The expansion of the Coolidge Generating Station would add 820 MW of capacity that can vary during the year because of changes in temperature and humidity. The power would be produced by 16 natural gas turbines, each capable of ramping up to full production within 10 minutes. The flexible nature of these turbines allows one or more of the turbines to power up to meet demand in different system conditions.

We have committed to adding 2,025 MW of solar energy to our renewable portfolio by 2025 to meet Board-approved carbon reduction goals. With this commitment, we expect nearly half of all retail energy delivered by SRP to customers will come from zero-carbon resources by 2025.

Along with increased solar generation comes increased variability in power output, especially during cloudy conditions. The CEP will add quick-starting and fast-ramping power generation resources that can smooth out these fluctuations and ensure SRP delivers consistent, reliable power to customers.

Each gas turbine added as part of the CEP will be capable of rapid starts (within 10 minutes) and can quickly adjust to match changing electricity demand across the Valley. In addition, the flexibility of this technology allows SRP to operate just one or two turbines when needed, versus having to run all of them at the same time.

SRP anticipates and is planning to add more battery storage projects in the coming months and years as the technology matures. We are an early adopter of battery technology and have already committed to adding 500 MW by 2023 — among the highest of any utility in the West.

Adding battery storage over the next three years in the amounts required to achieve similar reliability as the proposed Coolidge expansion gives us pause. Increasing battery storage at a measured pace, however, allows us to gain operational experience as the technology evolves. This approach will also help us benefit from decreases in battery prices and increases in storage duration that we expect to occur.

We don't have much operational experience with batteries, particularly long-term operating experience. That's also true for the utility industry as a whole. The United States has only approximately 3,100 MW of energy storage — 1,600 MW of that began operation this year, with the other 1,500 MW operating less than three years. To put this into context, that 1,500 MW represents 0.2% of the United States' electricity generation.

This technology is also still developing. A battery storage project SRP purchases power from caught fire last month. In California, the world's largest battery project, Moss Landing, has been offline since February after an overheating incident. Many battery projects are experiencing supply chain difficulties and may not be online by 2024 when SRP needs the power.

When we consider investing in a new power generation resource, we carefully consider alternatives in the context of reliability, our 2035 Sustainability Goals and affordability for our customers.

In evaluating options for the Coolidge Expansion Project (CEP), we:

1. Used commercially available planning models to determine whether we could build a portfolio of zero-carbon resources that could achieve the same reliability as the Coolidge plant expansion, and
2. Retained E3, an economic and environmental consulting firm, to provide an independent perspective on the same issue. E3 used its own proprietary planning model to build a zero-carbon portfolio that achieves similar reliability as the CEP.

In addition, we evaluated different sensitivities, including higher natural gas prices and lower battery costs than our current forecasts suggest.

As a result of the variability of renewables like solar and wind and the limited duration of battery storage, both our and E3's assessments independently concluded that SRP would need to build three to four times the megawatt capacity of zero-carbon resources (primarily solar and batteries) to achieve similar reliability as the Coolidge expansion.

The Coolidge portfolio was the lower-cost option in all scenarios and did not impact our ability to meet or exceed Board-established carbon reduction commitments. The Coolidge portfolio resulted in $342 million to $872 million of savings (in today's dollars) compared to the zero-carbon portfolio. This analysis demonstrates that Coolidge is not just the most prudent and practical decision but also is the best economic decision that provides the most value to SRP's customers.

The 16 new generating units that would be added at the Coolidge Generating Station will look nearly identical to the 12 existing units that currently operate at the plant. The stacks for the existing 12 units are approximately 85 feet tall and we expect the stacks for the 16 new units will be a similar height.

SRP recognizes that the existing power plant is located adjacent to Randolph, a historically African American community in an unincorporated area of Pinal County that is industrially zoned.

This project would expand the existing plant by adding new turbines that comply with all state and federal regulations. The facility was built between 2009 and 2011 with no opposition to its construction. From the start of its operation, SRP contracted the facility's output from the plant owner under a power purchase agreement. In 2019, SRP made the decision to purchase the facility, and to our knowledge and understanding, the facility has operated safely and with no safety complaints during its 10 years of operation to date.

SRP has proposed projects to mitigate the impacts of the expansion and support the Randolph community, including road paving to offset plant emissions, scholarships and job training, and landscaping to screen the expansion and beautify the area.

With the request for rehearing, SRP is proposing additional measures in the event of an approval of the CEC, including home repairs and energy efficiency improvements, and building a community center. This is a long-term commitment to help preserve Randolph's history and ensure its approximately 150 residents thrive in their homes for decades to come.

In cooperation with the community of Randolph, Pinal County and the City of Coolidge, SRP coordinated the formation of the Community Working Group (CWG), which meets on the second Friday of each month.

The CWG is composed of five residents of Randolph, one member designated by the Pinal County Board of Supervisors, one member designated by the City of Coolidge, and two members selected by SRP. SRP will act as an adviser to the CWG and collaborate on projects to support the Randolph community.

We do not need to purchase any additional land for the proposed CEP. The expansion will be constructed on SRP-owned property directly to the south of the existing Coolidge Generating Station.

Expansion at the existing Coolidge Generating Station allows us to leverage existing infrastructure, including access to transmission and fuel, reducing the overall cost of the project.

The CEP represents a substantial investment in the Coolidge region by SRP and will generate property taxes that are estimated to be a total of $76 million from 2024 through 2033.

These property taxes would be spread across county ($18.5 million to Pinal County), city ($10.8 million to the City of Coolidge), schools ($31.6 million to Coolidge Unified Schools) and higher education ($11.4 million to Central Arizona College). Additional taxes will include $1.2 million in state construction taxes, plus $360,000 and $900,000 in county and city construction taxes, respectively.

Additionally, SRP has proposed approximately $18 million in projects to mitigate the impacts of the expansion and support the Randolph community, including road paving to offset plant emissions, scholarships and job training, and landscaping to screen the expansion and beautify the area.

With the request for rehearing, SRP is proposing additional measures in the event of an approval of the CEC, including home repairs and energy efficiency improvements, and building a community center. This is a long-term commitment to help preserve Randolph's history and ensure its approximately 150 residents thrive in their homes for decades to come.

The Coolidge Expansion Project will help SRP continue to lead the region's energy transition to more sustainable power generation. The expansion of Coolidge will provide the necessary energy to meet peak demand as we work to integrate more renewables like wind and solar. Because the Coolidge expansion enables the reliable integration of other renewable projects, the project will help us achieve greater CO2 reductions sooner than our current forecasts.

SRP has more PV solar contracted than any other Arizona utility. SRP has projects underway that will take us to 2,025 MW of solar by 2025, enough to power more than 450,000 average-size homes. We also plan to add 450 MW of battery storage by 2023, one of the largest battery storage commitments in the West.

The Coolidge Expansion Project itself will operate as a "peaking" facility, only running for several hundred hours per year to help us meet demand for electricity at the summer peak and when needed to smooth out the variability of renewable energy.

Ultimately, expanding the Coolidge plant ensures we can maintain the reliability and affordability of our system while keeping us on the path to achieving our sustainability goals and renewable resource commitments.

The CEP is critical in meeting SRP's goal to achieve 65% carbon intensity reduction by 2035 and 90% by 2050, because it will enable the addition of more renewable resources while maintaining the reliability of SRP's power system.

The Coolidge units are expected to run for a few hundred hours per year to meet peak demand and to support the variability of renewable resources. As a result, the emissions from Coolidge itself will be relatively small, and those emissions will be more than offset by the reduction in carbon emissions from the addition of more renewable resources sooner.

As such, this project will support a net reduction of CO2 emissions and will accelerate our path to achieving our Board-established carbon intensity goals.

The CEP will comply with all local, state and federal air quality regulations, which are protective of human health and the environment.

One such area of regulation is the Clean Air Act (CAA), which requires the United States Environmental Protection Agency (EPA) to set National Ambient Air Quality Standards (NAAQS) for six common air pollutants — called "criteria" pollutants.

The CAA directs the EPA to establish NAAQS, which are designed to protect the public — including sensitive populations such as children and the elderly — from adverse health effects and to provide public welfare protection, including protection against decreased visibility and damage to animals, crops, vegetation and buildings.

To expand the Coolidge plant, SRP must file for and receive approval of an air permit, which ensures the emissions meet air quality regulations. Click here to view a copy of SRP's air quality permit application (23MB).

As part of the process to obtain a permit for the Coolidge expansion, SRP retained a consultant to conduct ambient air quality modeling to assess the impact of air emissions from the addition of the new units at Coolidge. Based on this review, it was determined that the new units will not cause or contribute significantly to a violation of any NAAQS.

The final air quality permit will be a federally enforceable document containing applicable emission limits and standards that Coolidge is responsible for meeting and will contain recordkeeping, monitoring and reporting conditions necessary to demonstrate compliance with all applicable requirements.

The CEP generation method is simple cycle, which uses aeroderivative turbines similar to those used in the aviation industry. It does not rely on steam to produce power, so it uses significantly less water than other types of generation, such as a combined cycle natural gas power plant.

Before the Coolidge site property was a natural gas generating site, the allowable groundwater use on the property was 736 acre-feet per year. After the proposed expansion, total water usage at Coolidge Generating Station is not expected to exceed 450 acre-feet per year — a 40% reduction in the water use previously allowed on the property.

After completion of the expansion, SRP will discontinue the use of groundwater and will rely exclusively on stored Central Arizona Project (CAP) water to serve the Coolidge Generating Station. SRP has already stored sufficient water in the Pinal County Active Management Area (AMA) to support an expanded Coolidge Generating Station for more than 60 years.

Providing the ACC approves the CEC on rehearing, we expect construction to begin in mid-2022 with the first eight units online by summer of 2024 and the remaining units coming online by summer of 2025.

We conducted a thorough and extensive review process to evaluate options for the additional power generation needed.

At the time of this assessment, we had current market pricing that we had obtained as a follow-up to a competitive Request for Proposals (RFP) for solar and a Request for Information (RFI) for wind projects. These processes provided us with a good indication of market prices and projects that could be operational by 2024.

The only resource options that could meet our significant capacity and flexibility needs in the time frame required are natural gas peaking units and battery storage. As explained in the responses above, we have concerns about the feasibility of adding the amount of battery storage that would be needed to achieve similar reliability to Coolidge in the time frame needed, and we demonstrated that the Coolidge Expansion Project is the lowest-cost option for our customers.

With the benefit of the reliability backbone provided by the CEP, we can consider a broader range of technology options to serve the balance of additional near-term power generation needs.

Accordingly, SRP issued an All Source RFP in October 2021 for near-term capacity needs beyond the Coolidge Expansion Project. As part of this, and separate from the capacity SRP would add with the proposed Coolidge expansion, SRP is seeking up to 400 MW of additional capacity by summer of 2024 and up to 1,000 MW by summer of 2026.

While SRP is still gathering responses from its current All Source RFP process, we cannot share detailed information on the proposed projects we are reviewing. However, SRP can confirm we have a comprehensive understanding of what resource generation projects can be developed on SRP's system in the near-term.

None of the projects and resources that bid into SRP's current All Source RFP can provide both the dependable flexibility and capacity of the Coolidge Expansion Project. In addition, given the recent increasing solar panel and battery supply chain challenges, there is no certainty of deliverability for alternative resources to meet demand in the summer of 2024.

We selected the General Electric LM6000 turbine technology for the Coolidge Expansion Project based on three factors: reliability, flexibility and operational experience.

The LM6000 turbines are flexible resources that allow SRP to integrate more renewables into the power system. They can start up and change output quickly to support the variability of renewable resources. In addition, the flexibility of this technology allows us to operate just one or two turbines when needed, versus having to run all of them at the same time.

We must reliably meet near-term capacity needs, and the LM6000 turbines are available to provide power when needed, including during outages of other units or when limited-duration resources are unavailable. The LM6000 model is an industry leader in reliability with over 40 million operating hours and over 99% reliability.

In addition, the existing Coolidge Generating Station utilizes the LM6000 technology, providing operational familiarity and common spare parts to reduce maintenance costs.

The outreach process included a variety of mechanisms to inform the public about the status of the siting process and to solicit public input.

The process began when SRP announced the proposed project in a press release in August 2021, and then presented the project for approval at a Board meeting in September 2021. These meetings are open to the public.

From there, we conducted a public outreach process that included both virtual open houses and in-person open houses with appropriate COVID precautions in place. Both the in-person and virtual open houses gave the public an opportunity to provide comments on the project. The in-person open house allowed the public to review informational displays, submit comments to the SRP project team and provide valuable feedback.

We met with public officials representing the region, jurisdictional agencies and other stakeholders. In addition, postcards were mailed to announce the project and this website was developed to allow members of the public to obtain updates and additional information. We also used social media to inform the public about the open houses and opportunities to provide comments.

We have also established a dedicated hotline as another option for members of the public to ask questions and provide comments on the project: (888) 705-1509(888) 705-1509.

SRP has requested that the ACC reconsider its denial of the CEC and vote to approve the CEC to ensure our customers have reliable, sustainable and affordable power in the years to come.

The ACC has 20 days from the date of the rehearing request to decide if it will conduct a rehearing.