Shortage of water not only hurts real estate values, as people stop watering their landscaping, it is also hurts the energy generation companies. Now it might be obvious that if lack of water in the reservoirs and behind dams means that the water cannot be let out in order to use hydro-electricity generators, but that is not the only use of water in the energy generation business. You see cooling is required for power plants and without water the generators plants have to be shut down otherwise they over heat.
Fewer electricity generating plants on the grid mean that the other generating plants have to run at higher capacity to keep up with demand, which may not be possible, depending on how many generation plants have been shut down. It can get serious in a hurry. Worse, drought regions are quite large and that means many energy generating plants might have to close in the same area. How bad is the current problem?
It is getting pretty serious and there are Power Plants in GA, NC, TN, CA, FL that are now at risk of being shut down. So, far there have already been a few, but those numbers will increase as we reach Spring and Summer time where no new major rain storms are normally expected.
When drinking water is pitted against electricity generation, fresh water supplies for citizens will win. When water is rationed in Level II Drought and homeowners cannot water their own lawn or landscaping, they should not be surprised that the cost of electricity increases due to the same supply and demand issues, as the power plants are going thirsty without water for cooling.
I would like to offer the following essays for background information:
The Flow of Water: http://activerain.com/blogsview/394040/The-Flow-of-Water
The Flow of Energy: http://activerain.com/blogsview/392479/The-Flow-of-Energy
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Seems like all of the talk about oil is secondary to our need for water! Here in GA, we have been getting some relief but if the northern lakes don't regain a reasonable water level we may be in the dark.