April 13, 2017 Read More →

Campaign to Keep Navajo Generating Station Open Runs Up Against Market Forces

Bloomberg News:

For more than four decades, the Navajo Generating Station in the dusty Four Corners area of Arizona has been the region’s economic engine, generating jobs and vital government revenue along with 2,250 megawatts of power. Now its utility owners want to start the process of closing the plant as early as July. Their argument: Coal can’t compete with cheap natural gas.

To save the plant and about 800 jobs linked to it, the Navajo and Hopi are taking their case to a higher power: A U.S. president who’s vowed to revive the slumping coal industry. Tribal leaders met Wednesday with the Trump administration, the owners and other stakeholders in a final push to keep the generator running.

Keeping the plant open will be a tough sell. At a time when the feeble economics of coal-fired power are hard to dispute, the plant’s four utility owners — Salt River Project, Arizona Public Service Co., NV Energy Inc. and Tucson Electric Power Co.  — are facing costly retrofits mandated by the U.S. Environmental Protection Administration, including air-quality controls that must be in place by 2030.

Salt River Project, the plant’s operator, argues that electricity produced at the Navajo station is more expensive than buying power on the spot market, with a turnaround years away. At the same time, the plant’s biggest customer, the Central Arizona Project, which pumps Colorado River water into the parched Phoenix metropolitan area, says it could have saved $38.5 million last year by buying energy in the wholesale market — and would pocket even more in the coming years.

Peabody Energy Corp., which operates the Kayenta mine, would lose its sole customer if the plant is shuttered. As a result, it’s offered to close the gap by selling its coal at a discount. The company commissioned a study that showed its discounted fuel plan could put the plant on equal footing with natural gas through 2040.

“Peabody has brought to the table a competitive fixed price fuel proposal,” Kemal Williamson, Peabody’s president for the Americas, said in a statement following Wednesday’s meeting. “We’re encouraged.”

Whether that proposal can attract buyers, however, remains an open question.

Battle to Save a Dying Arizona Coal Plant Goes to Washington

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