April 13, 2018 Read More →

Peabody Consultant Says Navajo Plant May Have A Buyer

S&P Global Market Intelligence ($):

A consultant retained by Peabody Energy Corp. told a U.S. congressional committee that the Navajo Generating Station has the potential to continue to supply power at competitive prices well into the future and a potential buyer is interested.

An unnamed investor and operating company have been identified that could keep the plant open, said George Bilicic, vice chairman of investment banking and global head of power, energy and infrastructure at Lazard Freres & Co. LLC. Bilicic said Lazard, which Peabody retained to facilitate a plan to keep the power plant open, has identified areas that still need to be addressed, including lowering mining and power generation costs and securing a long-term lease agreement with the Navajo Nation.

However, he said it would also require a willingness from the plant’s existing owners to contract power from Navajo at market competitive prices, and that is causing the most uncertainty. Utility owners of the plant include Salt River Project, Arizona Public Service Co., Nevada Power Co. and Tucson Electric Power Co.

The U.S. House Committee on Natural Resources held an oversight hearing April 12 focused on the benefits of Navajo Generating Station to local economies.

The plant is the only customer of Peabody’s Kayenta mine, and its future is uncertain after owners of the 2,250 MW coal-fired plant said they would back away from the facility after its lease ends in December 2019 due to challenges from low natural gas prices. Peabody has disclosed in securities filings that if the plant is closed, it would likely be uneconomic to sell coal from the Kayenta mine elsewhere. The mine represented about 6.2 million tons of coal sales in 2017.

More ($): Buyer Interested In Navajo Coal Plant Set To Close, Says Peabody-Hired Firm

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