May 4, 2018 Read More →

Peabody Energy, Hopi Tribe, Union Sue to Keep Arizona Plant Open

Bloomberg News:

Peabody Energy Corp.—the nation’s biggest coal producer—is joining an American Indian tribe and a miners’ union in suing the Arizona water authority to keep a coal-fired power plant up and running.

The lawsuit, if successful, would force a canal system that provides water to most of Arizona—the Central Arizona Project—to continue buying its power from the Navajo Generating Station. The Hopi Tribe and the United Mine Workers of America joined Peabody in filing the suit.

The coal-fired plant, the biggest west of the Mississippi, is scheduled to shut down on Dec. 23, 2019, when the current lease expires. The mine is situated on tribal land near Page, Ariz.

The lawsuit, filed May 1 in U.S. District Court for the District of Arizona, is rooted in the 1968 Colorado River Basin Project Act and the 1984 Hoover Power Plant Act. According to the plaintiffs, those statutes essentially form a contract obligating the Central Arizona Project to buy its power from the Navajo Generating Station until the debt for the plant’s construction is paid off. That’s not expected to happen until 2044.

The argument was first publicly voiced by Rep. Paul Gosar (R-Ariz.), during an April 12 hearing. Gosar chairs the House Natural Resources Energy and Mineral Resources Subcommittee.

But the operators of the Central Arizona Project deny that they have any such obligation. DeEtte Person, a CAP spokeswoman, told Bloomberg Environment earlier this month that “CAP is not obligated to purchase any power from NGS after the current contracts expire in 2019.”

Ted Cooke, CAP’s general manager, made the same point in an April 16 letter to Associate Deputy Interior Secretary James Cason. Cooke pointed to a 2011 contract that he said is the only current commitment for CAP to buy NGS energy. That contract expires on Dec. 31, 2019, according to Cooke.

Also during the press conference, John Shadegg, a former Republican Congressman from Arizona, said CAP’s legal obligation is clear.

“There was in fact a deal, and this lawsuit is going to prove that,” Shadegg said. “The law spells out what is supposed to happen.”

Marie Justice, president of UMWA Local 1924, which represents miners at Kayenta, added that CAP has a “moral obligation” to keep buying NGS’ power.

But David Schlissel, a director at the Institute for Energy Economics and Financial Analysis, said the lawsuit would mandate economic decisions that don’t make sense.

“Forcing CAP to buy power at above-market market prices isn’t going to make the plant economic,” Schlissel told Bloomberg Environment.

CAP’s current deal is for 2.8 million megawatt hours of NGS power annually, according to Schlissel. Last year, the plant produced 13.8 million megawatt hours.

($) Peabody Energy, Hopi Tribe, Union Sue to Keep Arizona Plant Open

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