April 27, 2018 Read More →

Potential Buyers of Navajo Power Plant Identified

S&P Global Market Intelligence ($):

The emails released April 26 by the Institute for Energy Economics and Financial Analysis, a research group that describes itself as promoting a more diverse energy economy, show communication between a representative of Lazard Freres & Co. LLC, which is leading the search for a buyer for the power plant, and an official with the Central Arizona Project, which uses power from the plant to pump water.

Lazard has previously said it found a potential buyer to keep the 2,250-MW plant open but did not name that entity. The future of the Navajo plant is uncertain since owners said they would walk away from the facility after its lease ends in December 2019, pointing to economic challenges to coal-fired power posed by cheaper natural gas.

The plant is the only customer of Peabody Energy Corp.’s Kayenta coal mine. Peabody hired Lazard to find a way to keep the plant operating.

Central Arizona Project spokeswoman DeEtte Person confirmed that Ted Cooke, the water project’s general manager, got an email on the subject, but did not know whether the inquiry was serious.

Representatives for Middle River Power were not immediately available to comment on April 26. A Lazard spokeswoman declined to comment, as did a representative for Avenue Capital Group.

Middle River Power, based Deerfield, Ill., a suburb north of Chicago, in 2016 took ownership of the 385-MW coal-fired C.P. Crane power plant from Talen Energy Corp. and three gas-fired plants, the 342-MW Big Sandy Peaker in Wayne County, W.Va.; the 824.5-MW High Desert Power Project in San Bernardino County, Calif.; and the 285-MW Wolf Hills Energy facility in Washington County, Va., from Tenaska Energy Inc.

Utility owners of the Navajo plant include the Salt River Project, Arizona Public Service Co., Nevada Power Co. and Tucson Electric Power Co. The U.S. Bureau of Reclamation uses its share to pump water along the Central Arizona Project from the Colorado River to central and southern Arizona.

The Institute for Energy Economics and Financial Analysis, which tends to be critical of coal-fired power resources, said even if Navajo gets a new owner there are several challenges ahead, including continuation of low natural gas prices and competition from renewables.

($) Potential Buyers of Navajo Plant Identified

Posted in: IEEFA In the News

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