October 26, 2017 Read More →

White House ‘Throws Weight’ Behind Failing Arizona Coal Plant


Even while experts conclude the Navajo Generating Station, a 43-year-old coal plant in northern Arizona, is an economic albatross, the Trump administration is pushing to keep it running.

Tired of losing money on the facility, the plant’s owners voted in February to close the Navajo Generating Station when their 50-year lease with the Navajo Nation expires in 2019. The three-unit, 2,250-megawatt plant has been more expensive to run than natural-gas-burning plants.

“The decision was based on the economics of coal generation at NGS compared to other resources, primarily natural gas,” said Scott Harelson, spokesperson for Salt River Project, an Arizona electric utility that owns the largest share of the power plant. The original agreement between the plant owners and the Navajo Nation included an option to extend the lease until 2044.

In a recent analysis, the Department of Energy’s National Renewable Energy Laboratory examined price trends and found that “a turnaround for the power plant might be years away, especially if natural gas prices remain low.”

The Institute for Energy Economics and Financial Analysis (IEEFA), a research and consulting firm, conducted multiple studies of the Navajo Generating Station and found that huge subsidies will be required to keep the plant operating through 2019. “We put the price of keeping NGS open from mid-2017 through the end of 2019 at $414 million,” IEEFA wrote in a May report. Extending that “bailout” to keep the Navajo Generating Station operating from 2020 until 2030 would cost an additional $1 billion to $2 billion, IEEFA said.

Nevertheless, the Interior Department is working with Peabody Energy — a coal company with ties to President Donald Trump — to find another entity to step in and keep the plant operating. Peabody Energy supplies coal to the power plant, the seventh biggest source of carbon dioxide emissions in the country, from the nearby Kayenta mine on Navajo land. The plant is located on the Navajo Indian Reservation, just east of Glen Canyon Dam, near Arizona’s northern border.

The Trump administration “is committed to finding a post-2019 future for the Navajo Generating Station,” Bureau of Reclamation spokesperson Dan DuBray told ThinkProgress. The U.S. Department of the Interior’s Bureau of Reclamation, primarily a water management agency, oversees the government’s 24.3 percent ownership stake in the plant. It is the bureau’s only stake in a fossil fuel-powered electric power generating facility.

Aside from the federal government, the Navajo Generating station is owned by four electric utilities: Salt River Project at 42.9 percent, Arizona Public Service Co. at 14 percent, Nevada Energy at 11.3 percent, and Tucson Electric Power at 7.5 percent.

Mike Hummel, deputy general manager of the Salt River Project, told the Arizona Republic that without federal subsidies, a new owner of the plant would not be able to operate it cost-effectively. He noted that each utility owner of the Navajo Generating Station has owned and operated coal plants. “We are all very good at it, and we are all not able to make it work. That’s why the owners are choosing to exit,” Hummel told the newspaper.

Continued operation of the coal plant will not only come at a cost to taxpayers and ratepayers, it will also take a heavy toll on people who live in the region. The Clean Air Task Force estimates that pollution from the Navajo Generating Station contributes to 16 premature deaths, 25 heart attacks, 300 asthma attacks, and 15 asthma emergency room visits each year, with total annual health costs of more than $127 million.

On the other hand, the plant also provides significant economic benefits to the Navajo Nation. The lease agreements, royalties, and other payments tied to the plant and coal mine account for about 20 percent of the Navajo Nation’s annual revenue. “This money funds critical public services for our nation including schools, emergency services, infrastructure, and public parks,” Russell Begaye, president of the Navajo Nation, wrote in an op-ed earlier this year. “We already struggle to make ends meet and any reduction in our already strained operating budget would have disastrous consequences.”

The Navajo Nation is exploring ways to produce and market coal, and a solar project is being considered for the site if the power plant is shut down in 2019.

Earlier this month, Peabody Energy, one of the largest coal companies in the world, announced several “highly qualified potential investors” have expressed interest in “pursuing an ownership position in the Navajo Generating Station for operation beyond 2019.

The Navajo Nation itself is evaluating the proposals, looking at the potential buyers’ experience in running electric power plants, said Meghan Cox, a spokesperson for the nation. “It is our hope to keep these strong wages and jobs in the region. We’re doing everything we can to do so,” Cox said.

For the long term, the Navajo Nation also has hired energy experts to analyze the potential for adding renewable energy facilities at the site.

The Trump administration remains determined to take actions — even if they go against conservative economic thinking — that benefit the coal industry and workers. The Interior Department is focusing on the Navajo Generating Station as “one example of the many links to our economy and jobs that American mining and coal-generated energy provide,” the Bureau of Reclamation’s DuBray said in an interview with the Washington Times. In fact, supporters of the Navajo Generating Station told the newspaper that if the Trump administration is serious about helping the coal industry, it should consider making the federal government the full owner of the power plant if the utilities pull out.

More: Trump administration throws weight behind keeping Arizona coal plant open

Comments are closed.