April 27, 2018 (IEEFA) — A well-known New York investment banking firm is putting its reputation at stake by working with Peabody Energy to keep a failing coal-fired Arizona power plant alive, concludes a letter published today by the Institute for Energy Economics and Financial Analysis.
The letter, addressed to Kenneth M. Jacobs, chairman and chief executive of Lazard, encourages Jacobs to reconsider Lazard’s participation in a campaign by Peabody to find new buyers for Navajo Generating Station, which is scheduled for closure at the end of 2019.
“Lazard’s tradition of sound stewardship of public resources tells us you should not be part of this effort,” says the letter, which is signed by Tom Sanzillo, IEEFA’s director of finance.
The letter notes Peabody’s history around Prairie State Energy Campus in Illinois, where the company engineered construction of that plant as a way to ensure business for one of its mines. Prairie State became a debacle for its construction cost overruns, spotty operations, high-priced electricity and for a Peabody-orchestrated arrangement that left dozens of municipalities on the hook with long-term contracts while allowing the company to walk away from the project.
“Peabody’s cynical approach in Illinois is now being repeated in its dealings with the Navajo Nation in Arizona,” wrote Sanzillo. “Neither financial gimmickry nor wasteful public subsidies will magically transform Navajo Generating Station into a competitive power generator. If your firm does help succeed in keeping the plant open beyond 2019, we think the plant will ultimately fail nonetheless.”
The letter says time and resources spent on Peabody’s — and Lazard’s — campaign to line up a buyer or buyers for Navajo Generating Station would be better directed toward realistic, long-term reinvestment in the region.
“Peabody has chosen instead to be hostile to transition and to show a complete absence of responsibility with regard to the future of its workforce in Arizona,” Sanzillo wrote. “They have instead mounted a campaign designed to instill fear in the community.”
Full letter: Lazard and Peabody Energy
Media contact: Sandy Buchanan, [email protected], 216-688-3457