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IEEFA U.S: Tribal investment in struggling coal-fired Four Corners plant will lose millions

December 14, 2018

Dec. 13, 2018 (IEEFA) — The Navajo Nation government’s acquisition this past summer of a 7 percent stake in the struggling coal-fired Four Corner Generating Station in northeastern New Mexico will cost the Nation dearly, concludes a report published today by the Institute for Energy Economics and Financial Analysis.

The deal, in which Navajo Transitional Energy Company paid Arizona Public Service $100 million, serves also as a cautionary tale that is especially timely as current Navajo leaders contemplate buying Navajo Generating Station (NGS), a plant on tribal lands in Arizona that is facing similar difficulties.

The report—“A Bad Bet: Owning the Four Corners Coal Plant is a Risky Gamble for the Navajo Nation and the Plant’s Other Owners”—sees the Navajo Nation losing approximately $170 million on plant operations from 2020 to 2027—in addition to the $100 million deal price—as the Four Corners plant continues to cede power-generating market share to natural gas-fired competitors and increasingly inexpensive utility-scale wind and solar operations in the region.

“Four Corners has been an increasingly unreliable and expensive source of power, and there is little reason to expect that this will change given the set of risks that the plant currently faces and will continue to face in coming years,” the report states.

David Schlissel, IEEFA’s director of resource planning analysis and author of the report, said Navajo Nation would do well to learn from its mistake in buying into the New Mexico plant: “Four Corners should serve as a costly lesson as to what the Navajo Nation would experience if it decides to acquire NGS too.”

The report details five manifest risks in Four Corners ownership:

  • The advanced age of the plant’s two remaining operating units, which came on line in 1969 and 1970, respectively.
  • A persistent decline in recent years in power produced by the plant.
  • Likely long-term low natural-gas prices, which undercut coal-fired generation.
  • Growing competition from low-cost wind and solar.
  • The relatively high cost of producing power at Four Corners.

The report notes also that current Navajo Nation leaders leave office next month and are said to be exploring buying NGS in a last-ditch bid to save it before a new administration takes over. The plant’s owners, a consortium made up mainly of utility companies, have scheduled NGS for closure at the end of 2019.

Full report here: “A Bad Bet: Owning the Four Corners Coal Plant is a Risky Gamble for the Navajo Nation and the Plant’s Other Owners”

Media Contacts: Karl Cates 917 439 8225 [email protected]

About IEEFA:

The Institute for Energy Economics and Financial Analysis (IEEFA) conducts global research and analyses on financial and economic issues related to energy and the environment. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy.

David Schlissel

David Schlissel has over 30 years of experience as a regulatory attorney and consultant on energy and utility issues. He has testified as an expert witness before regulatory commissions in more than 35 states and before the U.S. Federal Energy Regulatory Commission and the Nuclear Regulatory Commission.

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