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A coalfield reinvestment formula for the Grand Canyon State

March 24, 2020
Karl Cates and Seth Feaster and Pam Eaton
Document

Key Findings

These communities are part of the overall economy of greater Arizona, and their perilous state—combined with the broader economic trauma now engulfing the U.S.—presents an immediate opening for local reinvestment by Arizona utility companies that have relied on power plants, like Navajo Generating Station and Four Corners Generating Station, to name just two, for the electricity that has powered the phenomenal growth of Arizona for 50 years.

Power-generation communities like Page, Springerville, Kayenta and others that hosted the plants and their companion mines are facing crushing economic effects from closures.

Executive Summary

The Navajo Nation, which encompasses a good part of the coalfield economy of greater Arizona, has put forth a formula in a rate-case hearing before the Arizona Corporation Commission by which Tucson Electric Power (TEP) can invest responsibly now in the void left by the closure last year of the Navajo Generating Station and its coal source, the Kayenta Mine.

The Navajo formula is elegant, simple, and fair, calling for $100,000 of initial local utility-company reinvestment for every megawatt of power capacity owned currently and in prior years (the Hopi tribal government, similarly affected, has endorsed the Navajo proposal). This brief applies the Navajo approach to all of TEP’s coal-fired power holdings and to those of the two largest utility companies in Arizona, Salt River Project (SRP) and Arizona Public Service (APS), and to the Arizona Electric Power Co-op.

Karl Cates

Former IEEFA Transition Policy Analyst Karl Cates has been an editor for Bloomberg LP, an editor for the New York Times, and a consultant to the Treasury Department-sanctioned community development financial institution (CDFI) industry.

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Seth Feaster

Seth Feaster is an energy data analyst whose work focuses on the coal industry and the U.S. power sector.

Before joining IEEFA, he created visual presentations at the New York Times for 25 years with a focus on complex financial and energy data; he also worked at The Federal Reserve Bank of New York. 

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Pam Eaton

Pam Eaton is a Denver-based consultant.

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