A Battle Of Energy-Producing Native Americans Vs. Report-Producing Federal Contractors

Chuck DeVore | Vice President, Texas Public Policy Foundation

In Northern Arizona, the Navajo Generating Station (NGS) and a coal mine team to produce reliable, affordable electricity while providing 755 good-paying jobs, about 90 percent of whom are Native Americans. A federal report now threatens these jobs.

In Boulder, Colorado, 500 miles to the northeast, $357 million of federal funding employs 1,700 contractors at the National Renewable Energy Laboratory (NREL). They write reports, including the one critical of the Navajo Generating Station published last November.

There is a conflict between these two groups: one that produces electricity and the other that produces reports.

As the name suggests, the National Renewable Energy Laboratory promotes renewable energy. Many people, especially other government employees, take the NREL’s pronouncements seriously.

Recently, officials at Arizona’s Salt River Project, a utility cooperative run by the State of Arizona that provides $3 billion of water and power to the region, questioned the cost-effectiveness of the Navajo Generating Station based on the NREL report. Their opinion is significant because they operate NGS and own 42.9 percent of the facility.

The Central Arizona Project, a state government agency, uses enormous amounts of electricity to pump water from the Colorado River east to serve more than 5 million people in the Phoenix area. Central Arizona Project officials also criticized the NGS, saying that they could have saved $38.5 million last year if they had bought their power on the open market. NREL’s report informed this criticism.

At the same time, Central Arizona Project officials were critical of the U.S. Bureau of Reclamation under Pres. Obama, writing in a December 28, 2016 letter that the federal agency ignored its own data when deciding that there would adequate and affordable power available in the future to meet Arizona’s water pumping needs. In fact, as the Central Arizona Project’s general counsel noted, Reclamation admitted it has no idea where the power will come from.

Arizona Sen. John McCain, a Republican, and newly elected Rep. Thomas O’Halleran, the Democrat who represents the power plant and coal mine workers, both sounded notes of caution, calling on the Bureau of Reclamation, which owns 24.3 percent of NGS, to develop plans to maintain the plant’s operation.

Were it not for Pres. Donald Trump’s victory, NGS would be closing soon. However, unnamed Trump Administration officials at the Department of the Interior urged otherwise. They note that, “Key partners at the Navajo Generating Station, including the Bureau of Reclamation, agreed to extend the operating timeframe for the station until 2019, which will provide all parties with the opportunity to look at all of the options for solving this problem in the future.”

One of those problems originates in California where a 2006 law bans the renewal of electricity contracts from coal-fired power plants, facilities that are common in the West outside of California. California imports about a third of its electricity. Thus, its anti-carbon mandates combined with powerful renewable energy subsidies are cannibalizing inexpensive base load power across the Western grid that serves 85 million people in 13 states, Canada and Mexico.

The NREL report claims that NGS isn’t competitive in Arizona’s energy markets. NREL arrives at this conclusion by comparing wholesale electric spot market prices with NGS’ all-in costs. However, wholesale power prices only capture the variable costs of generation. Further, NREL’s study calculated natural gas prices at 15-year lows last year. Prices have since doubled and may go even higher if the Trump Administration sees success in its plans to export American natural gas.

Casting serious doubt on NREL’s methods, looking at the 11 Western states that entirely or mostly fall within the Western Interconnection, it is instructive to see that states that rely on coal and hydroelectric for their base load needs provide the lowest cost electricity while states that rely more on natural gas, wind and solar have higher electricity costs. California’s retail electric rates were 62 percent higher than the average in the West in 2015.

Lastly, there have been no updated analyses of the Western electric market based on the implications of the new Trump Administration’s policies.

President Trump campaigned on a platform of saving American coal jobs while Hillary Clinton campaigned on destroying those same jobs.

Similarly, the NREL report’s lead author, David Hurlbut, contributed some $600 to Clinton’s campaign and other liberal causes in the last election cycle. Hurlbut is far from alone at the NREL where some 91 percent of employees’ federal donations went to the left.

The bottom line is simple: liberal federal contractors at the National Renewable Energy Laboratory can’t be trusted to produce unbiased reports about America’s energy needs.

President Reagan cut the budget of the NREL’s forerunner by 90 percent, but couldn’t kill it. It sprang back to life, proving Reagan’s maxim that, “A government bureau is the nearest thing to eternal life we’ll ever see on this earth!”

With Trump in charge and former Texas governor Rick Perry slated to take the reins of the Department of Energy, it’s time to try again to eliminate this government bureau. Making 1,700 highly educated federal contractors look for work is preferable to eliminating almost 700 Native American jobs—jobs that produce affordable American energy instead of costly reports critical of that energy.

Chuck DeVore is a vice president with the Texas Public Policy Foundation and a former California State Assemblyman

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