Largest Coal-Fired Plant In The West On Brink Of Shutting Down

Jason Hopkins | Energy Investigator

Mere days are left to close a deal that would keep the Navajo Generating Station in operation, saving hundreds of jobs and crucial revenue for the local Native American community.

The Navajo Generating Station (NGS), a coal-fired plant located near Page, Ariz., has been an economic mainstay for its employees and their families since it went into operation in the 1970s. The 2,250 megawatt plant provides more than 700 jobs, with members of the Navajo and Hopi tribes filling the bulk of those positions. Furthermore, NGS accounts for 22 percent of the Navajo tribe’s total revenue and a stunning 85 percent for the Hopi. Beyond the benefits for the Native American community, NGS generates power to residents in Arizona, California and Nevada, and keeps the nearby Kayenta mine in operation.

However, the largest coal-fired plant west of the Mississippi River is due to shut down in December 2019 — decades before its original decommission date. In what may be the latest example of how the U.S. energy industry has changed drastically in recent years, NGS has become unprofitable against more competitive sources of electricity. With the invention and implementation of hydraulic fracturing making it a cheap and abundant resource, natural gas has skyrocketed as a top fossil fuel source for Americans, rendering coal much less feasible. Salt River Project — the operator and major stakeholder of NGS — said it wishes to close NGS because it can obtain cheaper electricity from natural gas plants.

After Salt River Project revealed it planned to shutter the plant, a public relations campaign was launched to save it. Lazard, an investment banking firm with international reach, was hired to locate potential buyers. The good news for NGS supporters is that Lazard has been in talks with two companies — Avenue Capital and Middle River Power — that are interested in a joint-ownership operation. Unfortunately, time is waning quickly.

Salt River Project (SRP) said a deal would need to be finalized by mid May or else a sale would likely not be completed by closing time.

“With no new owner stepping forward, we are now reaching a period where time is a critical factor in being able to develop and execute the myriad of agreements that would be required for a transaction for the transfer of ownership,” wrote SRP CEO Mike Hummel Monday to the Department of the Interior.

SRP leadership is not at all optimistic about what another owner could do at the helm. SRP President David Rousseau said in February that it would take a “unicorn” to churn a profit out of NGS.

Nevertheless, the stakes are considered too high for the families that depend on the plant for their livelihood. If NGS closes, so does the Kayenta coal mine located within the Navajo Nation. Both the mine and plant employ hundreds of Native Americans in northern Arizona — a community that already suffers from extreme poverty.

“We already suffer from an unemployment rate of more than 60 percent,” said Hopi tribe Chairman Tim Nuvangyaoma to a panel of House lawmakers on April 12. The House Natural Resources Committee convened a meeting that day to discuss what to do with the failing power plant. Nuvangyaoma, along with other tribal leaders, lobbied lawmakers to take action. “I cannot stress enough the severity of the financial consequences for my tribe if NGS closes,” he said.

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