The West’s Largest Coal Plant Is Running Out Of Options

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Jason Hopkins Immigration and politics reporter
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The sun may be setting on the Navajo Generating Station, as several options to save the unprofitable plant have either failed or are near collapse.

As soon as it was announced on April 30 the Navajo Generating Station — the largest coal-fired plant west of the Mississippi River — would soon be closing down, people tied to it immediately began to weigh different rescue strategies. Proposed legislation at the  federal level has failed, and potential new buyers have so far not committed to a deal. If a buyout agreement isn’t reached, time will run out, the owners of NGS said.

Located near Page, Ariz., NGS has been in operation since the 1970s. It not only provides electrical power for customers across the region, but it’s also a crucial source of revenue and employment for Navajo Nation — the largest Native American reservation in the country. The 2,250 megawatt coal plant provides around 500 jobs, with over 90 percent of those positions filled by Navajo members, according to the Salt River Project, an owner and operator of the plant. The Hopi, a smaller native tribe in the region, also benefit economically from the plant. NGS accounts for 22 percent of the Navajo tribe’s total revenue and 85 percent for the Hopi.

However, Salt River Project plans to close the plant down, citing continual losses of revenue. NGS can potentially be saved if new buyers step in and take ownership. Such a feat may prove impossible considering even SRP officials said making the plant profitable again would take a “unicorn.”

If a buyout deal isn’t reached, NGS will cease operations at the end of 2019. (RELATED: Largest Coal-Fired Plant In The West On Brink Of Shutting Down)

NGS’s woes are emblematic of the U.S. coal industry as whole, which has been hammered in recent years with strict environmental regulations and stiff competition from natural gas. The plant’s demise would also mean the closure of the nearby Kayenta mine, a coal mine whose only customer is NGS. The Kayenta coal mine employs 345 people — 99 percent of whom are Native American.

In April, Arizona Gov. Doug Ducey signed legislation that will exempt coal from sales taxes in the state. The bill, however, doesn’t go into effect unless NGS is sold and a new lease is signed by 2023.

“[The bill] did nothing more than provide a mechanism to end an unjust tax that drove the price of coal up, making it harder to compete with other fuels,” Finchem said in a Tuesday statement to The Daily Caller News Foundation. The Republican lawmaker says the taxes levied on NGS are unlawful.

U.S. Rep. Paul Gosar would be introducing federal legislation this week aimed at keeping NGS open, a local report indicated on Monday. The bill reportedly would require the Central Arizona Project, NGS’ largest customer, to continue purchasing their power. However, a spokesman at Gosar’s office told TheDCNF on Monday the bill would no longer be introduced “this week” and a relevant committee meeting was cancelled. The spokesman did not provide any further details.

Peabody Energy, the owner of the Kayenta Mine, has enlisted the help of a prominent consulting firm to locate potential buyers. Their efforts appeared to be gaining steam at first, where officials revealed a number of prospective buyers had come forward — but a deal has yet to be reached. NGS owners “have not received an offer to purchase the plant or entered into negotiations with any interested party,” a Salt River Project spokesman confirmed to TheDCNF on Monday.

Nevertheless, Peabody Energy projected confidence when TheDCNF contacted them.

“We are encouraged by the progress to support the transition of the plant to new owners and will continue working with stakeholders to advance all possible steps to keep the plant online well beyond 2019,” read a Tuesday statement from Charlene Murdock, director of corporate communications at Peabody.

Correction: An earlier version of this story incorrectly suggested an Arizona bill died in the state Senate. HB-2003-2018 passed both chambers and was signed by the governor. 

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