The Western US’s Largest Coal Plant Faces New Threat — No Buyers

Michael Bastasch | Energy Editor
  • Trump’s plan to keep a Navajo coal plant open is in jeopardy.
  • The only company interested in buying the beleaguered plant pulled out Thursday.
  • The plant has been struggling to stay afloat for years, and is slated to close at the end of 2019.

The survival of the largest coal-fired power plant in the western U.S. just became even more precarious.

The only company to show an interest in buying the Navajo Generating Station (NGS) informed Navajo Nation on Thursday it would not move forward with acquiring the 2,250-megawatt coal-fired power plant.

Middle River Power told Navajo leaders it was unable to secure enough buyers of power to justify buying the coal plant, despite still believing the plant is viable beyond 2019.

It’s a blow to the Trump administration’s plan to keep NGS operating and providing jobs and economic security to its largely American Indian workforce. The plant and its accompanying mine employ hundreds of Navajo and Hopi tribe members.

“The Department remains committed to exploring options that stakeholders may present for an economically-viable option for the Navajo Generating Station,” Bureau of Reclamation spokeswoman Theresa Eisenman told The Daily Caller News Foundation.

NGS is co-owned by the Department of the Interior and four utilities. The Salt River Project, a co-owner, operates the massive coal plant, which is located in Navajo Nation territory in Arizona. (RELATED: EPA Abandons Obama-Era Climate Rule That Brett Kavanaugh Struck Down)

Interior Secretary Ryan Zinke has made keeping the plant open a major priority as part of President Donald Trump’s pledge to revive the coal industry. Navajo Nation heavily depends on NGS revenues and jobs to stay afloat.

“Interior will continue to support a path forward that meets this objective and recognizes the economic implications to the Navajo Nation and Hopi Tribe, as well as Tribes and water users in central and southern Arizona,” Eisenman said.

The Interior Department partnered with the coal miners union and Peabody Energy, which operates the nearby Kayenta mine, to keep NGS from closing. If no new buyer is found, Salt River Project will continue with plans to shut NGS down at the end of 2019.

Things aren’t looking good. The Central Arizona Project, NGS’s largest customer, recently approved a 20-year power purchase agreement with a solar power plant, and plant opponents say it can’t hope to compete with cheap natural gas and renewables.

“The Navajo Nation should now focus its efforts to transitioning its economy off of coal and into renewable energy,” Nicole Horseherder, executive director of the anti-NGS group To Nizhoni Ani, told Bloomberg Environment. “They need to own and operate their own energy.”

NGS supporters blame Obama-era policies and environmental activist litigation for much of the coal industry’s struggles, including NGS’s challenges.

“As part of Obama’s war on coal, Navajo Generating Station was always at the top of his Disposition Matrix,” Daniel Kish, senior distinguished fellow at the free market Institute for Energy Research, told TheDCNF.

“Obama’s EPA conducted multiple strikes against the target, and unfortunately, the Navajo and Hopi people are the collateral damage,” Kish said. “Let us hope President Trump will figure out a way to keep this valuable national asset producing energy and jobs for the Navajo and Hopi.”

Environmentalists have been looking to close down NGS for years. Indeed, NGS has been the victim of not just low-priced natural gas, but also state and federal policies designed to reduce coal-burning.

A 2008 California law effectively prohibits state utilities from entering into power purchase agreements with coal plants. California Democratic Gov. Jerry Brown also signed into law legislation to require the state to get all of its electricity from “carbon-free” energy sources by 2045.

As recently as 2014, NGS was one of three coal plants that supplied 50 percent of Southern California’s summer power demand. In fact, Mid River Power cited California’s policies as a reason why it wouldn’t buy NGS.

“Unfortunately, recent developments in California and Arizona will create additional challenges for baseload power plants, and it has not been possible to secure from counterparties commitments to purchase a sufficient amount of power generated from Navajo Generating Station to enable a workable operating paradigm,” Mid River Power said in a statement to Bloomberg Environment.

The Obama administration’s Environmental Protection Agency (EPA) also took a swing at NGS, forcing the plant to shut down one of its coal generators after 2019 and add costly emissions control equipment by 2030.

There is some hope for NGS. Arizona Republican Gov. Doug Ducey signed into law a bill exempting NGS from state sales tax. The Trump administration is also committed to keeping the plant open.

Navajo Nation also wants to keep the plant open, but has also hinted it might allow other developers to come in and possibly convert NGS to solar or natural gas.

Navajo National Council spokesman told E&E News “there are many new technologies that are becoming more and more feasible options, and there is no shortage of interest in NGS by such developers.”

“We’ve had many potential buyers and developers approach the Nation,” the spokesman said.

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