Arren Kimbel-Sannit

Monday, Feb. 20, 2017

Hard choices ahead as officials look at future of Navajo power plant

WASHINGTON – Despite pledges to look for alternatives, closing the Navajo Generating Station in Page could devastate the local economy, where hundreds of jobs rely on the plant and affiliated coal mine and where experts see few, if any, workable solutions.

To replace the 800 jobs that would be lost at the plant and the mine, planners and policymakers must overcome a lack of economic diversity in the remote region as well as low demand for the relatively costly power the plant produces. Proposals to replace the plant with sustainable energy are costly in themselves and will not go far toward replacing lost jobs.

In short, there are no easy answers, and the clock is ticking for the workers, most of whom are Navajo and Hopi.

“Closing it (the plant) would be a very bad backwards step for that area,” said Tim James, an Arizona State University economist who worked on multiple economic impact studies for the power plant and mine. “If you’re looking at that part of Arizona, it’s one of the biggest employers in terms of numbers.”

The owners of the coal-fired plant – which provides much of the power to the pumps of the Central Arizona Project, the canal that has enabled the explosive growth of Phoenix and Tucson – voted last week to close when its lease ends in December 2019. The plant is old, has been called one of the dirtiest in the country and has been undercut by low prices for natural gas that fuel other plants.

The power plant is also the only customer of the nearby Kayenta coal mine, which sends its coal to NGS on a dedicated rail line. An official with Peabody Coal, the mine’s owner, said no decision can be made on the fate of the mine while negotiations over the plant’s future continue, but it’s likely that as goes the power plant, so goes Kayenta.

“It’s almost like having an economy based only on one type of job,” James said. “It’s a very remote area reliant on one type of industry.”

In a different area, solutions might include something like building a shopping mall – but without the plant, there wouldn’t be area customers to patronize it. And if the plant closes, James said, local buying power will decrease, jeopardizing other nearby businesses.

“There’d be second-order job loss in different areas,” he said. “What can the Navajo Nation do to make itself attractive? What it sold itself on is that it had coal. You could build roads there, but it would be a road to nowhere.”

Despite the challenges, statements from Peabody and the Navajo Nation both emphasized a desire to keep the plant open past 2019 – but little sense of what might happen if they can’t.

“The Navajo Nation stands on its proposal to keep NGS in operation until 2030 and our proposal is still on the table to keep it in operation until that time,” Navajo Nation President Russell Begaye said in a statement when the closing was announced last week.

“Key players like Peabody Coal, which solely supplies coal to NGS, is willing to negotiate its coal-supply agreement. The owners of NGS should reconsider and work with the Navajo Nation, Peabody and the federal government in continuing the operation beyond 2019,” his statement said.

The Navajo Nation could feasibly assume plant operations, James said. As long as the management remained, it shouldn’t run any differently.

“The question would be, if they owned it and tried to sell power as the nation, whether SRP (plant operator Salt River Project) or the federal government would be willing to buy the power,” he said. “They’d want some kind of long-term agreement. But it’s difficult to do that with a coal-fired plant.”

He called it unlikely that another company would want to take on the plant, unless the current owners essentially gave it away. The money to buy NGS and defray costs associated with it could more effectively be used to construct a natural gas facility in a better market, he said.

Navajo environmental groups understand this, and want the nation to focus more on its potential for wind and solar energy.

“We have a responsibility to our future generations to begin a just transition away from fossil fuels now,” said Black Mesa Water Coalition Executive Director Jihan Gearon in a statement after the announcement that the plant would close in 2019.

“We are blessed with some of the best wind and solar energy resources in the world, and these are what will help us build a sound economic foundation that is sustainable, restorative and just,” her statement said.

But James said “renewables are very volatile.”

“You need a constant source of power to pump water around the state,” he said. “You can’t use it as the main source for the CAP. You need a backup. That makes it very expensive.”

Furthermore, a solar or wind farm would not recoup all the jobs lost at the plant and mine. Both solar and wind power require significant upfront cost and labor, but then only need intermittent servicing and cleaning – and relative to the high-skilled jobs on a coal-fired plant, solar maintenance would be more comparable to window washing, James quipped.

But Rep. Tom O’Halleran, D-Sedona, said renewables are an option that has to be considered.

“Longer term, the renewable portfolio part of it is important. We’ve asked the Bureau of Reclamation to look into renewable energy – what is their capacity up there?” said O’Halleran, whose district includes the NGS and much of the Navajo and Hopi reservations.

For now, he said he hoped the two-year window could allow time to find a solution.

“This gives us an opportunity to work on these issues,” he said. “We have staff embedded into the economic development groups up there.”

And it gives those 800 workers and their families some breathing room,

“Obviously, I’m happy for those families right now,” O’Halleran said.