The Navajo community in northern Arizona has cautiously welcomed an announcement by the owners of the failed coal-fired Navajo Generating Station (NGS) in northern Arizona to the effect that the owners will continue to move forward to decommissioning of the plant in December 2019.
Courtesy of Alan Stark, Flickr
The owners of NGS, which include Salt River Project (SRP), Arizona Public Service Co., Tucson Electric Power Co., and NV Energy, decided in February 2017 (reported by REM on 16th May 2017) that they would no longer own and operate the coal-fired plant after its lease ends later this year on 22nd December.
The decision in 2017 was taken following the release of a report - End of an Era: Navajo Generating Station Is No Longer Economic - by the Institute for Energy Economics and Financial Analysis (IEEFA), to the effect that the power plant, which is situated on land owned by the Navajo Nation and dates from the 1970’s, can no longer compete with power produced by other means, particularly renewable energy.
To this effect, the owners have taken various steps to enable any interested entity to evaluate and potentially continue the operation of NGS, upon receipt of all the necessary approvals. Most recently, the owners in October began discussions with Navajo Transitional Energy Company (NTEC) at the request of the Navajo Nation and supported NTEC's pursuit of a possible asset transfer by making available information related to NGS and by providing access to the plant.
However, according to the owners, while they have been willing to explore avenues for NTEC to assume ownership of NGS, NTEC is not able to provide the required assurances to protect the plant's owners, their customers and shareholders in the event of a sale. Therefore, because of time challenges to meet their decommissioning obligations, the owners will continue to move forward with plans to decommission NGS later this year.
The NGS owners have said they will continue to fulfill their commitments to the Navajo Nation and the NGS employees as they prepare to cease operations of the plant. Meanwhile, operations at NGS continue to be conducted in a safe manner for employees and investments continue to be made to complete the decommissioning of the plant within the current agreed-upon timelines with the Navajo Nation.
As REM reported in May 2017, keeping the plant running until 2030 would have required a total bailout of $1.4 billion to $2.4 billion. The IEEFA report also noted that the viability of the plant in recent years has been dealt a circular one-two punch. First, the price of the power being sold by the plant has not covered the full cost of producing it. In other words, it is operating at a net loss for each of the MWh of power it sells. Secondly, as the cost of producing the power at the plant has risen, the plant has begun to produce significantly less power in recent years than it had previously generated.
“SRP said there’s no path forward in their negotiations with NTEC” said Percy Deal, a resident of the Navajo Nation, responding to the owners comment that NTEC wasn’t able to provide the required assurances. “There’s no path forward on prolonging coal, period. There’s no believable business plan you can write when the market signals that something like coal is simply no longer economically viable. Our Nation should be talking with SRP, but about renewable energy, not coal.”
Nicole Horseherder, of grassroots community organisation Tó Nizhóní Ání (“Sacred Water Speaks”) which aims to preserve and protect the natural resources of the Black Mesa region, added that NGS owners and Peabody have mined and burned coal on Navajo land for 50 years and that as a result there is generations of contamination that the owners are accountable for cleaning up.
“The Navajo Nation should never let them off the hook for that” said Nicole Horseherder. “The plan to retire NGS in December provides full accountability and guarantees proper cleanup and reclamation. And it gives the owners the certainty they need. Coal markets are dead and this moment provides an opportunity for the Navajo Nation to stop wasting time and move on to build a clean energy economy.”