2.2-GW Coal-Fired Behemoth Could Permanently Close This Week

The 2,250-MW coal-fired Navajo Generating Station (NGS) in Arizona will permanently close likely this week, ending a long and bitter fight to keep the plant and its affiliated coal mine open.

The plant’s utility owners—Salt River Project (SRP), Arizona Public Service Co., Tucson Electric Power Co., and NV Energy—in February 2017 voted to shut down the plant located on tribal land near Page along the border with Utah, citing “rapidly changing economics of the energy industry,” which has seen natural gas prices sink to record lows.

SRP, the plant’s majority owner, told POWER in an email on Nov. 12 that operations at the plant are now expected to end within the next week, once fuel on site has been exhausted. “The best estimate now is for all units to be shut down permanently on Nov. 15—but that could change,” a spokesperson said.

After the project’s utility owners voted to close the plant in 2017, coal mining giant Peabody Energy, the Department of Interior (whose Bureau of Reclamation is a participant in the project), and the Navajo Nation launched concerted attempts to find an outside buyer to keep running the plant.

In September 2018, however, companies negotiating to buy the largest coal-fired power plant in the southwestern U.S. ended their pursuit. Avenue Capital ,a New York-based global investment firm focused on distressed assets, and Chicago-based Middle River Power told the Navajo Nation in a letter, “We have concluded, regrettably, that the steps required to facilitate our ownership and operation of NGS are no longer possible within the required timeframe.”

And this March, after a Navajo tribal council voted to block acquisition of the NGS and Peabody Energy’s Kayenta coal mine, the Navajo Transitional Energy Co. (NTEC) announced it would drop its bid to keep the plant open. Though the plant’s owners granted several extensions and began discussions with NTEC to pursue a possible asset transfer in October 2018,following the vote, they moved forward with decommissioning the plant.

The coal-fired Navajo Generating Station in northeast Arizona provides almost 1,000 jobs between the plant and the mine that supplies it, but the plant’s operators have said they plan to shut it down after 2019. (Photo by Amber Brown/Courtesy SRP)

Construction of the three-unit plant began in 1969. The first 750-MW unit began producing electricity in 1974. Commercial operation of the other units began in 1975 and 1976. According to SRP, it cost $650 million to build, but plant owners have invested another $645 million in environmental controls over the years. In the 1990s, owners spent $420 million on new sulfur dioxide scrubbers and $45 million between 2009 and 2011 to reduce nitrogen oxide emissions.

NGS, which is powered by low-sulfur bituminous coal from the Kayenta Mine located 78 miles away, serves customers in Arizona and Nevada. It supplies more than 90% of the power needed to pump water through the Central Arizona Project (CAP), which is both the single largest end-user of power and the single source of renewable water supplies in Arizona.

CAP told POWER in March that it has been working to find alternative energy supplies to deliver water in 2020. “Thus far, the CAWCD [Central Arizona Water Conservation District] board has approved a 5-year purchase power agreement with Salt River Project and a 20-year purchase power agreement with AZ Solar 1, LLC. Other resources will be hydropower with Hoover Dam to firm up the solar power and buying power on the open market. The CAWCD board directed that no more than 20% of our energy shall come from any single source,” it said.

Sonal Patel is a POWER senior associate editor (@sonalcpatel, @POWERmagazine)



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