Chicago Company Preparing Offer for Navajo Generating Station
A suburban Chicago-based energy company executive on June 7 told Arizona officials his group is putting together a proposal to purchase the Navajo Generating Station (NGS), the largest coal-fired power plant in the western U.S. The plant’s current owners have said they will close the 2,250-MW facility by year-end 2019 unless a buyer is found.
Workers, their family members, union representatives, and tribal leaders had rallied Wednesday in Phoenix, asking state officials to slow the process of closing the plant, which employs hundreds of Native Americans along with the nearby Kayenta Mine that supplies coal for the plant. Joe Greco, senior vice president of Middle River Power in Chicago, told the Central Arizona Water Conservation District board on Thursday that his company could operate the plant efficiently and economically.
The water board was meeting Thursday to consider bids for the future power supply to pump water for the Central Arizona Project (CAP), which supplies some of the state through an aqueduct system from the Colorado River. The NGS at present provides about 75% of the power for the CAP. The district wants to ensure an adequate power supply beyond the plant’s scheduled closing date.
The federal government also could intervene to keep the plant operating, either as part of the Trump administration’s potential effort to prop up U.S. nuclear and coal plants, or as part of a 1968 law that created the CAP during the Johnson administration.
Middle River Power manages power plant investments for New York City-based Avenue Capital, a global investment firm that focuses on distressed debt and other special situation investments. Greco did not provide information about what Middle River might offer for the plant. He did say his company is serious about buying the facility and “to keep the NGS operating well into the future.”
Middle River’s interest in NGS was first reported by Bloomberg in April, based on emails it obtained that showed a representative with the Lazard investment company reached out to a CAP representative regarding the plant. Lazard has been retained by Peabody, owner of the Kayenta Mine, to find potential buyers for the plant and coal mine.
The board on Thursday denied Greco’s request to delay approval of agreements to buy power from other sources to supply the CAP. The board said it needs to move ahead with the process of finding alternative sources of electricity, noting the system already relies on multiple power sources, including hydro plants in Arizona. The board approved deals Thursday for about 14% of the CAP’s energy needs.
Timothy L. Nuvangyaoma, chairman of the Hopi Tribe, told the board: “Let’s slow this process down, answer questions and give the prospective owner a chance.” Nuvangyaoma said the tribe gets about 85% of its operating budget revenues from the plant and coal mine and said closing them would be “economic catastrophe.”
Four utilities—Salt River Project, Arizona Public Service, Tucson Electric Power, and NV Energy—have ownership stakes in the NGS. The owners have for months said the plant is no longer economically viable to operate. The current ownership deal expires in December 2019. A search for new ownership has yielded no results, although there reportedly have been groups interested in purchasing the facility prior to Middle River’s announced interest. Arizona lawmakers earlier this year approved a tax break for the plant to make it more attractive to potential buyers.
Middle River, based in Deerfield, Illinois, owns three gas power plants located in California, Virginia, and West Virginia; a geothermal plant in California; and the 385-MW coal-fired C.P. Crane plant near Baltimore, Maryland, which is scheduled to close this month. Middle River has owned the Crane plant for just more than two years after purchasing it from Talen Energy. Terms of that sale were not disclosed.
—Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).