Coal Plant Owners, Beneficiaries, Enviros Propose “Better-than-BART” Alternative to EPA

Stakeholders of the coal-fired Navajo Generating Station on Friday proposed to shut down a 750-MW unit at the plant by 2020 as an alternative to an Environmental Protection Agency (EPA) rule that requires the owners to install costly Selective Catalytic Reduction (SCR) technology on all three units by 2018.

The 2.3-GW coal-fired power plant located near the Grand Canyon on the Navajo Indian Reservation, close to Page, Ariz., delivers more than 90% of power needed for pumping Colorado River water to central and southern Arizona for the Central Arizona Project (CAP). Meanwhile, the Navajo Nation’s economy is soundly invested on the power plant and its coal supplier, the nearby Kayenta Mine, both which support more than 1,000 private sector jobs and thousands of public sector jobs in the semiautonomous Navajo Nation government.

Citing visibility impacts to the Grand Canyon, the EPA this February proposed a Best Available Retrofit Technology (BART) rule for the Navajo plant that would require its owners—the U.S. Bureau of Reclamation and five utilities: Salt River Project (SRP), Los Angeles Department of Water & Power (LADWP), Arizona Public Service Co., Nevada Power Co. and Tucson Electric Power Co.—to install SCR technology on all units by 2018 to reduce emissions of nitrogen oxides (NOx). But recognizing the power plant’s importance and its "unique circumstances," the agency also proposed an alternative that encouraged voluntary installation of low-NOx burners at the plant in exchange for an extended schedule requiring installation of SCR on one unit per year between 2021 and 2023. It also invited submittal of alternative proposals that would achieve the same or greater emissions reductions as the EPA’s proposal.

However, according to plant operator SRP, installing SCR on all three units could cost about $544 million and exceed $1.1 billion if additional equipment is required to remove air-borne particulates created by the SCR process.

A Better-Than-BART Alternative

The alternative agreed on and proposed on July 26 by a Technical Working Group (TWG) made up of various interested parties will allow continued operation of the Navajo plant, but it also takes into account commitments by the U.S. Department of Interior (DOI) to reduce carbon dioxide emissions as well as to study opportunities to transition the federal share of the Navajo plant over time, the group said. The TWG consists of representatives from the Central Arizona Water Conservation District, the Environmental Defense Fund, the Gila River Indian Community, the Navajo Nation, SRP (on behalf of itself and the other plant owners), the DOI, and Western Resource Advocates.

The July 26 proposal essentially calls for closure of one 750-MW unit by January 2020 and for SCR to be installed on the remaining units by 2030—but only if the LADWP and NV Energy divest ownership in the plant as expected by 2019, and if the Navajo Nation chooses not to exercise an option to purchase a portion of the plant’s ownership shares. According to the TWG, the LADWP and NV Energy together "own the equivalent of almost exactly one unit at [the plant]." If the ownership situation plays out differently, the group proposes that the EPA should require NOx reductions equal to the shutdown of one unit between 2020 and 2030. That would require the plant’s owners to submit annual plans to the EPA starting in 2020 and through the end of 2044 describing measures that they are taking to achieve greater emission reductions than outlined in the EPA’s original February 2013 rule, and which would likely require "a combination of retirement in capacity or curtailment in utilization at the plant and new emission controls," the TWG said.

Both scenarios will require the plant’s current owners to cease operation of all conventional coal-fired generation at the Navajo plant by December 2044, however.

“Given the challenges associated with the timelines specified in the proposed rule, the development of an alternative proposal was essential,” said Mike Hummel, chief power system executive at SRP. “The TWG proposal provides a path for the future operation of NGS that incorporates potential ownership changes and provides a much needed extension to the schedule for installing SCR at [the plant]."

If the EPA, after review, agrees that the proposed "Reasonable Progress Alternative" to BART is an acceptable "better than BART" alternative, the EPA will issue a supplemental proposal that provides public notice and requests public comment on the proposal. The EPA will then provide public notice when it issues a final BART rule.

Feds to Mitigate Effects of BART Proceedings on Tribes

Significantly, the TWG’s agreement on the proposal submitted to the EPA, reached on July 25, calls for a commitment by the plant’s non-federal owners to establish a $5 million local benefit fund for community improvement projects within 100 miles of the plant or the Kayenta Mine. According to Ben Shelly, president of the Navajo Nation, the plant is important to the largest Native American–governed territory in the U.S. "because current and future payments generated by [the Navajo plant] directly benefit the Nation." The Nation "has never accepted the prospect of shutting down one unit at [the plant]," he said, though he noted that in response to the current EPA proposed rule, the TWG’s proposal is a "reasonable compromise" by all parties. "While this compromise may negatively impact the Nation’s overall economy, it is better than the potential for a complete shutdown of [the Navajo Station] in 2019, or before the end of the 25-year lease extension period in 2044," Shelly said.

Another noteworthy aspect of that agreement is that it commits the DOI (outside of the "better than BART" alternative) to promote development of "clean energy" with an emphasis on Indian Tribes affected by the Navajo plant. The agreement requires the federal agency to identify options for replacing the federal share of power (26,975,000 MWh) from the Navajo plant with zero- or low-carbon dioxide emitting options, and to reduce carbon dioxide associated with power used to pump Central Arizona Project (CAP) water by 3% annually (for a total of 11.3 million metric tons). The DOI will achieve this, according to the agreement, through a credit-based carbon dioxide tracking and accounting program that assures the reductions are accurately measured.

Meanwhile, the agreement requires the U.S. government to "take actions" to mitigate the effects of the BART proceeding and other developments on the rising costs of CAP water for Arizona Indian tribes with CAP water contracts, in addition to providing at least $100 million in new funding for CAP water costs for those tribes starting in 2020—without requiring additional Congressional authorization.

“The fate of [the Navajo Station] is of critical importance to Central Arizona Project,” said CAP Board President Pam Pickard. “The TWG proposal preserves the viability of NGS and thus provides certainty that CAP can continue to provide reliable and affordable water supplies to our customers for many years.”

Sources: POWERnews, SRP, Navajo Nation, CAP

Sonal Patel, Senior Writer (@POWERmagazine, @sonalcpatel)

NOTE: This story was originally published on July 30

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