Interior Dept., Peabody Energy Seek to Keep Coal-Fired Navajo Plant Open

The Navajo Generating Station can continue to be competitive under a reduced-price fuel proposal through 2040, said Peabody Energy, the coal giant which owns a coal mine currently fueling the Arizona plant.

The utility owners of the Navajo plant on February 16 voted to shut down the 2,250-MW coal-fired power plant in December 2019. The decision to close the plant on tribal land near Page along the border with Utah was based on the “rapidly changing economics of the energy industry,” which has seen natural gas prices sink to record lows, the plant’s owners said.

The plant is operated by Salt River Project (SRP). SRP is a utility owner along with Arizona Public Service Co., Tucson Electric Power Co., and NV Energy. The U.S. Bureau of Reclamation is a participant in the project.

But according to the Arizona Republic, Peabody Energy told regulators last week that the power plant could profit under new ownership. The newspaper reported that the coal company’s officials are “positioning the Navajo Generating Station for new buyers to come in and take over the troubled coal plant, which would allow the company to continue selling coal to the facility” from its Kayenta Mine in northern Arizona.

Peabody on April 6 publicized findings from a long-term analysis of the plant’s economic performance conducted by Navigant Consulting, which suggest a new fixed-price proposal would keep the plant competitive with natural gas and other coal-fired power plants.

The study commissioned by Peabody projects that the plant would “remain one of the lowest variable cost generating resources in the region, dispatching at a high level with an annual capacity factor averaging over 80 percent from 2020 to 2040.” Power plants with the lowest costs typically dispatch first and have a high capacity rate, the company noted.

It also claims that under the reduced-price fuel proposal, the plant would continue to have variable operating costs below regional natural gas combined cycle plants. The plant could also see greater non-fuel operating and maintenance cost savings of approximately $160 million through 2040.

The plant is located on tribal lands, and both the Navajo Nation and Hopi Tribe are seeking support to keep the plant open.

On April 12, meanwhile, newly confirmed Interior Secretary Ryan Zinke and other officials from the Bureau of Reclamation met with Navajo Nation and Hopi leaders to discuss how the government could help to keep the plant from closing.

Navajo Nation President Russell Begaye said in a statement on April 12 that the tribal government has asked the Interior Department to guarantee access to transmission lines to export wind and solar power if the plant should close.

“The primary goals of the Navajo Nation are to renew our lease and explore all ways to keep the Navajo Generating Station open until 2029,” Begaye said. “To shut down prematurely will create a devastating impact for Navajo, as over 40% of our entire budget and infrastructure is tied to revenues generating from both [Navajo plant] as well as the Kayenta mine.”

Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)