Coal Industry Makes Pitch To Keep Navajo Generating Station Open

Published: Friday, April 7, 2017 - 5:00am
Updated: Friday, April 7, 2017 - 3:05pm

Representatives of the coal industry say the West’s largest coal-fired plant, the Navajo Generating Station, can provide cheap, reliable energy for years. That is, if it stays open.

On Thursday, the Arizona Corporation Commission heard arguments from Peabody Energy, owner of the Kayenta Mine that feeds the plant, about why the state should stay in the coal business.

“To prematurely retire NGS more than two decades before the end of its useful life would negatively impact the diversity and security of Arizona’s generation portfolio,” Bryan Galli of Peabody Energy said.

Economics, primarily the cheap price of natural gas, drove Salt River Project to decide not to renew its lease with the Navajo Nation in 2019.

But Galli said SRP’s isn’t accounting for the volatility of gas prices as demand rises in the future.

“Much of that analysis is based on data that we believe is not reflective of industry fundamentals and doesn’t represent a long term commitment to provide certainty related to costs,” he said.

Galli also cited the reliability of coal as a power source and the importance of keeping a diverse energy portfolio in the state. About 30 percent of Arizona’s energy mix comes from coal. That would drop to about 17 percent if NGS shuts down.

Galli warned that the cost of pumping Arizona’s water from from Lake Mead could go up, too, but estimates from the agency in charge of that, the Central Arizona Project, show it would actually save money.

"It seems like they are grasping at straws,” said Martin Pasqualetti, professor at Arizona State University. “All predictions are that natural gas is cheaper and, of course, it provides the same kind of base load power that coal does for less money and a lot less pollution.”

While Arizona should have a diverse energy mix, Pasqualetti says many states like Nevada and California are moving away from coal because there are plenty of others options.  

“You can’t force businesses to stay in the coal business when it’s not economic for them,” Pasqualetti said.

He also said that concerns raised by Peabody about Arizona becoming too dependent on natural gas exported from out-of-state were overblown.

“We have several gas pipelines coming in. It’s not just one. The likelihood of all of them going down at one time is extremely remote,” he said.

Arizona Corporation Commission Chairman Tom Forese listed four areas of concern at the end of the hearing: the state's energy portfolio, the cost of water, the benefit of having an in-state resource and the region's economy.

But Forese told KJZZ he isn’t taking a position on whether the power plant should close. He said Peabody, despite its recent bankruptcy, “looked like it had a lot of fight left.”

“Now the question for the utilities is: what are the right strategies to make sure their portfolios are properly balanced?” Forese said.

Unless other buyers come forward, the plant will close by the end of 2019 and possibly even sooner if an agreement isn’t reached with the Navajo Nation by this summer.

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