President Trump campaigned on saving coal, but his promises haven’t been enough to save the Navajo Generating Station (NGS), the largest coal-fired power plant in the southwest. After more than a year spent trying to work out a way to save the Page, AZ plant and the hundreds of jobs it provides to Hopi and Navajo tribe members, the plant and its connected mine are still set to close at the end of 2019. Meanwhile, the community is getting more desperate.
On March 9, Navajo tribal council Delegate Rickie Nez introduced legislation supporting the acquisition of the power plant and mine by the Navajo Transitional Energy Company (NTEC). NTEC is a company owned by the Navajo Tribe which was created to purchase and operate a different coal mine in 2013. Nez, like many other tribe members, is concerned that closing NGS will do significant harm to the tribe’s economy through lost jobs and lost taxes and fees.
“We need to start thinking about how many legislative branch employees we will be laying off [if NGS closes],” he said at a work session with groups opposing the acquisition. “We need to start thinking about how many executive branch employees we will be laying off, same with the judicial branch. We need to think about which chapters we are going to shut down because they won’t get enough money. We are going to start telling our veterans ‘No funding.’”
NGS and the Kayenta mine directly employ 845 people, paying higher than average wages in an area that has struggled economically for decades. In addition, Peabody Energy, which operates the Kayenta mine, pays royalties and mineral fees to the Navajo and Hopi tribal governments. These taxes and fees provide much of the tribal governments’ revenues. Estimates show that the mine and power plant provide 85 percent of the Hopi tribe’s annual general fund and 22 percent of the Navajo tribe’s general budget.
This money helps hold the community together. Supporters of plans to keep NGS open say that without the mine, families will find it difficult to raise their children in their native community and culture. (The NGS is on Navajo land, though the Kayenta mine is on both Hopi and Navajo land.)
“In the last ten years, things have changed and not necessarily for the good of the Navajo. In fact, mining and power generation closure decisions were made that definitely ignored the effects these decisions would have on the Navajo,” wrote Charles J. Cicchetti, managing director of Berkeley Research Group, and Scott Sternberg in a report released last week.
“After decades of sometimes obscenely low payments to the Navajo that made economic and population growth possible in much of the southwest, the direct beneficiaries, coal mining firms and electric utilities, are shutting their operations. These decisions are made without consideration for the effect they have on the Navajo. Environmentalists applaud the demise of Navajo coal with little concern for the losses to the Navajo Nation or its people,” they continued.
One of the main obstacles faced by potential buyers of the plant has been finding someone to buy the power it produces. Generally, power plants enter into long-term contracts, known as power purchase agreements, with utilities and industrial clients. These multi-year agreements provide revenue certainty for plant operators.
In September, Middle River Power, a Chicago-based company, dropped a bid to purchase the plant after failing to secure enough power purchase commitments. NTEC will need to do better to keep NGS open. Industry analysts are skeptical that they will succeed.
“[Middle River’s announcement] serves as a warning sign for any investor thinking of acquiring the plant to make sure to secure some form of revenue certainty,” writes David Schlissel, director of resource planning analysis at the Institute for Energy Economics and Financial Analysis. Schlissel believes it is doubtful that NTEC will be able to find customers where Middle River Power did not, especially because it is planning to sell power at a higher price.
“NTEC’s plan appears to rely on selling NGS power into the energy market. And that can be financially risky given that actual market prices can be significantly lower than today’s forward prices would suggest – especially as increasing amounts of low-cost renewable resources are added to the grid in California and the Southwest, and as natural gas prices remain low,” he added.
Since the 1970s, the power plant and the Kayenta coal mine which fuels it have provided energy for the Central Arizona Project, a major water infrastructure project that helps supply water to the central and southern parts of the state. Originally, NGS was intended to provide the electricity to power the project’s massive pumps for 70 years, a period ending in 2044.
Last summer, then-Secretary of the Interior Ryan Zinke put pressure on the CAP’s board of directors to try to help save NGS. That wasn’t enough to sway them to decide in favor of a continued purchase agreement with the plant. Since then, the administration has offered little help. Despite the campaign promises, it looks like a major coal plant will be closing on a reservation a long way from Washington.
