Market forces may be working against the Navajo Generating Station, but supporters of the power plant, and the coal mine which fuels it, are still working to ensure that it stays open. On Thursday, the House Committee on Natural Resources held a hearing on the benefits of the Navajo Generating Station to local economies. The committee was looking into ways to potentially keep the mine and power plant open by pushing the Central Arizona Project, a massive water infrastructure program, to return to buying its power from the plant.

The testimonies before the committee acknowledged the complexity of the situation. Like other coal-fired plants around the country, the Navajo Generating Station has struggled to remain cost-competitive in the face of a surge in natural gas supplies. In the middle of last year, the investment banking adviser Lazard began a search for a new owner who would be able to keep the power plant and mine open. Lazard eventually found fifteen potential investors who expressed interest in the project and received proposals from a handful of them.

According to Lazard, with changes to the mine operation process, both the mine and the generating station could compete more favorably with natural gas generation. Furthermore, they told the committee that they had found a potential investor who had worked to determine a solution that would allow the plant to supply power at market competitive prices. This potential investor has met with the Hopi and Navajo tribal governments, made site visits to the mine and power plant, as well as met with the utility customers.

“We are pleased to report that, to date, the ownership transition process remains on track, within the timeframe set forth by Salt River Project,” said George W. Bilicic, global head of power, energy, and infrastructure for Lazard.

Supporters of the plant stress that keeping it open can be part of a balanced energy portfolio, which helps the trip to both keep jobs and to transition towards more environmentally friendly generation methods.

LoRenzo Bates, speaker of the tribal council, told the committee that “even the most environmentally friendly places have found middle ground to maintain the jobs and revenues of their citizens” and the tribe was no different. He described how the Navajo Nation had announced the second phase of the Kayenta Solar project, adding 50 MW of solar power to their grid.

Even so, much of the Navajo Nation’s economy is based on the reservation’s natural resources, meaning that changes to this sector would have wide ranging impacts.

“The Navajo Generating Station and Kayenta Mine together represent approximately 22 percent of our overall Navajo Nation general revenues, over 800 of our highest paying jobs and our local Navajo Nation Utility Authority’s largest power purchaser,” Bates told the committee. “The adverse effects of a potential shutdown of these facilities to our Nation translates to an across the board cut of 22 percent of all revenues to each of our governmental functions, from law enforcement and fire departments to elderly and child care.”

These cuts would come at the same time as increases in the utility rates paid by tribe members. Changes to the mine and the power plant would also impact the rest of the state of Arizona.

While the hearing often focused on the numbers–jobs, revenues, taxes, and profits–some of the largest impacts of the mine’s closure would be personal. Today, the employment provided by the mine allows tribe members to live on the reservation close to their families and in a manner that allows them to continue tribal traditions. Were it to close early, these cultural connections might be lost.
“Working at the mine and power plant offer Dine’ [Navajo] a way to remain on lands our families have used for generations,” said Marie Justice, president of United Mine Workers Local 1924, which primarily represents Native American miners. “If these operations shut down a quarter century before Congress intended, the impact will be devastating.”
Given the extent to which the local economy relies on the mine, its closure would lead to an increase in poverty, juvenile delinquency and familial breakdown. She described how she and her husband had originally worked at the Black Mesa Mine, which was closed in 2005. That mine was targeted for closure by environmental non-governmental organizations (NGOs), like the Navajo Generating Station is today. Despite the promises of growing alternative energy, these approaches have not brought the promised jobs.
“As they were running their campaign to destroy the jobs at Black Mesa, the environmental NGO’s made lots of promises about new jobs and new sources of income. But none of that came to pass,” she said. “It was just another example of empty words from those who do not care about our families’ ability to survive.”
How the tribal economy can survive is a matter of debate, though. Keeping the plant open means running against broader trends in the energy markets, which have hurt coal in recent years.
“There is nothing that will halt the decline in coal in the face of today’s market pressures and the competitiveness of energy sources such as wind and solar,” said Nicole Horseherder, a Navajo tribe member, who called talk of keeping the generating station open “fairy tales.”
“It’s critically important for the Diné to accept this reality so that they can leverage our vast clean energy resources to level the playing field and get out from under the exploitative control of outside corporations, whose questionable history with tribes leaves little doubt that their true allegiance is to shareholders and not the wellbeing of Navajo communities,” she said.
Underneath the discussions is one major federal decision–where the Central Arizona Project (CAP) will purchase its power. When the massive water infrastructure project was built, it was designed to use power generated by the Navajo Generating Station and was the power plant’s largest customer. Without those massive purchases of power, the plant begins to lose its economies of scale and becomes more expensive. At the hearing, the committee chairman pushed back on this change as he questioned Arizona state Rep. Mark Finchem about the CAP’s decision.
“I’m one of these guys who believes in all of the above energy policies,” said Committee Chairman Paul Gosar (R, Ariz.) who stressed that the government needed to keep its word and honor existing contracts, including the one that said the CAP “shall” purchase power from the Navajo Generating Station.