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Coal-Fired Power Plant Closure Imperils Grid Security, Jobs

January 30, 2018

Plans by four utilities to close a giant coal-fired power plant on Navajo Nation land in Arizona will lead to a substantial loss of Native American jobs and endanger the reliability of the grid in the Southwest, a study concludes.

Plans by four utilities to close a giant coal-fired power plant on Navajo Nation land in Arizona will lead to a substantial loss of Native American jobs and endanger the reliability of the grid in the Southwest, a study concludes.

The future of the 2,250-megawatt Navajo Generating Station (NGS) was thrown into doubt in early 2017 when four of the plant’s ownersSalt River Project, NV Energy, Arizona Public Service Co., and Tucson Electric Powervoted to shutter the facility in 2019. A fifth party with a minority stake in NGS, the U.S. Department of Interior’s Bureau of Reclamation, is scrambling to find a way to keep the plant open, in keeping with President Donald Trump’s pledge to save coal miners’ jobs.

Like other coal-fired power plants around the country, NGS came under immense regulatory pressure under former President Barack Obama’s administration. The Environmental Protection Agency’s (EPA) 2015 Clean Power Plan (CPP) placed severe restrictions on coal-fired power plants, leading to the closure of many such facilities in favor of natural-gas-fired plants or wind and solar facilities. The Trump administration has withdrawn CPP, but because electric power suppliers plan years in advance, many closures already in the works are still moving forward.

Critical Source of Power, Jobs

In operation since the mid-1970s, NGS has been a major supplier of electricity to customers in Arizona and Nevada.

Located near Page in northeastern Arizona, NGS is supplied with coal from the Kayenta Mine 73 miles to the southeast, operated by Peabody Western Coal Company. Coal is transported from the mine to the power plant via a dedicated railway. NGS also supplies more than 90 percent of the power needed to pump water through the Central Arizona Project, which transports water from the Colorado River to the arid areas of central and southern Arizona.

Ninety percent of NGS’s approximately 500 full-time employees are Navajo, and most of the 350 full-time workers at the Kayenta Mine are Navajo or Hopi. The Navajo and Hopi say closure of NGS and its dedicated mine, among their reservations’ largest and best-paying employers, will have a devastating effect on them. The Navajo Nation petitioned the federal government to keep NGS open.

Electric Reliability Endangered

In addition to job losses imposed on the Navajo and Hopi in a rural area with few other opportunities, a study by utility consulting firm Quanta Technology concludes shuttering NGS prematurely could endanger the power grid throughout the Southwest.

The study, commissioned by Peabody Western Coal Company, states closing NGS in 2019 would result in “unacceptable overloads” should alternative power suppliers suffer outages or failures.

This “would result in power deficiencies which could evolve into potential voltage collapse and outages, load shredding triggers, potential rotating brownouts, failing transformers or transmission lines, and equipment damage, causing severe electric power disruptions in Phoenix, Flagstaff and other large Arizona cities, but also in the California cities of Lugo and Shandon,” the report stated.

Concern Over Water Supplies

Tom Altmeyer, former vice president for government affairs at Arch Coal and currently a Washington-based energy consultant, says in addition to the electricity problems, closing NGS could jeopardize water supplies for many people in the region.

“We shouldn’t be surprised that many people have backup generators for their power needs in the Southwest,” Altmeyer said. “With respect to the NGS, we’re talking about backup for potable water for people to drink.

 “Power generators aren’t responsible for water; government agencies are,” said Altmeyer. “If NGS closes and natural gas isn’t available for electricity, power generators won’t be responsible; federal and state governments will.”

‘Anti-Coal Agenda’

Fred Palmer, a senior fellow with The Heartland Institute, which publishes Environment & Climate News, says the closure of NGS is a result of Obama’s anti-coal agenda, at the expense of regional grid reliability.

“Closure of Navajo Generating Station will be devastating to the Native Americans of the Navajo Nation and the Hopi Tribe,” said Palmer. “It will also put electric reliability and affordable electricity in the Southwest at risk.

“As part of an anti-coal agenda of the Obama-era EPA, NGS’ owners were already forced to shut Unit 3 and, under continuing pressure from California Gov. Jerry Brown and the Sierra Club, have now indicated complete closure by 2019,” Palmer said. “Instead of closing the power plant, the spurious deal NGS reached with EPA in 2015 should be abrogated and all three units should continue operating until the coal on Black Mesa is depleted many decades from now.”

Nearby Power Plant Closures

Developments in New Mexico further cloud the future use of coal in the Southwest.

As part of an agreement with the Obama-era EPA, owners of the coal-fired San Juan Generating Station, which served customers in the Southwest for decades, ceased operating one of its units on December 19.

San Juan’s owner, Public Service Co. of New Mexico, plans to shut the plant completely in 2022 and divest its shares in the nearby Four Corners Power Plant when its coal supply contract expires in 2031.

Officials in San Juan County, where both facilities are located, estimate closing the San Juan Generating Station and the mine that feeds it will result in lost wages and benefits totaling more than $76 million and an additional $31 million in lost purchases from local vendors and missed contributions to education and charities in the region.

Bonner R. Cohen, Ph.D. (bcohen@nationalcenter.org) is a senior fellow at the National Center for Public Policy Research.

INTERNET INFO

Quanta Technology, “Navajo Generating Station Southwest Regional Reliability Study Report,” November 9, 2017: https://www.heartland.org/publications-resources/publications/navajo-generating-station-southwest-regional-reliability-study-report

Author
Bonner R. Cohen is a senior fellow with the National Center for Public Policy Research, a position he has held since 2002.
bcohen@nationalcenter.org

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