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Owners of Navajo Plant Vote for 2019 Lease Extension


Rather than close the plant later this year, the utility owners of Navajo Generating Station (NGS) voted on February 13 to extend operations of the three-unit 2,250-megawatt (MW) facility near Page, Arizona, to December 2019 if an agreement can be reached with the Navajo Nation.

This measure would preserve continued employment at the plant, additional revenues for the Navajo Nation and the Hopi Tribe. It also provides the nation or others with the potential to operate the plant beyond 2019 should they so choose.

The owners of NSG include the Salt River Project (SRP) at 42.9%, which is also the operator; U.S. Bureau of Reclamation at 24.3%; Arizona Public Service Co. at 14%; NV Energy at 11.3%; and Tucson Electric Power (TEP) at 7.5%.

“The utility owners do not make this decision lightly,” said Mike Hummel, deputy general manager of SRP, the plant’s operator. “NGS and its employees are one reason why this region, the state of Arizona and the Phoenix metropolitan area have been able to grow and thrive. However, SRP has an obligation to provide low-cost service to our more than 1 million customers and the higher cost of operating NGS would be borne by our customers.”

According to a recent study by the National Renewable Energy Laboratory, “Electricity produced at NGS is currently more expensive than electricity purchased on the wholesale spot market,” and “price trends examined suggest a turnaround might be years away, especially if natural gas prices remain low.”

Hummel said the owners’ focus now is to secure an agreement with the Navajo Nation that would allow the plant to continue to run through the end of its lease on December 22, and allow removal and restoration activities, which could take up to two years. Hummel said without an agreement between the owners and the Navajo Nation, the plant would be required to cease operations in 2017.

David Palumbo, deputy commissioner of operations for the Bureau of Reclamation, said the Department of the Interior is looking into ways the plant could operate after 2019 in a more cost-effective manner. “We recognize that NGS is an economic driver throughout the state of Arizona, both for local economic activity and Native American employment near the facility as well as for users of CAP water, including the tribes that rely on that water. Before discussing the possibility of a permanent shutdown, we would like to see if we can find a path forward that meets the needs of multiple NGS stakeholders.”

NGS currently employs 400 full-time workers, 90% of whom are Navajo. Hummel said NGS employees will be considered for possible positions within SRP, while career and financial planning services will also be available.

SRP President David Rousseau said, “The SRP Board fully supports operating NGS through the current lease term of 2019 while working with the Navajo Nation on transition alternatives to the mutual benefit of their members and our customers.”

TEP President and CEO David G. Hutchens agreed. He said, “We look forward to working toward a long-term solution for NGS that balances the needs of the plant’s many stakeholders and serves the best interests of our customers and the community we serve.”