Arizona regulator wants federal support to save embattled 2,250 MW coal plant

Dive Brief:

  • According to the Arizona Republic, Arizona Public Service Commissioner Andy Tobin  has sent a letter to Interior Secretary Ryan Zinke asking the federal government to pick up half of maintenance costs, hoping to keep the plant running for decades longer.
  • Tobin says closing the Navajo Generating Station coal-fired power plant  is premature, and is pressing for the federal government to pick up some costs to keep it running at least five more years.
  • Earlier this year four utilities led by plant operator Salt River Project decided to shutter the 2,250 MW plant, which is the largest coal generator in the western United States. Competition from cheaper natural gas was the primary reason, they said.

Dive Insight:

Arizona regulator Tobin may be about to dive into the baseload subsidies argument that has mired other states, saying in a letter to Interior Secretary Zinke: "SRP and [Central Arizona Project] know that they are subjecting their customers to the most volatile energy resource available." 

Competition from natural gas generators means electricity from NGS is already more expensive than wholesale power prices, SRP said in a statement in February. But the deal the utility announced was aimed at assisting the Navajo community: Employment at the plant would remain stable for almost three years, while also preserving revenues for the Navajo and the Hopi tribes.

The arrangement also allows the Navajo Nation or others to continue operating the plant beyond 2019. Now, Tobin is pressing the federal government to keep the facility running in order to avoid farming the community. 

Last year, the National Renewable Energy Laboratory issued analysis that pegged the cost of power generated at NGS at $38/MWh, compared with $32 in 2015. After 2019, that cost will rise to $41/MWh, reflecting terms of a new lease, and then $51/MWh in 2030 due to emissions standards currently on the books.

After that data came to light, the plant's four owners said they intend to shutter the plant—though they left open an option for another group could take it over. The U.S. Bureau of Reclamation owns about a quarter of the NGS plant, while SRP claims 43%. Arizona Public Service, NV Energy, and Tucson Electric Power own the remaining shares.

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Filed Under: Generation
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