Navajo Generating Station in Page, Arizona

Shuttering Navajo Generating Station Could Cost Arizona $18 Billion

ICTMN Staff
2/22/12

A study, released Tuesday, demonstrates the critical value of the continued operation of the Navajo Generating Station (NGS) on the Navajo reservation in northern Arizona beyond 2019, when the current lease expires.

Unless agreements can be reached, Arizona could take an $18 billion hit in gross state product between 2017 and 2044, in addition to eliminating up to 3,400 jobs each year.

The report, Navajo Generating Station and Kayenta Mine: An Economic Impact Study, was prepared for Salt River Project (SRP), which owns 21.7 percent of the electric generating unit, and the Navajo Nation by the L. William Seidman Research Institute at the W.P. Carey School of Business at Arizona State University.

NGS is one of the largest suppliers of electricity in the Southwest, serving customers in Arizona, Nevada and California. But numerous challenges threaten its future viability.

NGS owners are currently negotiating lease extensions as well as renegotiating its contract with Peabody Energy, operator of the nearby Kayenta Mine that supplies approximately 7.8 million tons of coal to NGS annually. Perhaps the greatest obstacle: the U.S. Environmental Protection Agency (EPA) may implement additional and costly environmental rules to emissions of nitrogen oxides that could force the plant to shut down prematurely.

Last year, SRP completed a $45 million emissions control project to update the three, 750-megawatt units at the plant to reduce nitrogen oxide emissions by about 40 percent. John Sullivan, the chief resources executive at SRP, said that investing in additional emission-control technology at NGS, which could cost more than $1.1 billion, could threaten its ability to continue operating.

According to the ASU study, closing NGS—combined with the potential impact on the Kayenta Mine—could result in an annual loss of nearly 3,400 jobs and more than $602 million in adjusted state tax revenues for 2017 to 2044.

If the coal-fired plant remains in operation, the study concluded, it will provide more than $20 billion in economic contributions throughout Arizona from 2011 to 2044.

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