The Navajo Generating Station on the Navajo Indian Reservation near Page, Arizona, serves electric customers in Arizona, Nevada and California. (Courtesy of NGS)

Study: Navajo Generating Station, Kayenta Mine Have $1.3 Billion Economic Impact on Navajo, Hopi Tribes

ICTMN Staff
4/9/12

A study by the National Renewable Energy Laboratory (NREL) has found that the Navajo Generating Station (NGS) and the Kayenta Mine contributed nearly $1.3 billion to the Navajo and Hopi economies since 1987, according to a NGS press release.

The 120-page federal report shows that in the past 25 years, coal royalty payments, bonuses and water fees paid to the Navajo Nation totaled $772 million. Meanwhile, payments to the Hopi Tribe totaled $291.4 million.

The study “Navajo Generating Station and Air Visibility Regulations: Alternatives and Impacts,” released in January, was produced through an interagency agreement between the U.S Departments of Interior and Energy.

The report addresses issues the federal Environmental Protection Agency (EPA) must consider to design a new pollution control rule for NGS, which must consider impacts to tribal economies.

In a study released on February 21, prepared for the Salt River Project (SRP), which owns 21.7 percent of the electric generating unit, and the Navajo Nation, the L. William Seidman Research Institute at the W.P. Carey School of Business at Arizona State University found that the power plant and mine would have a $20.5 billion impact on the state of Arizona through 2044.

The current NGS lease is set to expire in 2019. Discussions to extend the lease are underway.

“The continued operation of NGS and Kayenta Mine therefore exerts significant positive economic impact for the host counties an Arizona as a whole,” said the ASU study, titled "Navajo Generating Station and Kayenta Mine: An Economic Impact."

The NREL report found that in the past 23 years, the Peabody Western Coal Co., operator of the Kayenta Mine, paid about $50 million per year to the two tribes, totaling nearly $1.3 billion.

Approximately eight million tons of coal per year from the Kayenta Mine is dedicated to NGS.

“In 2010, the total tribal payments for coal royalties were $34.4 million and the coal bonuses for the two tribes totaled $5 million,” the report said.

NREL found that wages and benefits paid to Native American employees at the NGS amounted to $52 million per year.

The average hourly wage paid at the power plant is $35 per hour—twice the average wage paid in Coconino County, according to the Bureau of Labor Statistics.

The report notes that 83 percent of the NGS workforce, about 450 employees, is Navajo.

The NREL report found that total wages and benefits paid to Kayenta Mine employees amount to $46.8 million per year.

Average annual wages and benefits paid to mine workers are $117,000 a year.

Some 93 percent of the Kayenta Mine workforce, about 400 employees, is Navajo, according to Peabody Coal.

The EPA’s final Best Available Retrofit Technology determination (BART), which is expected sometime this summer, will have diverse impacts on many Arizona tribes.

Should the EPA require NGS to install the most expensive pollutions controls, which could cost as much as $1.1 billion, its six owners may not be able to justify such a significant capital investment without any certainty that the plant could continue to operate beyond 2019. This could put the plant at risk of closure.

“For the Hopi Tribe and Navajo Nation, in northeast Arizona, a power plant shutdown would impact areas such as local employment, tribal revenues and public health,” the report says.

Both tribes were negatively impacted economically by the closure of the Mohave Generating Station in December 2005, the report states.

“When Mohave closed, nearly a third of the Hopi’s operating budget—then $21.5 million—was eliminated,” the report states.

Closure of NGS would eliminate nearly 1,000 high-paying jobs and about $98.8 million in annual payroll, in addition to eliminating an average of $37.2 million in annual coal royalties, payments and fees paid to the Navajo Nation and $14 million in annual coal royalties, payments and fees paid to the Hopi Tribe, the report says.

It cites the Navajo Nation 2009-2010 Economic Development Strategy in which Navajo Nation President Ben Shelly says NGS is “an essential component of the Navajo Nation economy and our energy portfolio, and must remain viable, for the sake of the Nation and our People, for years to come.”

In 2009, the Navajo Nation received NGS site lease payments of $600,000 and air permit fees of $400,000, NREL reports.

In 2010, the Navajo Tribal Utility Authority was paid $10 million to provide electricity to the Kayenta Mine.

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