Even as Desert Rock's developers have struggled with permits and tax breaks, electricity markets have changed significantly. Initially, developers looked to California. But after that state's Public Utility Commission essentially banned new contracts for electricity from coal-fired power plants in early 2007 -- requiring utilities to generate or purchase power with emissions comparable to or lower than modern natural gas facilities, which emit about half the carbon emissions of coal -- developers turned to the interior Southwest. In Desert Rock's June 2007 draft environmental impact statement, Sithe listed seven of the region's utilities, all of which were projected to need new power, as potential customers.
Now, however, not one of those utilities plans to seek electricity from new coal plants. Although he's optimistic about the future of "clean coal" and the eventual development of new carbon-capturing technology, Resource Planning Manager John Coggins of the Salt River Project sums up the utilities' current viewpoint: Until it's certain how carbon emissions will be regulated and there's a commercially viable way to capture and store carbon, the Salt River Project, which serves the Phoenix area, has no intention of buying new coal power. In addition to the EPA's recent ruling that carbon dioxide and other greenhouse gases should be considered pollutants, the agency has proposed new air-quality standards for smog, which, if implemented, will affect everything from the transportation sector to factories and power plants.
Securing funds for the ever-more-expensive Desert Rock, even from the Navajo Nation itself, has also proved difficult for Sithe. In 2003, when the project was projected to cost $1.5 billion, the Nation was expected to pay between 25 and 49 percent of construction costs. Now, with estimated costs exceeding $4 billion, President Shirley's spokesman, George Hardeen, says that Sithe will have to foot the entire bill. In fact, the tribal council has yet to actually approve investment in the project. Within the agreement that the Diné Power Authority drew up between Sithe and the tribe, DPA's project administrator Ben Hoisington says the Navajo Nation still has the option to buy into Desert Rock and be a partner in the project. The DPA is working with the tribal council's oversight committee and investment committee on the deal. "We are just trying to fine-tune it," he adds. "But we have to get the permitting done before we can make any commitments."
The tribe and Sithe have also failed to obtain federal money. In 2005, the Bush administration denied Shirley's request for a $1 billion loan; three years later, the Obama-Biden Transition Team denied a $2.9 billion request to help fund carbon capture and sequestration at the site. A June 2009 application to the U.S. Department of Energy's Clean Coal Power Initiative was also denied.
Some tribal officials -- including CERT's Lester and DPA's Hoisington -- say the federal government is unfairly denying Indian projects. But there are significant discrepancies between the reality of the project and the words in the clean-power initiative application. Sithe insists, for example, that the project is supported by the host community as well as the Navajo tribal government -- and that the project is in "very advanced stages of development," despite lacking all of its permits.
This isn't the first time the Navajo Nation has stumbled while trying to develop its own energy resources. Since it was founded in 1985, the Diné Power Authority has yet to develop a single energy project. Even the project that spurred the authority's creation in the mid-1980s -- the Paragon Ranch coal-fired plant planned for reservation land north of Crownpoint -- never came to fruition. "In '92, things went toward natural gas," says Hoisington, "and the plant was not feasible." At that point, the authority directed its efforts toward the Navajo Transmission Project, which would run from the reservation in northwestern New Mexico some 400 miles to Nevada. But more than two decades into the project's planning process, it also remains theoretical.
In March, 2009, the Department of the Interior remanded the power line's environmental impact statement after environmental groups sued, arguing that the analysis -- completed in 1996 -- did not consider the greenhouse gas emissions or the environmental and health impacts from the coal plant it would likely serve: Desert Rock. On top of that, the project's only permit, for a segment of the line's location Arizona, will expire this October.