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Navajos double-down on coal

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Emily Guerin | May 06, 2013 05:00 AM

Coal is always a hot topic on the Colorado Plateau, home to many of the mines and power plants that feed electricity-hungry Southwestern cities hundreds of miles away. But in the past few weeks, black gold has been in the news even more than normal as the Navajo Nation has weighed a new lease for the 2,250-megawatt Navajo Generating Station in Page, Ariz., and moved closer to buying the Navajo Mine, which feeds the Four Corners Power Plant. It may be unpopular elsewhere, but all signs indicate that in Navajoland, coal’s not going away any time soon.

NGS is a complex power plant: It’s got a ton of different owners, including the federal government – which relies on the power to pump water to Phoenix and Tucson – and utilities in Nevada, California and Arizona. Two of those owners want out of the coal business: In March, Los Angeles Mayor Antonio Villaraigosa announced the city would be coal-free by 2025. That means its utility, Los Angeles Department of Water and Power, will have to sell its 21 percent ownership in the plant. And in April, NV Energy, the largest utility in Nevada, said it, too, was bailing, ditching its 11 percent share. It remains to be seen if the plant’s operator, the Salt River Project, a Phoenix-based utility, will buy both shares. “The potential exit of NV Energy from (the plant) further complicates an already complex process under way to extend the life of this important Arizona resource,” SRP spokesman Scott Harelson told The Arizona Republic.

Navajo Generating Station at sunrise.
The Navajo Generating Station at sunrise.

In addition to the ownership uncertainty, in January the Environmental Protection Agency told the plant, one of the dirtiest in the country, to cut haze-causing emissions by 84 percent by 2023, which would cost $500 million in pollution controls. The worry is that all of these factors combined will force NGS to close, although Salt River Project insists that won’t happen.

There’s a lot at stake here for the Navajo Nation: It’s projected that the plant and the coal mine that feed it would contribute nearly $13 billion to the tribal economy over the term of the new lease, and employ about 1,000 people, mostly Native Americans.

On April 29, the tribal council approved a lease extension that upped annual payments to the tribe, provided money for scholarships and gives the Navajo an opportunity to become partial owners of the power plant.

Did you catch that? The Navajo Nation itself is interested in filling the ownership gap left by the L.A. and Nevada utilities. It’s a big deal: a reversal of a decades-old pattern in which the tribe leased land, resources and water to outside companies but had no ownership in the resulting businesses. Bad lease deals left the Navajo suffering from the health and environmental effects of mining and burning coal, but seeing few of the profits.

The idea of buying the Navajo Mine from BHP Billiton is another step toward more tribal ownership of extractive industries. The $85 million deal hasn’t been signed yet (there’s a July 1 deadline), but there’s a ton of pressure on the tribe to make the buy. Like L.A, Southern California Edison, which owns nearly half of one unit at the Four Corners Power Plant, is also getting out of the coal business and selling its share to another big utility, Arizona Public Service. But that deal can’t go forward until it's certain there will still be someone around to operate the mine that supplies the plant with coal. For that, all eyes are on the tribal government. As Craig Moyer, an attorney hired by the tribe, said at an April 29 tribal council meeting, if the Navajo don’t buy the mine, both it and the Four Corners Power Plant will close in 2016.

But many people question whether the tribe is getting a good deal in the mine, and think the process is moving way too fast. “They’re just ramrodding this through,” says Lori Goodman, the treasurer of Diné CARE, a Navajo environmental group, who worries BHP Billiton is dumping the 50-year-old mine on the tribe to get out of the coal business while it's still profitable. Shiprock council delegate Russell Begay questioned the quality of the mine’s machinery, and worried the coal that’s left to be mined is low-quality. "We'll have to put a lot of revenue back into the management. It's like a gamble," Begay told The Farmington Daily Times.

Mike Eisenfeld, an environmental organizer at San Juan Citizens Alliance in Farmington, N.M., wonders whether the tribe has thoroughly considered the long-term future of the coal industry. “Respectfully, my observation from afar is that coal plants are becoming real bad investments,” he says.

But in the April 29 council meeting, Moyer said the tribe would eventually make money on the Navajo Mine. He also told elected officials that government estimates show coal use increasing between now and 2040. “Over time, coal generation will decline, but this is likely to be one of the last power plants out there,” he said.

And with that, a majority of elected officials voted to create a tribal corporation to run and buy the mine.

As Erny Zah, spokesman for Navajo Nation President Ben Shelley, told The Durango Herald, “We want to make sure coal is part of the picture for at least another couple of decades, if not longer.”

Emily Guerin is the assistant online editor for High Country News.

Photo courtesy Flickr user haglundc.

Howard Johnson
Howard Johnson Subscriber
May 07, 2013 05:57 PM
This article and the "comments" say better than I can, what will happen to this plan. I hope the people in the 4 corners area recognize that they are about to be taken for a ride. Please, read the "comments" CAREFULLY ! http://www.azcentral.com/op[…]-arizona-energy-future.html
Katherine Toan
Katherine Toan Subscriber
May 12, 2013 11:55 PM
Bad investment. Since when did white people ever offer to sell an Indian anything worth having? Air pollution regulations, divestment, it seems like they're trying to unload a junk asset. One of the dirtiest plants in the country, poisoning Dine children. This will be a disaster.
Craig Watson
Craig Watson
Jun 18, 2013 05:49 PM
A new power plant is in planning some 50 miles south of Farmington, NM on the Navajo Reservation. That one has been disputed for years now by the resident Navajos in that area. They managed to get the permitting procedure stopped because the EPA did not thoroughly accurately examine the environmental impact of it. So far, the Navajo Nation has been unable to ram that one down the throats of those most likely to suffer from another power plant's poisons.

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