Potential buyer would operate Navajo Generating Station at less than half capacity

Dive Brief:

Officials from Middle River Power, a potential buyer for the Navajo Generating Station (NGS) in Arizona, told state regulators that it would make changes to facility operations, including running at 44% of its capacity in order to remain profitable.
Middle River Power manages the power plant investments of Avenue Capital Group and is in talks to take over the threatened 2,250 MW coal-fired plant in Page, Arizona.
The Bureau of Reclamation, a part of the Department of the Interior (DOI), owns about 25% of NGS. Salt River Project owns the largest share of 43%, while Arizona Public Service, NV Energy and Tucson Electric Power own the remaining shares. A year and a half ago, the four utility owners decided to close down the plant.

Dive Insight:

Negotiations have continued to keep NGS open beyond the end of 2019 as the plant provides substantial revenues for Native American tribes in the area.

As potential new owners mull how to operate NGS profitably, E&E News uncovered emails from 2017 that show how the DOI has worked to keep it open.

Obtained in response to an open records request, the emails show Peabody Energy, which owns the mine supplying the plants power, put together a list of requests that it needed in order to keep NGS operating, including encouraging Central Arizona Water Conservation District to continue purchasing the plants power and not continue with a request for proposals to consider renewables.

DOI pressed the water district, but in June, the Central Arizona Project, which supplies water from the Colorado River to central and southern Arizona, voted not to renew a power purchase agreement with the plant. Rather than purchasing Navajo plant power, CAP voted to sign a five-year PPA with the Salt River Project (SRP) and a 20-year PPA AZ Solar 1.

In another instance, DOI helped the plant secure an exemption for required, expensive environmental controls.

While the Arizona Corporation Commission does not regulate NGS, it does regulate a pair of utilities which are part owners. At an ACC meeting on Tuesday, meant as an update on the plant's future, Associated Press reported officials from Middle River briefly outlined how they intend to run the plant. The company will run NGS at 44% of its capacity, and at different levels during peak and off-peak times.

At one time the plant was expected to continue operating until 2044. Lease payments and other associated revenues from NGS make up more than 20% of the Navajo Nation budget, and the power plant is a major employer, providing about a thousand jobs.