Study outlines issues for Navajo coal plant stakeholders

The U.S. Department of the Interior announced Jan. 18 the availability of a report by the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) on the coal-fired Navajo plant and the possible impacts of new emission standards for the control of regional haze.

DOI commissioned the study and will provide it to the U.S. Environmental Protection Agency (EPA), which anticipates issuing a proposed rule for the 2,250-MW plant in late spring or early summer of 2012. The NREL report is up for public comment until Feb. 6.

The report stems from a DOI agreement with NREL to conduct a comprehensive study investigating the many unique, interrelated and complex economic, social and environmental issues affecting Navajo and the addition of emission control technologies at the facility to improve visibility in nearby national parks and wilderness areas. Under the Clean Air Act Regional Haze Rule administered by the EPA, Navajo must be retrofitted with Best Available Retrofit Technology (BART) air emission control equipment to accomplish this goal. The EPA has agreed to consider the NREL report in developing its BART rule for the Navajo plant, located on the Navajo reservation near Page, Ariz.

NREL conducted public workshops in Phoenix, Ariz., and met individually with a wide variety of stakeholders, tribes and interested parties to gather information for the Phase 1 report. A Phase 2 study is planned to evaluate energy generation alternatives. Although scoping for what should be covered in the second phase has not been conducted, it will likely include conducting detailed technical, economic, environmental, social, regulatory, and policy analyses to thoroughly evaluate the impacts of each generation alternative that passed the analytical screening in Phase 1.

The Navajo plant is owned by numerous entities and serves electric customers in Arizona, Nevada and California, and also supplies energy to pump water through the Central Arizona Project (CAP). Relying on coal from the Navajo Nation and Hopi Tribe, the plant is operated by the Salt River Project. DOI’s Bureau of Reclamation is the largest owner of the Navajo facility, which went into construction in 1969 and first began producing electricity in 1974.

Numerous other initiatives also endanger Navajo

The proximity of the Navajo plant to eleven Class 1 visibility areas is the focus of EPA’s current rulemaking, but various environmental regulations have affected the plant throughout its history, the report noted. The most significant has been the Clean Air Act, including its amendments in 1977 and 1990. The 1977 amendments resulted in the need to install SO2 scrubbers on all three units, which cost the partners $420m in all. The plant’s SO2 emissions have declined considerably since the installation of scrubbers.

Several other ongoing or upcoming regulatory measures could affect Navajo beyond EPA’s BART determination, the study added. Together, these other pending actions create an additional layer of uncertainty that affects the present calculus of whether visibility-related BART upgrades would be economically viable. Navajo has been operating for nearly thirty-five years. The plant site lease is up for renewal in 2019. Other supporting agreements needed to continue operating Navajo expire within the next ten years. The renegotiation of these instruments – mainly the rights-of-way for transmission lines, plant site, railroad, and water intake and water line – is an added uncertainty and will trigger a National Environmental Policy Act (NEPA) review, the report added.

“The next few years will be crucial in determining whether the original retirement date of the plant should be extended,” the NREL report said. “In 2011 alone, the plant faced new regulation under the GHG Tailoring Rule, the Utility Boiler MACT, and the updated ESA work plan that listed species and critical habitats. In addition, Navajo GS will be facing new SO2 NAAQS attainment designations, ozone attainment designations, coal combustion residual regulation, and cooling water intake structure mitigation measures by the end of 2012. Further uncertainties lie in actions that do not have final schedules at present. These actions include: Transport Rule II (NOx); Particulate Matter NAAQS; Utility Boiler GHG NSPS; Final NEPA Guidance from the Council on Environment Quality on the effects of Climate Change and GHGs; and the BART petition pertaining to Reasonably Attributable Visibility Impairment (RAVI).”

The Salt River Project has a section of its website devoted to the Navajo plant issue. It said a plant shutdown would have significant financial and social consequences, including: the loss of the plant and the Kayenta coal mine that serves it would have a big negative impact on the local economy; payments to the Hopi Tribe related to the plant represent 88% of the non-federal tribal budget, according to statements made by Hopi leaders to the EPA in March 2010; and the Central Arizona Water Conservation District would have to pay much more to buy replacement power for its water pumping operations.

Kayenta is an Arizona strip mine controlled by Peabody Energy (NYSE:BTU). Peabody, by the way, lost the neighboring Black Mesa strip mine in 2005 when that mine’s sole customer, the Mohave power plant, was shut down due to another clean-air impasse.

If EPA requires the most stringent control technology under consideration, the Navajo owners could be required to invest over $1.1bn, the SRP website noted. A site lease with the Navajo Nation, and the grants of rights-of-way for the plant, railroad, transmission and water lines, will begin expiring in 2019. A lease extension and renewals of the rights-of-way are needed before the owners could commit to investing over $1.1bn in additional emission control equipment.

The Navajo owners are working to avoid a facility shutdown, which could occur if the EPA imposes the most stringent controls under consideration before the lease and rights-of-way can be renewed, or if the lease and rights-of-way cannot be renewed, the SRP website added.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.