Navajo joins list of coal plants where shutting capacity is a haze plan

The owners of the coal-fired Navajo power plant in Arizona have come up with a regional haze plan that calls for shutting one of the three 750-MW units at the plant, something that has become an increasingly common compliance option for Western power plants.

The U.S. Environmental Protection Agency wants NOx emissions reduced by 84% at Navajo through the installation of selective catalytic reduction (SCR) systems on all three units. But an alternative plan now being submitted to the EPA would shut down one of three units by 2020, cutting pollution beyond what the EPA has proposed. The plant’s operator, the Salt River Project, said the plan takes into account potential ownership changes and pushes back the implementation of expensive pollution controls.

Two plant owners, the Los Angeles Department of Water and Power and NV Energy, plan to get rid of their stakes in Navajo in an effort to cut their greenhouse gas emissions. SRP, the U.S. Bureau of Reclamation, Tucson Electric Power and Arizona Public Service also own shares of the power generated at the plant.

Shutting some of the capacity at a plant to achieve haze compliance is something of a trend.

  • When it issued a final rule for the 2,040-MW Four Corners plant in New Mexico, EPA gave the plant’s owners, including Arizona Public Service, the option of adding new emissions controls on all five units or using a plan devised by the owners themselves of shutting down Units 1-3 and installing pollution controls at the two other units.
  • New Mexico was involved in an agreement with federal regulators and the state’s largest utility, Public Service Co. of New Mexico, to shut down Units 2 and 3 (about 840 MW in total) at the 1,700-MW San Juan Generating Station by the end of 2017 and replace them with a new natural gas-fired plant.
  • Arizona Electric Power Cooperative recently proposed to EPA a plan to switch one coal unit at its Apache power plant to natural gas and to add selective non-catalytic reduction to the other coal unit, instead of moving forward with an EPA mandate for much more expensive SCR installations on both units.

New plan calls for one Navajo unit to be shut by the end of 2020

The EPA issued a Best Available Retrofit Technology (BART) proposal for Navajo in February of this year that would require the NGS owners to install SCR technology on all three units by 2018. However, EPA also proposed an alternative that acknowledges the owners’ voluntary early installation of low-NOx burners at NGS in exchange for an extended schedule requiring installation of SCR on one unit per year between 2021 and 2023.

Under this new alternative, one 750 MW unit at the power plant would be shut down by Jan. 1, 2020 and SCR would be installed on the remaining units by 2030 – if the Los Angeles Department of Water & Power (LADWP) and NV Energy exit NGS as expected by 2019, and if the Navajo Nation chooses not to exercise an option to purchase a portion of the plant’s ownership shares. In total, LADWP and NV Energy own the equivalent of almost exactly one unit at NGS, so shutting one unit would essentially be getting rid of their capacity.

If the ownership situation plays out differently, the new agreement worked out by a Technical Work Group (TWG) would require NOx reductions equivalent to the shutdown of one unit between 2020 and 2030. The owners would have to submit annual plans to EPA beginning in 2020 through the end of 2044 describing the measures to be implemented to achieve greater emission reductions than EPA’s proposed rule through a combination of retirement of capacity or curtailment in utilization at the plant and new emission controls.

Under both scenarios, the current NGS owners are committed to cease operation of all conventional coal-fired generation at NGS by no later than Dec. 22, 2044.

“Given the challenges associated with the timelines specified in the proposed rule, the development of an alternative proposal was essential”, said Mike Hummel, chief power system executive at SRP. “The TWG proposal provides a path for the future operation of NGS that incorporates potential ownership changes and provides a much needed extension to the schedule for installing SCR at NGS. As such, SRP strongly believes that the TWG proposal is the best path forward for its customers and for the state of Arizona.”

The TWG agreement also includes a commitment by the non-federal NGS owners to establish a $5m Local Benefit Fund for community improvement projects within 100 miles of NGS or the Kayenta mine, the plant’s coal supplier. Kayenta is owned by Peabody Energy (NYSE: BTU).

“NGS and Kayenta Mine provide over 1,000 private sector jobs and support thousands of public sector jobs in the Navajo Nation government,” said Ben Shelly, President of the Navajo Nation. “Therefore, maintaining all units of NGS at maximum efficiency for as long as possible and complying with USEPA’s regional haze regulations are the Nation’s goals. NGS is important to the Navajo Nation because current and future payments generated by NGS directly benefit the Nation, and will assist with a long-term transition to a diverse energy portfolio. The Nation has never accepted the prospect of shutting down one unit at NGS, however, in response to the current USEPA proposed rule, this Reasonable Progress Alternative is a reasonable compromise by all parties. While this compromise may negatively impact the Nation’s overall economy, it is better than the potential for a complete shutdown of NGS in 2019, or before the end of the 25-year lease extension period in 2044. The Nation will continue to consult with U.S. EPA on the proposed rule before USEPA makes its final decision.”

Interior would help with clean energy development, jobs to replace Navajo

The agreement also includes a variety of commitments from the Interior Dept. that are separate from the “better than BART” alternative. These include promoting development of clean energy, with an emphasis on Indian Tribes affected by NGS, conducting studies to identify options for replacing the federal share of energy from NGS with low-CO2-emitting energy, and a commitment to reduce the CO2 associated with the energy used to pump Central Arizona Project water by 3% annually for a total of 12.5 million tons to be achieved no later than Dec. 31, 2035. Interior’s commitment will be administered through an innovative credit-based CO2 tracking and accounting program that assures the reductions are accurately measured and genuine. The Interior Dept.’s clean energy commitment includes facilitating energy projects and other energy related initiatives associated with 26,975,000 MWh from zero-carbon to low-carbon emitting energy sources.

“This plan provides a roadmap to cleaner air, climate progress and a stronger clean energy economy,” said Vickie Patton General Counsel at the Environmental Defense Fund.  “We had to work through some difficult issues but together we were able to develop an approach that provides for cleaner air at the Grand Canyon and surrounding communities, that begins a cost-effective clean energy transition at the Navajo Generating Station, and that provides for crucial clean energy economic development for the Navajo Nation, Hopi Tribe and Gila River Indian Community.” 

Sandy Bahr, Chapter Director of the Sierra Club’s Grand Canyon Chapter, said in a July 26 statement: “The haze pollution reduction plan that SRP and others proposed today contributes to the discussion of how to protect our health and our park as well as to transition from dirty coal power to clean energy. We are concerned that the proposal lacks a clear enforceable path to end coal’s dirty legacy in the region and bring about development of renewable energy to tribal lands. Utilities in California and Nevada have read the writing on the wall and are getting out of the plant. Their exit is an important opportunity to begin an orderly transition to a clean energy future while cleaning up our air. Now is the time for the remaining plant owners to act on that opportunity with a clear enforceable commitment.”

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.