Trump Admin. Desperate To Keep Coal Power Plant Alive With Taxpayer Dollars

October 30, 20177 years ago Steve Hanley 0 Comments

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You hear it all the time from Trump supporters, the tired old shibboleths about “government shouldn’t be picking winners and losers,” and about the mythical “level playing field” in business. Then you realize all those pious platitudes are just so much bilge water designed to disguise what they really mean, which is they want to use taxpayer dollars to reward their friends and punish their enemies. The story of how this administration wants to prop up the Navajo Generating Station in Arizona illustrates the depth of the lie perfectly.

The Navajo Generating Station Saga

The Navajo Generating Station is a 43 year old coal power plant located northeast of the Grand Canyon near the southern border of Utah. Its original purpose was to power the pumps that take nearly 1.5 million acre-feet of water out of the Colorado River and send it south via the Central Arizona Project to irrigate crops. That water is also the lifeblood of Phoenix, one of the fastest growing cities in America.

In the early 1970s, the US Bureau of Reclamation, which is part of the Interior Department, convinced 5 utility companies from Arizona, Nevada, and California to invest in the Navajo Generating station. The federal government also became a partner, owning about 25% of the project. The coal to run NGS would come from the Black Mesa coal mine in Kayenta, 85 miles to the east. The first of 3 units came online in 1974.

Today, NGS has a total output of 2,250 megawatts, making it one of the largest electricity-generating facilities in America. It is also the 7th largest emitter of carbon dioxide pollution in the country. The economics of burning coal have changed over the past 4 decades. What was once one of the cheapest sources of electrical power has become one of the most expensive. It often now costs far less to run a generating facility on natural gas than coal, and renewables like wind and solar beat natural gas in approximately half of the country (even ignoring pollution/health costs).

NGS was central to a grand scheme designed to make the deserts in the American southwest bloom, and bloom they did. Today, the cities of Las Vegas, Phoenix, and Tucson are all a testament to the power of that dream. Building the NGAS was also seen as an economic benefit to the Navajo and Hopi tribes in the area. That part didn’t work out well. The Black Mesa coal mine in Kayenta is owned by Peabody Coal. It sits in between land owned by Navajo and Hopi tribal reservations. Native people are allowed to dig the coal but not own it — a modern day version of the plantation system that served the South so well prior to the Civil War. NGS itself is located on land leased from the Navajo nation.

The mines and the power plant do provide about 800 jobs. The rents and royalty payments paid to the tribes total more than $50 million a year. “This money funds critical public services for our nation including schools, emergency services, infrastructure, and public parks,” says Russell Begaye, president of the Navajo Nation. It goes without saying that losing that revenue would create hardship for the tribe.

Yes, the native tribes derive income from the NGS operation, but they have given up much to make NGS possible and gotten relatively little in return. “Thousands of residents were exiled to make way for mining. Those who kept living nearby have been breathing coal dust for more than a generation,” writes Roger Clark, director of the Grand Canyon Trust’s Grand Canyon program.

“In fact, we give so many things for free to the Navajo Generating Station,” Jihan Gearon, executive director of the Black Mesa Water Coalition, told Equal Voice News in a 2012 interview. “The electricity lines that run across the Navajo Nation, the train tracks that carry the coal — we’ve given them all of those right of ways for basically nothing.”

Vote To Close NGS

Last February, the utility companies that own the majority stake in the Navajo Generating Station voted to close it down when their 50 year lease with the Navajo Nation expires in 2019, because it is simply too expensive to keep in operation. Keeping the plant open will require huge subsidies, according to the Institute for Energy Economics and Financial Analysis, a research and consulting firm. It has done multiple studies and determined that keeping NGS going from the middle of this year through the end of the lease period will cost $414 million. The lease contains a provision that could extend it through 2044. IEEFA says keeping the Navajo Generating Station open until 2030 would require subsidies of between $1 billion and $2 billion.

None of that fazes the Trumpies, who never met a subsidy they didn’t like, just as long as the money winds up in the pockets of their campaign donors. Dan DuBray, a spokesperson for the Bureau of Reclamation tells ThinkProgress the administration “is committed to finding a post-2019 future for the Navajo Generating Station.” Naturally, Peabody Coal is all in favor of the bailout plan, but industry insiders think this is just plain nuts.

Mike Hummel is the deputy general manager of the Salt River Project. He tells the Arizona Republic that any new owner of the NGS cannot operate it profitably without federal subsidies. He points out that the current owners are all seasoned, experienced utility operators who know a thing or two about coal-fired generating plants. “We are all very good at it, and we are all not able to make it work. That’s why the owners are choosing to exit.”

The Navajo Nation is stuck between a rock and a hard place. “We already struggle to make ends meet and any reduction in our already strained operating budget would have disastrous consequences,” says Russell Begaye. If NGS is closed, his tribe is asking that it be granted access to the transmission lines in the area so the electricity generated by solar power plants located on tribal lands can reach the same customers serviced by NGS. The first solar installation, a 27.3 megawatt facility called the Kayenta Solar Project, was first placed in service in June.

Bluster & Blather From Rick Perry

The Navajo Generating Station is part of Rick Perry’s transparently skewed grid study, which found that propping up coal power plants was necessary to promote “resiliency” of the nation’s electrical grid and support the nation’s energy independence by continuing to burn good old American coal even though doing so kills thousands of citizens every year and damages America’s claim to being a world leader. Perry is only one of Donald Trump’s cabinet members chosen more for his willingness to toe the party line as laid down by the Koch brothers instead of actual intellectual acumen.

All of the usual suspects have had unfettered access to the Interior Department and Energy Department to plead their case for federal dollars to flow their way. Representatives from Peabody Coal were granted a 2½ hour meeting with Perry on April 13 and officials from Salt River Project also had the ear of the government. Nobody bothered to invite the Navajo nation to those meetings, however. And the Sierra Club, predictably, has been shut out of the process.

Peabody Energy is “trying to hoodwink its investors that they have a plan” for the Navajo Generating Station, claims Bruce Nilles, senior director of the Sierra Club’s Beyond Coal campaign. “I’ll believe it when I see it. Why would you buy a 40-year-old coal plant when the owners say they are losing millions a year?” An excellent question to which no one in authority has a suitable answer, apparently.

Among other things working NGS has against it, the plant requires at least $100 million in deferred maintenance and upgrades, according to Evelyn Nieves, a writer for Sierra, the national magazine of the Sierra Club. “The coal industry remains in a long-term decline. This is as true in Indian Country as it is in the United States as a whole,” she writes.

Coal Is A Double-Edged Sword For Navajos

For those who think the $50 million or so the Navajo Nation derives from the NGS operation is a big deal, perhaps a few statistics will change your mind. Today, more than 4 decades after the Navajo Generating Station came online, about 40% of Navajo Nation members don’t have access to running water in their homes. And even though the NGS has been the engine that has been driving economic growth in the American Southwest from Las Vegas to Tucson, 32% of the homes on the Navajo Nation reservation still don’t have electricity. The Clean Air Task Force estimates that pollution from the Navajo Generating Station results in annual health costs of more than $127 million.

“We don’t even have the basic necessities that people across the United States and certainly down in southern Arizona have,” says Jihan Gearon. “Our whole economy is stagnant because of the coal industry. That has made us economically dependent on our own cultural destruction.”