NGS prepares to go Dark

As the Navajo Generating Station in LeChee, Arizona, prepares to shutter just three days before Christmas this year, questions remain.

Questions remain as Navajo Generating Station prepares to go dark.

LECHEE, Ariz. – Questions remain as Navajo Generating Station prepares to go dark. Who pays for cleanup? What is the scope of the project? How will the region fill the economic void?

According federal government documents, the five NGS stakeholders are responsible for cleanup and land restoration, but opinions differ over what that entails.

The stakeholders are Arizona Public Service, Bureau of Reclamation, Tucson Electric Power, NV Energy, and Salt River Project, the operator of the plant.

Nicole Horseherder, an activist with Tó Nizhóní Ání says, “NGS owners and Peabody (Western Coal Company) have mined and burned coal on Navajo land for 50 years.

That’s generations of contamination they are accountable for cleaning up, and the Navajo Nation should never let them off the hook for that.”

According to the 2017 lease extension between the NGS stakeholders and the Navajo Nation, stakeholders are responsible for restoration.

Like most standard lease agreements, the lessee pays for damage. Environmental regulations have changed dramatically since the plant began construction 50 years ago, complicating matters further. This is covered in the 75-page, renewal lease that was signed by former Navajo Nation President Russell Begaye and then Vice President Jonathan Nez on July 1, 2017 in Twin Arrows, Arizona.

According to the Bureau of Reclamation, which approved the document, “The lease provides five years for the Salt River Project Agricultural Improvement and Power District to complete plant retirement and 30 years for long-term monitoring and remediation.”

NGS has already begun decommissioning the plant and estimates a minimum of 2-3 years to complete the initial task, followed by 30 years of monitoring and remediation.
Ed Malley says in Power Magazine that, “Power plant decommissioning and redevelopment projects are all about risk, money, and who pays. When a power plant shuts down, revenue ceases but costs do not.” Salvage and scrap from the plant’s three, 750-megawatt units may offset some of the expense.

Malley says, “Decommissioning costs for a typical 500-megawatt coal-fired power plant range from $5 million to $15 million net of scrap.”

The current rate for metals, demand for old equipment, shipping costs and the urgency will likely push the net to the low side.

Seventy-eight miles from NGS is Peabody’s Kayenta Mine. The mine, with 300 employees remaining after 40 mine workers were laid off Feb. 26, has only one customer.
According their website, in 2018, they sold 6.6 million tons of coal to NGS and claim the mine provided $530 million in direct and indirect economic benefits.

This works out to $82 million per ton. With no economical means of transporting coal to other buyers, and competition from solar, wind and natural gas, the mine’s fate appears sealed. Coal is stockpiled at NGS, so the mine will likely close long before the plant does.

As for the economy, time is of the essence.

An analysis by Tony Skrelunas and Karl Kates gives a few clues of what could happen in the near future.

Their estimate is in line with the renewal lease terms, five years to complete restoration and up to 35 years of monitoring and follow-up work.

Their report is optimistic, estimating more jobs gained than jobs lost. This restoration process buys time for local economies to adjust and develop.

The plant and mine decommissioning are expected to create hundreds of jobs for 5-7 years. Utility scale solar construction will add 1,000 jobs per project with at least three projects over 10 years.

How many of these jobs are given to regional residents depends on local investments.

Since SRP has begun decommissioning the plant, the window of opportunity is narrowing for the Navajo Nation and regional businesses.Decommissioning and restoration is a large-scale operation. To compete or partner with outside contractors with more expertise, financial backing is needed for incentives, planning and equipment.

Skrelunas estimates investments of at least $20 million will keep restoration jobs local and stimulate new development.

Tourism, retail, manufacturing, solar energy, scenic train rides, hotels and a casino are all on the table.  

In an interview with the Chronicle, Skrelunas stressed the urgency of moving quickly before SRP awards all the contracts to outside contractors.

He admits local contractors are up against more established and experienced companies that specialize in this type of work.

Skrelunas hopes regional business will “partner-up and tackle things” with the larger companies. This would involve training programs, labor pools, and awarding sub-contracts to regional businesses.

Another concern is some regional businesses can perform the work but may lack the resources for equipment, bonding and insurance.

This is one of the reasons investments are needed.How much development and when is still up in the air. The 24th Navajo Nation Council created a task force for the transition during a committee meeting last week. The ongoing debate about keeping the plant and mine open is settled. “The policy movement from coal source revenues to sustainable, renewable energy sources is in conformity with the fundamental understanding of Navajo traditional thinking."

Solar projects will undoubtedly continue, but the statement highlights future controversies to come.  Skrelunas says it’s “cultural continuity verses new development.”
Any new projects mustbe culturally compatible, and anyone involved must demonstrate clear accountability to gain and keep the people’s trust.


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