LECHEE, Ariz. – The potential investors of the Navajo Generating Station have been identified as a New York investment bank, according to a letter addressed to a banking firm.

The letter, which is addressed to Kenneth M. Jacobs, chairman and CEO of Lazard Frères and Co., encourages Jacobs to reconsider Lazard’s participation in a campaign by Peabody Energy to find new buyers for NGS, which is set to close in December 2019.

Lazard though is putting its reputation at stake by working with Peabody to keep a failing coal-fired power plant alive, according to the Institute for Energy Economics and Financial Analysis – a nonprofit research group that has been following the coal industry – that shared the letter.  

Lazard has global offices. The legendary firm was once considered by many in the world of high finance the quintessence of investment banking. The firm skirted bankruptcy more than once, but each time recovered stronger than ever.

“We urge you to reconsider your involvement with this project,” writes Tom Anzillo, director of finance for IEEFA, “given Peabody’s track record of promoting coal deals that have proven to be detrimental to affected communities.”

Because there are cheaper alternatives for making electricity, the plant’s five owners – Arizona Public Service, Bureau of Reclamation, NV Energy, Salt River Project, and Tucson Electric Power – voted last year in February to close the plant. The Bureau of Reclamation though wanted to explore ways to keep it open.

This means that if the plant closes, the Kayenta Mine on Black Mesa closes.

“The tactics Peabody is using to keep the mine open, including hiring of your firm to find a new owner for the plant, are unfortunately all too familiar,” Sanzillo writes, citing Peabody’s history with Prairie State Energy Campus in Illinois, where the company engineered construction of that plant as a way to ensure business for one of its mines.

“Peabody’s cynical approach in Illinois is now being repeated in its dealings with the Navajo Nation,” Sanzillo wrote, “where the Navajo have had to fight Peabody’s constant efforts to shortchange them in royalties.”

Hopi leaders have also stated that if the plant closes, “it will be devastating for the Hopi Tribe.”

“There is a rippling effect throughout the (Hopi Tribe) and throughout the (surrounding) tribes,” said former Hopi Chairman Ben Nuvamsa, the CEO and president of KIVA Institute in Pinetop, Arizona. “We depend 100 percent on the revenues. Some of us have leases and other things but (those things) are not substantial enough to keep the villages going.”

Arizona Gov. Doug Ducey in late April signed legislation exempting coal used at NGS from the state’s sales to make it more appealing for prospective buyers.

Ducey called the bill he signed “essential for the Navajo Nation, the Hopi Tribe and surrounding communities.”

The tax cut will cost the state an estimated $12 million a year and will go into effect if the plant is sold.

“Peabody is using political tactics to transform a bad financial deal into a good deal for themselves by giving the public a raw deal,” Sanzillo added. “Lazard’s tradition of sound stewardship of public resources tells us you should not be part of this effort.”