Trump plan to boost coal eyed cautiously by Navajo power plant backers

The Navajo Generating Station and the nearby Kayenta mine that feeds it with coal employ thousands in a part of the state with high unemployment, jobs that are at risk as the plant is scheduled to shut down at the end of 2019. (Photo by Bill Morrow/Creative Commons)

WASHINGTON – The Trump administration may have pulled off the unlikely trick this month of uniting liberals and conservatives, energy industry executives and environmentalists.

All those groups have come out against a White House plan to keep failing coal and nuclear power plants from closing by forcing electrical grid operators to buy a certain amount of energy from those facilities.

Critics on the right say such a plan would put the government in the business of propping up unprofitable operations, hitting consumers in the wallet, while those on the left worry that it will stifle the development of clean energy while further polluting the environment.

“Rates will go up substantially for consumers of all kinds, from small businesses to manufacturers to residences, because the whole point of this is to force people to buy power that is not economic,” said John Shelk, president and CEO of the Electric Power Supply Association.

But one group sees potential benefits in the plan, which could provide an economic lifeline to the Navajo Generating Station, a coal-fired power plant near Page. That plant is slated to close at the end of 2019, taking thousands of jobs with it.

“If the plant were to close, we would see between 1- and 3,000 individuals lose their jobs, 90 percent of whom are Navajo,” said Jackson Brossy, executive director of the Navajo Nation Washington Office. “So, in a place with very high unemployment, very high poverty, the impact would be tremendous.”

President Donald Trump, long a vocal supporter of the coal industry, on June 1 ordered Energy Secretary Rick Perry to take immediate action to help financially reinforce struggling coal and power plants.

The White House tried once before to order power companies to buy from coal and nuclear plants, but that plan was shot down last year by the Federal Energy Regulatory Commission.

But this time around, according to a leaked Department of Energy memo first obtained by Bloomberg News, the administration is citing the importance of a diverse energy grid to national security interests as the need to keep the coal and nuclear plants in business. The plan uses Section 202 of the Federal Power Act, which gives the Energy Department authority to keep plants running in emergency situations, or in times of war.

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“The president is right to view grid resistance as a serious national security issue and he’s directed me to prepare immediate steps to stop the loss of these critical resources,” Perry said Monday

But the national security line of reasoning doesn’t pass muster with Shelk.

“This part of the Federal Power Act is really supposed to be for really discrete emergencies, and experts across the spectrum in both parties have said there is no emergency that justifies the use of such extraordinary powers,” he said.

Besides driving up energy prices for consumers and businesses, Shelk said the plan would represent unprecedented government intervention into U.S. energy markets.

Brossy acknowledged that the plan faces legal challenges and it still being reviewed by lawyers on all sides. But he said he is optimistic about the opportunity it could bring for the Navajo Generating Station, and the economic security that might bring the tribe.

The plant, and an affiliated coal mine at Kayenta, were created to provide power to the Central Arizona Project, which brings water to Phoenix and Tucson from the Colorado River. But the plant’s fate appeared sealed when CAP said it would no longer buy NGS power, as cheaper, cleaner electricity was available in the open market.

State and local officials have been looking for a buyer, and mineworkers rallied outside the State Capitol this week to demand more time to save the plant. At least two potential buyers – Avenue Capital Group of New York and Middle River Power of Illinois – have submitted applications to take over the plant from Salt River Project, the main shareholder in NGS.

The Navajo Nation currently faces an unemployment rate of 40 percent, more than 10 times the national average, according to the latest numbers from the tribe and the Bureau of Labor Statistics. Brossy said losing jobs at the plant and mine would be catastrophic for the region’s economy.

“Those jobs are vital, and those jobs provide not only for the individuals who work there, but also provide support for families and the extended families in the area,” Brossy said. “So I can’t understate the importance of NGS for the families there.”