Tribes look to Trump to save their coal plant

The free mar­ket, and not reg­u­la­tions, has doomed the Navajo Gen­er­at­ing Sta­tion.

Los Angeles Times - - FRONT PAGE - By Evan Halper

WASH­ING­TON — On Navajo Na­tion ter­ri­tory near Page, Ariz., news about plans to shut­ter a hulk­ing coal plant that has been the work­horse of the strug­gling lo­cal econ­omy for decades came like a punch to the gut.

Now tribes and plant work­ers are de­mand­ing relief from the per­son who vowed to end th­ese kinds of dev­as­tat­ing an­nounce­ments — Don­ald Trump.

The plight of this com­mu­nity in north­ern Ari­zona will put Trump’s vi­sion for a coal in­dus­try resur­gence to its first ma­jor test, and lay bare the ex­tent to which the new ad­min­is­tra­tion will go to pre­serve coal coun­try jobs.

The im­pend­ing clo­sure, an­nounced last week, also high­lights the lim­i­ta­tions of Trump’s blue­print for sav­ing coal, as none of the easy so­lu­tions, such as cut­ting en­vi­ron­men­tal reg­u­la­tions, will be enough to res­cue the Navajo Gen­er­at­ing Sta­tion, which is fail­ing be­cause of free-mar­ket com­pe­ti­tion from cheaper nat­u­ral gas.

It is the largest — and most en­vi­ron­men­tally dis­rup­tive — coal plant in the West. If the switch is turned off as planned in 2019, the Navajo Na­tion will lose more than a third of its yearly rev­enue. The sov­er­eign Hopi tribe lo­cated on land in­side the Navajo bor­ders is threat­ened with even greater fi­nan­cial peril: It gets 80% of its money from roy­al­ties re­lated to the coal op­er­a­tion. Hun­dreds of prized min­ing and plant jobs would evapo-

rate in a com­mu­nity where de­cent em­ploy­ment is scarce.

The st­ing would rip­ple out to Page, Flagstaff and even Phoenix, where the coal plant’s sup­ply chain and the power it gen­er­ates have been a bedrock for the arid South­west’s growth since the Nixon ad­min­is­tra­tion, pow­er­ing the de­liv­ery of tril­lions of gal­lons of wa­ter to cities and farms. The plant’s in­ter­con­nect­ed­ness to the West­ern power grid is mov­ing some con­ser­va­tives to ar­gue the threat­ened clo­sure gives the ad­min­is­tra­tion an open­ing to tar­get some of the green-power man­dates re­viled by con­ser­va­tives in nearby Cal­i­for­nia, which af­fect the mar­ket for the en­tire re­gion.

This clo­sure wasn’t sup­posed to hap­pen. Even the coal-wary Obama White House had signed off on a plan to en­able the plant to keep run­ning un­til 2044. Now the only thing lo­cal lead­ers have to hang on to are the coal-re­lated cam­paign prom­ises of Trump, who re­cently in­vited tele­vi­sion cam­eras and some hard-hat-wear­ing min­ers into the Oval Of­fice to tout all he is do­ing for the in­dus­try.

“This ad­min­is­tra­tion said that it will be 100% be­hind the coal in­dus­try,” said Navajo Na­tion Pres­i­dent Rus­sell Be­gaye. “This is the first op­por­tu­nity to live up to that state­ment Pres­i­dent Trump made to the Amer­i­can pub­lic.”

But like so many other trou­bled coal plants, the Navajo Gen­er­at­ing Sta­tion presents a co­nun­drum for the new ad­min­is­tra­tion. Trump’s plans to come to the res­cue of the coal in­dus­try have done noth­ing to pause the Ari­zona op­er­a­tion’s march to moth­balls by the util­i­ties that own it. The en­vi­ron­men­tal rules that Trump de­nounces as the cul­prit for the rapid de­cline of coal are not the prob­lem in Ari­zona — even at this plant that re­leases more green­house gases than al­most any other in the coun­try. The prob­lem is old-fash­ioned com­pe­ti­tion.

“The bot­tom line is there is not much Trump can do here,” said Kevin Book, an an­a­lyst at ClearView En­ergy Part­ners. “There is no ob­vi­ous lever for him to pull.” The Ari­zona and Ne­vada util­i­ties that own the plant say they have done the math ev­ery which way and reach the same con­clu­sion each time: Re­plac­ing the coal en­ergy with mostly nat­u­ral gas would lower their costs by mil­lions of dol­lars each year. The Los An­ge­les De­part­ment of Wa­ter and Power had also been a part owner of the plant, but sold its stake last year in con­nec­tion with city and state ef­forts to re­duce green­house gas emis­sions.

“The util­ity own­ers do not take this de­ci­sion lightly,” said a state­ment from Mike Hum­mel at the Salt River Project, op­er­a­tor of the plant, which since the 1970s has pow­ered the de­liv­ery of 1.5 mil­lion acre-feet of wa­ter from the Colorado River es­sen­tial to sus­tain­ing a large swath of Ari­zona. He nod­ded to the coal plant’s his­tor­i­cal role in the growth of the South­west, but said

‘This is the first op­por­tu­nity to live up to that state­ment Pres­i­dent Trump made to the Amer­i­can pub­lic.’ — Rus­sell Be­gaye, Navajo Na­tion pres­i­dent, speak­ing of Trump’s prom­ise to re­vive the coal in­dus­try

his util­ity and the oth­ers can’t af­ford to keep it go­ing in this era of cheap and plen­ti­ful nat­u­ral gas.

It all puts the Trump ad­min­is­tra­tion in an un­com­fort­able place. The po­lit­i­cal fall­out from the clo­sure of the plant would be mag­ni­fied by the fact that the fed­eral gov­ern­ment is among its own­ers. The Bureau of Recla­ma­tion was a driv­ing force be­hind push­ing for the con­struc­tion of the plant in the 1960s, when it was es­sen­tial to the ar­chi­tec­ture of Ari­zona’s mas­sive wa­ter project. The bureau still owns its 24% share of the Navajo Gen­er­at­ing Sta­tion.

To keep it run­ning into the fu­ture, the Trump ad­min­is­tra­tion would need to do some­thing rad­i­cal. Scrap­ping en­vi­ron­men­tal rules alone won’t cut it. Tribal lead­ers sug­gest a de facto bailout in the form of sub­si­dies and tax ex­emp­tions — or even the Bureau of Recla­ma­tion tak­ing full con­trol of the plant and hav­ing the gov­ern­ment run the whole op­er­a­tion. They are the kind of so­lu­tions that make con­ser­va­tives bris­tle, even those cru­sad­ing for the coal in­dus­try.

The bureau is com­mit­ting only to a meet­ing in Wash­ing­ton next month, where the plant own­ers, the tribes and fed­eral of­fi­cials can mull over op­tions. “We need to see what the eco­nom­ics of this sit­u­a­tion are and find a path­way for­ward that works,” said Dan DuBray, a spokesman for the bureau. “Ev­ery­thing po­ten­tially would be on the ta­ble.”

Few in the en­ergy in­dus­try are bet­ting on the plant stay­ing open. It wasn’t long ago that coal power ac­counted for more than half the na­tion’s elec­tric­ity. Now it is a third. The de­cline is no longer driven by strict en­vi­ron­men­tal rules but a mar­ket in which nat­u­ral gas is of­ten cheaper, and many util­i­ties are swap­ping their coal power for re­new­ables to meet state man­dates re­quir­ing so­lar and wind be in their mix.

Even those big play­ers in coal who cel­e­brated the Oval Of­fice event Thurs­day, where Trump in­fu­ri­ated en­vi­ron­men­tal­ists by elim­i­nat­ing clean wa­ter pro­tec­tions the coal in­dus­try warned threat­ened thou­sands of min­ing jobs, are skep­ti­cal of how much Trump can do to save plants like the one in Ari­zona.

“We built an in­fra­struc­ture to serve a much big­ger mar­ket share than we have now,” said Luke Popovich, spokesman for the Na­tional Min­ing Assn. “It means the less ef­fi­cient ca­pac­ity is go­ing to be down­sized.”

As is of­ten the case with such elec­tric­ity strug­gles in the West, some al­lies of tra­di­tional en­ergy sources lay blame on Cal­i­for­nia. They point to state law that re­stricts im­port­ing coal en­ergy and sug­gest it has skewed the en­tire mar­ket of the West, which is in­ter­twined with the state through the re­gion’s mas­sive power grid. “Cal­i­for­nia ends up man­dat­ing en­ergy pol­icy for about 85 mil­lion peo­ple in 14 states and three coun­tries,” said for­mer Cal­i­for­nia Assem­bly­man Chuck DeVore, now a vice pres­i­dent at the con­ser­va­tive Texas Pub­lic Pol­icy Foun­da­tion.

He en­vi­sions the Trump ad­min­is­tra­tion try­ing to save the Navajo Gen­er­at­ing Sta­tion by chal­leng­ing the Cal­i­for­nia man­dates in fed­eral court as an af­front to in­ter­state com­merce, and in reg­u­la­tory pro­ceed­ings as a bur­den on the in­ter­state power grid. But other en­ergy an­a­lysts don’t see that hap­pen­ing. It would be too heavy a pol­icy lift, too dis­rup­tive to a broader elec­tric­ity in­dus­try that has al­ready adapted to meet Cal­i­for­nia’s rules, and too likely to get slapped down by the courts, they say.

Back in Ari­zona, Navajo lead­ers are des­per­ate. They talk about the plant’s fate not as a mat­ter of mar­ket forces and the evo­lu­tion of en­ergy sources, but as a be­trayal by the util­i­ties that are walk­ing away af­ter mak­ing a wind­fall off tribal coal and tribal la­bor for decades. They warn that if Trump, af­ter all his prom­ises to bring back coal, does not fix this, he will have be­trayed them too.

Ross D. Franklin As­so­ci­ated Press

THE NAVAJO Gen­er­at­ing Sta­tion, seen in 2011, is fail­ing be­cause of com­pe­ti­tion from nat­u­ral gas.

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