Tribes look to Trump to save their coal plant
The free market, and not regulations, has doomed the Navajo Generating Station.
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.
THE NAVAJO Generating Station, seen in 2011, is failing because of competition from natural gas.