By Jude Clemente

March 20, 2018 - We’re hearing more and more concerns about the reliability and resiliency of the U.S. electric power system, as recently illustrated by the so-called "bomb cyclone" that struck the northeast early this year.  Electric grid operators reported that coal use soared during the cold snap in the Midwest and East Coast, showing the importance of fuel diversity.

Assistant U.S. Energy Secretary Bruce Walker has amplified concerns. He testified earlier during a Senate Energy and Natural Resources Committee hearing:  “What was apparent during this weather event was the continued reliance on baseload generation and a diverse energy portfolio,” he said.

Others agreed:  “We could not have served customers without coal,” said Andrew Ott, CEO, PJM Interconnection serving 13 states and Washington, D.C.  These remarks come as no surprise given a similar situation occurred during the Polar Vortex in 2013, when even The New York Times declared: "Coal to the rescue."

With more retirements expected, the question is clear: what will happen to the U.S. power grid if coal capacity is cut short?

The battleground for that question is playing out in Arizona, where the Navajo Generating Station could be prematurely shutdown by 2019 (the importance of NGS).

There is a growing body of evidence that shows early closure of NGS would mean higher power prices, electric reliability concerns, and higher water rates. A recent study from Quanta Technology warns that closing NGS could hurt electricity reliability in the Southwest. Quanta examined different scenarios where blackouts could occur, namely 1) if there were problems with two gas pipelines El Paso Natural Gas Pipeline and/or the Trans-Western Gas Pipeline and 2) if the 4,100 MW Palo Verde Nuclear Station went offline. Both scenarios are plausible.

The worst power disruptions would be seen in major population centers, such as Phoenix, Flagstaff, and Tucson. Quanta reports that losing NGS would "stress the Arizona electric grid with unacceptable overloads." Maricopa County includes Phoenix and the U.S. Census Bureau reports that it's the "fastest growing in country." Thus, new power demand is increasing, and 24/7 sources like coal keep reliability and resiliency. With NGS in service, reliability of the electric grid was maintained under all of the unique scenarios, the study found.

Yet, the ethical issue connected to shutting down NGS would be the devastating impact on the Hopi Tribe and Navajo Nation that rely on NGS and the accompanying Kayenta Mine for high revenues and good-paying jobs. NGS and Kayenta provide over "85% of the Hopi’s annual general fund and 22% of the Navajo’s annual general fund budget." In these remote parts of the state, these Native American groups can have unemployment rates above 60%, compared to the low national rate of around 4%.

In fact, these devastating money and job losses that would result for such vulnerable peoples is why Arizona Corporation Commissioner Andy Tobin has been so engaged in the process, calling on the power plant owners to maintain the plant as a marketable asset given the “progress” that has been made in identifying potential buyers. He cites Arizona law that mandates this.

As for the economics, Navigant Consulting has concluded that sticking with coal will keep NGS cost-competitive through 2040 and save owners and customers $400 million in lower operating costs. A study from Energy Ventures finds that continuing operations at NGS "will save $370 million in power costs through 2030 and avoid a 30% average increase in municipal and industrial water charges over 10 years."

It’s a good thing the future of NGS has captured the attention of the Administration, with the U.S. Secretary of the Interior working to keep the plant operational in the years ahead.  With so much at stake for the tribes and the people of Arizona, let’s hope the voice of reason prevails. 

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