FARMINGTON — Arizona Public Service Co. won a ruling Wednesday from Arizona regulators that clears the way for Four Corners Power Plant to shut down the three oldest units and continue operating units 4 and 5.
The 5-0 vote by the Arizona Corporation Commission allows APS to complete a $294 million purchase from Southern California Edison. The California utility is selling because of a law in that state that discourages investment in coal-fired power plants.
As part of a proposal to satisfy the U.S. Environmental Protection Agency, APS plans to shut down units 1-3, the plant’s oldest and dirtiest stacks.
If the purchase goes through, APS intends to continue operating units 4 and 5 for years to come. The plan still hinges on reaching an agreement to extend the plant’s coal contract with mining company BHP Billiton, and on approval from the Federal Energy Regulatory Commission.
“Once we have those two things completed, we would proceed with the purchase at that point in time,” said Mark Schiavoni, APS’ senior vice president for fossil generation.
The Arizona commission’s approval requires the sale to close no earlier than Dec. 1. APS hopes to clear the final two hurdles by then.
“We would expect to close in December,” Schiavoni said Thursday.
APS is negotiating with BHP Billiton on an extension of the coal contract. The current deal will expire in July 2016. APS and BHP are discussing an extension through at least 2026, Schiavoni said.
“We’re in those negotiations as we speak so nothing has been finalized in that area,” Schiavoni said.
Four Corners is fed by coal from the adjacent Navajo Mine, operated by Australia-based BHP.
The plant’s land lease with the Navajo Nation extends to 2041. Schiavoni said Four Corners is capable of operating until then if the regulatory and economic environment will allow it.
“The physical structure of the power plant we can maintain through 2041 no problem,” Schiavoni said. “I’d like to say that we’re confident (units 4 and 5) will run through 2041, but your guess is as good as mine.”
APS plans to achieve job reductions at the plant through normal attrition. No layoffs are planned, Schiavoni said.
The plant and mine together employ about 900 workers.
Four Corners is a major emitter of mercury and other pollutants. Environmental groups question the wisdom of continuing to invest in a decades-old coal plant.
“Sinking more money into the Four Corners plant sticks rate payers with a long-term liability,” Sierra Club representative Nellis Kennedy-Howard said in a prepared statement.
“As long as units 4 and 5 ... continue to burn coal, Navajo and local communities will suffer the consequences of the toxins produced by mining and burning coal and disposing of coal ash waste,” Kennedy-Howard said. “Coal contains mercury, arsenic, lead, selenium and other toxic substances that endanger people and our air and water.”
The EPA recently issued emissions limits for new coal-fired power plants that industry-watchers say could make it difficult for anyone to construct a new coal-burning plant without improvement to current technology.
Schiavoni said he believes coal still has a future.
“I’m a firm believer that technology eventually solves the problems that everybody is concerned with,” he said. “Coal is a valuable resource and something we can’t ignore.”