Recent events related to the giant Navajo Generating Station hint at progress being made toward resolving its complex environmental and ownership issues. In January, the Environmental Protection Agency proposed its regional haze rule for NGS, calling for retrofitting selective catalytic reduction to reduce nitrogen oxide emissions, and extending the effective date to 2023. Earlier this month, discussions advanced on a framework for renewing the NGS leases.
But is this really "progress" for rate-payers, owners, Tribes, employees, and the environment? Or is it or merely the continued slow plodding of business-as-usual? Salt River Project has estimated NGS retrofit costs alone might be over one billion dollars more than the original cost of this 40-year old coal-burning plant. And that doesn't include additional costs arising from recent and future EPA requirements for mercury, particulate matter, water discharge, ash handling and carbon dioxide emissions.
From both a cost and environmental perspective, this is a perilous time to be reinvesting in coal. The economic logic of retrofitting many antiquated coal plants simply no longer works. Short-term decision making, without considering the longer-term picture, may just be throwing good money after bad. Instead of patching up old coal plants, we can begin revamping our power systems to be competitive in the 21st century.
Such innovative, forward thinking was on display at the nearby San Juan Generating Station. That debate had long been stuck on which of two retrofit coal technologies should be installed on an aging and inefficient plant. A "third alternative" was conceived and demonstrated, using coal unit closures, more natural gas use and less costly NOx retrofits to create a true win-win outcome offering better environmental performance at lower cost. Working among all the stakeholders, the Settlement Agreement announced in February will not only save ratepayers hundreds of millions of dollars, but will also yield dramatic reductions in coal ash, water use, and, for carbon dioxide, the biggest reduction in New Mexico's history.
For NGS, could such innovative thinking achieve similar benefits for stakeholders? Analyses to date mostly focused on coal retrofit technologies, or simply retiring NGS and drawing from other resources in the western power grid. But how does either approach help the Tribe's transition from coal to cleaner energy?
What's been missing from discussion is the role natural gas could play in generating cleaner power at or near NGS. Dramatic shifts in the natural gas markets have opened up compliance opportunities for utilities that just a few years ago would have appeared too expensive, volatile and unreliable. And in a geologic stroke of good luck, the nearby Mancos Shale is showing exceptionally attractive characteristics, including the fact that much of this prime resource underlies Navajo Nation lands.
Natural gas use could avoid the need for costly pollution retrofit controls and lessen the cost risk of future environmental regulation, while still retaining an employment base in the area and utilizing the established transmission infrastructure. Further, natural gas units can be paired neatly with expanded use of renewables, particularly solar power resources abundant around the NGS site. Unlike coal retrofitting or shutting down NGS, this creates genuine opportunities for a transition to a cleaner and more sustainable energy future.
Why now, and not before? Technologies, natural gas markets and policy are all moving into alignment, creating a window of opportunity where one had not existed before. These cleaner-energy strategies offer a far more compelling value proposition than just a few years ago. It no longer has to be a choice of costs versus the environment; today we really can have both.
We are at a crossroads. Whether we choose to seize this opportunity for a cleaner energy future, or simply double down on the technologies of the past, is a Sputnik moment for NGS, its owners, and customers, both now and for future generations. There's time to do this right, and getting this right has never been more important.
Ms. Lovejoy is a former New Mexico State Senator, Chair of the NM Public Regulatory Commission, two-time candidate for Navajo Nation President, and currently President of Lovejoy Consulting Partners. Mr. Klein is President of Twenty-First Strategies, a Santa Fe consultancy, and a longtime consultant on energy, energy security, and climate change.