Lawsuit: Navajo coal plant must keep running till debt paid off
The Hopi Tribe and coal-miners May 1 filed a lawsuit that aims to force the Central Arizona Project to continue buying power from a troubled coal-fired power plant near Page.
CAP officials said last year that moving to natural-gas power instead of the coal plant could save money for water users throughout Maricopa, Pima and Pinal counties.
The plaintiffs said there is no guarantee gas prices will remain lower than running the coal plant, though that is what the plant's operators have forecast for the foreseeable future.
The Navajo Generating Station is on Navajo land, and is scheduled to close next year. That will force the closure of the Kayenta Mine about 80 miles away, which is on Navajo and Hopi land.
The biggest user of the plant's power is the Central Arizona Project, which uses the power to pump water from the Colorado River to Phoenix and Tucson.
Last year CAP officials began searching for replacement power once the plant closes, and the lawsuit says that is illegal and that the CAP must continue to take the power from the coal plant if a new owner buys the plant to run it beyond 2019.
"Some at CAP believe it has no legal obligation to purchase the power," Hopi Chairman Timothy Nuvangyaoma said Tuesday announcing the lawsuit. "These actions are unlawful and will hamper efforts to secure new owners for the Navajo Generating Station."
Coal plant's power more expensive
CAP officials have previously said they can save money buy purchasing power on the open market rather than running the coal plant, which is no longer cost competitive with natural gas. CAP's rates affect municipalities such as Phoenix and Tucson that take its water, as well as farmers and tribes that rely on the canal.
CAP officials said in response to the lawsuit that they have delayed plans to get replacement power for the canal but can't continue to wait.
"The CAP Board took several actions to delay the process to allow for other opportunities to emerge," a statement from CAP read. "Further delays could threaten the organization’s ability to meet our responsibilities."
CAP officials said they would consider buying power from the plant if it remains open and if the price is "cost-competitive."
"In the meantime, the CAP Board is doing what it must do to responsibly meet its future water-delivery commitments," the district said.
The coal mine and power plant not only provide about 750 jobs that are mostly filled with tribal members, but the coal royalties and other economic benefits provide the majority of the operating budget for the Hopi Tribe. They are significant to the Navajo Nation as well.
"Many Hopi will be forced deeper into poverty if the plant shuts down," Nuvangyaoma said.
What complaint seeks, and claims of new buyer
The complaint in U.S. District Court in Phoenix was filed by the tribe, the United Mine Workers of America and Peabody Western Coal Co. The defendant is the Central Arizona Water Conservation District, which runs the CAP canal.
The complaint asks the court to declare that the CAP must buy power from NGS while the power plant remains open.
Mine officials at the press conference for the lawsuit said they were certain new buyers would purchase the plant from the utilities that share the plant.
"An interested buyer that is willing and able to run NGS after 2019 has come forward and has nearly completed its diligence process," the complaint states. "Five other potential buyers are ready to step forward if that interested buyer decides not to acquire the non-federal NGS ownership interests."
Former Arizona Congressman John Shadegg is the attorney for the plaintiffs.
He said the decision by CAP to buy power from other sources in 2020 and beyond is both a legal problem and a practical one because the coal plant and CAP canal were built as a result of congressional acts, including the 1968 Colorado Basin River Project Act.
He said the congressional plan requires CAP to use the plant's power.
"This lawsuit is intended to tell them that they are wrong," Shadegg said.
Shadegg said SRP is not acting prudently in its decision to close the plant, but that the utility has the right to get out of the plant if it needs to.
Obligated to buy power till $1B canal debt paid?
CAP has no choice on taking the power though, he said, and added that CAP's public requests for power proposals are muddling efforts to sell the power plant.
The surplus power from the plant is sold and the money is used to repay debt on the canal, which remains more than $1 billion. However, in recent years the plant has not run as often and there has been little excess power to sell.
"I believe the law is clear that CAWCD is obligated to take and use NGS power, which it gets at cost, until the debt is paid," Shadegg said.
The U.S. Bureau of Reclamation owns a portion of the plant and wants to keep it open. Utilities Salt River Project, Arizona Public Service Co., Tucson Electric Power and NV Energy voted to end their participation in the plant.