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Navajo Generating Station gets a short-term reprieve

Posted: Wednesday, Feb 15th, 2017

Navajo Generating Station may have received a three-year reprieve Monday.

The owners of NGS voted to keep the power plant open and running until the end of 2019, if they can reach an agreement with the Navajo Nation.

Currently, NGS has a lease with the Navajo Nation that expires at the end of 2019. To keep the plant operating until then, the Navajo tribe would have to agree to extend the lease so NGS would have time to tear down the plant. Without an agreement, the plant could still close as early as this summer.

During the meeting Monday, the owners also agreed to let the Navajo and Hopi tribes take over the plant at the end of 2019, if the tribes choose to do so. The non-governmental owners vow to end a business relationship with NGS at that time. The federal Bureau of Reclamation, which owns 24.3 percent of NGS, did not vote to close the plant and could be interested in remaining involved after 2019.

The four utility owners of NGS include Salt River Project, Arizona Public Service Co., NV Energy and Tucson Electric Power.

“The utility owners do not make this decision lightly,” said Mike Hummel, deputy general manager of SRP, the plant’s operator. “NGS and its employees are one reason why this region, the state of Arizona and the Phoenix metropolitan area have been able to grow and thrive. However, SRP has an obligation to provide low-cost service to our more than 1 million customers and the higher cost of operating NGS would be borne by our customers.”

In recent years, the cost of operating NGS, a coal-powered plant, has grown while the cost of operating natural gas powered plants has plummeted. The utility owners made it clear Monday, the cost of doing business is the sole reason they are looking to leave NGS when the current lease with the Navajo Nation expires.

Hummel explained recent studies have shown the cost of producing electricity at NGS is greater than the open market, and as long as natural gas prices remain low, that gap is expected to continue.

For the complete article see the 02-15-2017 issue.

Click here to purchase an electronic version of the 02-15-2017 paper.

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