NREL study finds NGS, Kayenta Mine have $1.3 billion economic impact on Navajo and Hopi economies

LECHEE, Ariz. - A federal report has found that the Navajo Generating Station (NGS) and the Kayenta Mine contributed nearly $1.3 billion to the Navajo and Hopi economies since 1987.

The 120-page report shows that since 1987, coal royalty payments, bonuses and water fees paid to the Navajo Nation totaled $772 million. Payments to the Hopi Tribe totaled and $291.4 million.

The study, titled "Navajo Generating Station and Air Visibility Regulations: Alternatives and Impacts" was released by the National Renewable Energy Laboratory in January. It was produced through an interagency agreement between the U.S Departments of Interior and Energy.

The report addresses issues the federal EPA must consider to design a new pollution control rule for NGS, which must consider impacts to tribal economies.

Earlier this year, the L William Seidman Research Institute at the W.P. Carney School of Business at Arizona State University found that the power plant and mine would have a $20.5 billion impact on the state of Arizona through 2044.

"The continued operation of NGS and Kayenta Mine therefore exerts significant positive economic impact for the host counties an Arizona as a whole," said the ASU study, titled "Navajo Generating Station and Kayenta Mine: An Economic Impact."

The NREL report found that in the past 23 years, the Peabody Western Coal Co. paid about $50 million per year to the two tribes, totaling nearly $1.3 billion.

Approximately eight million tons of coal per year from the Kayenta Mine is dedicated to NGS.

"In 2010, the total tribal payments for coal royalties were $34.4 million and the coal bonuses for the two tribes totaled $5 million," the report said.

NREL found that wages and benefits paid to Native American employees at the Navajo Generating Station amount to $52 million per year. The average hourly wage paid at the power plant is $35 per hour - twice the average wage paid in Coconino County, according to the Bureau of Labor Statistics.

The report notes that 83 percent of the NGS workforce, about 450 employees, is Navajo.

The NREL report found that total wages and benefits paid to Kayenta Mine employees amount to $46.8 million per year. Average annual wages and benefits paid to mine workers are $117,000 a year.

Some 93 percent of the Kayenta Mine workforce, about 400 employees, is Navajo, according to Peabody Coal. The EPA's final Best Available Retrofit Technology determination - or BART - which is expected sometime this summer, will have diverse impacts on many Arizona tribes.

The initial term of the plant site lease with the Navajo Nation expires in 2019. Meanwhile, discussions to extend the lease are under way.

Should the EPA require NGS to install the most expensive pollutions controls, which could cost as much as $1.1 billion, its six owners may not be able to justify such a significant capital investment without any certainty that the plant could continue to operate beyond 2019. This could put the plant at risk of closure.

"For the Hopi Tribe and Navajo Nation, in northeast Arizona, a power plant shutdown would impact areas such as local employment, tribal revenues and public health," the report says.

Both tribes were negatively impacted economically by the closure of the Mohave Generating Station in December 2005, the report states.

"When Mohave closed, nearly a third of the Hopi's operating budget - then $21.5 million - was eliminated," the report states.

Closure of NGS would eliminate nearly 1,000 high-paying jobs and about $98.8 million in annual payroll, in addition to eliminating an average of $37.2 million in annual coal royalties, payments and fees paid to the Navajo Nation and $14 million in annual coal royalties, payments and fees paid to the Hopi Tribe, the report says.

It cites the Navajo Nation 2009-2010 Economic Development Strategy in which Navajo Nation President Ben Shelly says NGS is "an essential component of the Navajo Nation economy and our energy portfolio, and must remain viable, for the sake of the Nation and our People, for years to come."

In 2009, the Navajo Nation received NGS site lease payments of $600,000 and air permit fees of $400,000, NREL reports.

In 2010, the Navajo Tribal Utility Authority was paid $10 million to provide electricity to the Kayenta Mine.