It’s vital that we support solutions to keep Mohave plant generating<br>

Each passing day without support for a solution moves the Mohave Generating Station a step closer to likely closure in 2005, which would be a tragedy for Navajo and Hopi people.

Closing Mohave would put 600 employees out of work. It would do away with more than $1.8 billion in economic benefits to tribal communities and more than $6 billion in benefits to the region. And it would be devastating to the Navajo Nation and Hopi Tribe, who have testified to California regulators that closing Mohave means a loss of more than $26 million in annual revenue along with a likely reduction of essential government services.

Several so-called alternatives have been suggested by Mohave opponents, which include replacing the generation with renewables or integrated gasification coal combustion technology. While America needs to embrace all energy alternatives, we need to be practical about the benefits these applications have today.

Mohave provides some of the lowest cost electricity in the Southwest, and there are 1.5 million families who rely on this baseload energy now. Renewables provide less than 1 percent of the electricity on our grid and have limited application.

This is particularly true for solar energy, which provides a tiny fraction of our power supply. In fact, the energy that Mohave generates is six times greater than all of the solar power currently generated in the United States. Solar power also has high capital costs, huge land requirements and a low capacity factor, making it prohibitively expensive. Replacing Mohave’s output with solar is simply not a viable alternative—nor is wind generation.

Arizona has no operating wind farms because of its poor wind resources. Replacing Mohave’s capacity would require over 1,600 wind turbines covering more than 100 square miles. Construction could cost up to $3 billion. And, because wind capacity is highly variable and wind speed periodically drops below the minimum for producing power, generators must have back-up capacity from other sources.

Integrated gasification combined combustion (IGCC) technology, which blends coal with oxygen to produce syngas, has tremendous promise. However, the technology is not commercially available today, and the technology is not well suited for the high elevation at Black Mesa. There are only a handful of small, coal-fueled IGCC generating systems operating in the world, all of which were developed with extensive government funding.

Peabody continues to support research and development for IGCC through the U.S. Department of Energy’s Vision 21 Program. Clearly this technology is exciting for our future—yet it is not the answer for today.

Peabody’s lease agreements with the Navajo and Hopi provide sufficient coal reserves within our lease area to supply fuel for Mohave through the 20-year extension while giving us the ability to continue using the Navajo Aquifer to transport the coal. While 11 major studies over the past 30 years demonstrate that the Navajo Aquifer is healthy, we respect concerns associated with use of the Navajo Aquifer and support development of an alternative that the tribes endorse.

A solution is available —supported by both the Navajo Nation and the Hopi Tribe—that would avoid the tragedy of closure, keep Mohave generating with coal, develop tribal infrastructure and water systems, and preserve billions in economic benefits and hundreds of jobs. It’s called the

Coconino Aquifer, the largest and most productive aquifer in the Little Colorado River Basin, spanning more than 25,000 square miles. The Coconino Aquifer could provide water to convey coal and water for Navajo and Hopi communities along the pipeline route, creating additional long-term benefits for tribal people. A preliminary U.S. Bureau of Reclamation study confirms this.

Beyond providing jobs, economic and infrastructure benefits, the Mohave Station and the Black Mesa Mine demonstrate the principle of continuous environmental improvement. The plant uses low-sulfur coal and will install additional controls to further improve emissions.

At Black Mesa, award-winning reclamation practices return all mined lands to a condition that is far more productive for livestock grazing than native range. These results lead the industry. An extensive environmental program monitoring air, soil, vegetation and water also continues to show the environment is being protected.

For those working hard to shut the plant down, it’s easy to just say “no” to practical alternatives and destroy jobs and lifestyles. It is vital that we come together to support sensible solutions that will improve the environment and preserve hundreds of jobs and millions of dollars in economic benefits for tribal people.

(Vic Svec is Vice President of Public and Investor Relations at Peabody Energy.)

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