Guest column: SRP's purchase of LADWP's share of NGS, and what it means for the Navajo Nation
On May 14, the Navajo Generating Station's (NGS) ownership pie chart began to take on a new look.
That's when it was announced that the slice held by Salt River Project (SRP) will grow from nearly 22 percent to 43 percent. But that piece won't stay so big for long.
The SRP board approved the $10 million purchase of the Los Angeles Department of Water and Power's (LADWP) share of NGS. Los Angeles Mayor Eric Garcetti recently signed an ordinance authorizing LADWP's general manager to sign the purchase agreement. The deal is scheduled to be complete by July 2016.
LA sold its share of NGS because of a 2006 California law that prohibits California's electric utilities from importing electricity from power plants that exceed an emissions cap above that of a combined cycle power plant.
For NGS, the purchase is critical to the continued operation of the plant. That's because it clears the way for SRP to implement a new EPA rule to lower the plant's nitrogen oxide emissions starting in 2020. SRP will do this by either shutting down one of the three generating units or reducing output from all three units.
NGS will also begin planning for the installation of new pollution controls. These actions are in accordance with the agreement both SRP and the Navajo Nation helped structure last year.
When the EPA issued its proposed Best Available Retrofit Technology rule to reduce NGS NOx emissions, it invited proposals to be submitted that were "better than BART."
SRP helped form a Technical Work Group that included the Navajo Nation, Gila River Indian Community, environmental groups and the Central Arizona Project. The group achieved a workable solution that reduces total nitrogen oxides more than EPA originally sought. Closing one of its units or reducing power output reduces all of NGS emissions, including CO2, by one third.
This was a reasonable compromise that EPA accepted and incorporated in its final rule. It's one that keeps NGS operating and its Navajo workers employed. This is especially important to the Navajo Nation because 90 percent of the NGS workforce is Navajo and the tribe will benefit financially if the plant continues to operate.
The Technical Work Group proposal was also necessary because the EPA is enforcing a regional haze rule designed to improve visibility. There are 11 national parks and wilderness areas, including the Grand Canyon, that must be evaluated as part of the NGS BART rule because they are within a specified distance from the power plant.
What this means is that NGS will continue to run but at a reduced capacity beginning in the year 2020. It means the frequency of annual winter overhauls could be reduced in the future. And if a unit is shut down, it would mean reduced staffing in the future, as well.
But it's anticipated that the majority of staff reductions can be managed through normal retirements.
The end result of the SRP purchase of the Los Angeles share of NGS is this: by next July, NGS will have four owner-participants instead of six. On Dec. 22, 2019, power production at NGS will be reduced. From that point on, NGS will essentially be a two-unit power plant, and all emissions will be 33 percent less.
But NGS will continue to provide electricity for Arizona's needs, excellent employment for Navajo workers and needed revenue for the Navajo Nation.