The expected shutdown of the 1,580 MW Mohave Generating Station will raise the price of power in the Southwest slightly but pose no supply problems, say utility executives. At the same time, they continue to negotiate in the hopes of a last-minute deal to keep the plant running. "There are a lot of people working hard to keep that plant open," said Mike Hummel, Salt River Project manager of resource planning and development. "As we get down to the 11th hour, there will be some creativity." Salt River owns 20 percent of the plant. "Confidential discussions continue," said Gil Alexander, Southern California Edison spokesperson. He added that it is economically important to keep the plant operating now that the price of natural gas-the fuel for many alternative sources of generation-has gone sky-high. He admits, however, that as time goes by it is likely that the plant will be shut for some time. The baseload plant outside Laughlin, Nevada, supplies power at a cost of 2 cents/kWh, according to Roger Clark, Grand Canyon Trust air and energy program director. The power goes to its four utility owners - Sothern California Edison, the Los Angeles Department of Water & Power, Nevada Power, and the Salt River Project, a public power agency in Arizona. It opened in 1971. The plant's problems began in the 1990s when its violation of Clean Air Act standards prompted environmental groups to sue the operators to install air pollution controls. The suit was settled in 1999 under a consent decree. The Navajo and Hopi tribes benefit from jobs supplying coal to the plant. They receive millions of dollars a year for their tribal governments from mining operations on their land, said George Hardeen, Navajo Nation communications director. However, while some utility officials are hopeful they will achieve a breakthrough in negotiations that would allow the plant to continue operations, the talks are slow and complicated. Moreover, any agreement will have to gain legal approvals, which could be contested. "There are a lot of pieces, and they all have to fit," said Hardeen. They include expensive investments not only in pollution control, but also in a new water supply for the 273-mile-long slurry pipeline that transports pulverized coal to the plant from Peabody Energy?s Black Mesa mine on the Hopi and Navajo reservations. The 1999 consent decree requires the operators to install scrubbers that will reduce by 85 percent the 40,000 tons a year of sulfur dioxide the facility emits to the atmosphere. The pollution obscures visibility downwind at the Grand Canyon and contributes to respiratory disease. Plant operators agreed to install controls or shut down unit 1 by December 31, 2005, and unit 2 by April 1, 2006. Meanwhile, concerned about depletion of their chief source of drinking water, the tribes told the operators that they wanted the water source for the slurry pipeline shifted from the Navajo aquifer to the brackish Coconino aquifer 100 miles to the south. Edison, which owns 56 percent of the plant, has agreed to spend $200 million on a pipeline to the Coconino aquifer, according to a recent statement issued on the negotiations by the Hopi Tribe. A treatment plant may be needed too to prevent the water from damaging the slurry pipeline. Yet Edison and the other owners have done nothing to arrange for needed pollution-control equipment, said the Grand Canyon Trust's Clark. To keep the plant open at this point, the owners would have to seek a modification of the consent decree deadline. "To this point, nothing has been proposed," he said, and the environmental groups that sued - the Grand Canyon Trust, the Sierra Club, and the National Parks Conservation Association - fully expect the plant to be shut down. In a letter earlier this year, the groups told the tribes: "We are unwilling to excuse further violations of the law-and threats to public health and the clean air of the Colorado Plateau-by allowing any further extensions." Should the operators want to reopen the plant, it likely will take years. Clark said that the consent decree envisioned that it would take three years to install pollution-control equipment. Edison told the California Public Utilities Commission in an update that building the new water pipeline could take four years. Between the air pollution control equipment and upgrades to the slurry system, it may cost $1 billion to keep the plant going, Clark estimated. However, the operators will still see some revenue, he said, because they will be able to sell the plant's sulfur dioxide emission credits for more than $1,000 per ton per year. At the rate of 40,000 tons a year, it could net $40 million annually. Clark suggested that the revenue be invested with the tribes to mitigate the economic impacts of the plant closure. Edison is committed to installing the pollution-control equipment if it can reach an agreement with the tribes regarding a long-term supply of coal and water, Alexander said. Any such agreement will require CPUC approval, which may be met with resistance, particularly if Edison seeks it on an expedited basis. "We don't want any more Mountainviews," said Jan Smutny-Jones, Independent Energy Producers executive director, speaking of a power project Edison purchased under an approval outside the normal CPUC process, which was granted in an expedited and nonpublic manner. In a November 28 letter to the commission, the Independent Energy Producers said that regulators should consider any further investment in Mohave by Edison in the course of routine planning and procurement proceedings rather than on an expedited basis. However, if it seeks to reopen the plant, Edison may have to do so without the participation of one of the owners. LADWP, which holds a 10 percent interest, has become indifferent on the question of whether to invest money to keep the plant open. "We've recently done some repowering to plants in the [Los Angeles] Basin that will fill the gap," said Eric Tharp, LADWP manager for external generation. The department also plans to more aggressively pursue renewable power. "It will be easy to replace Mohave's power with something green." Nevada Power, which owns 14 percent of the plant, also has entered power-purchase agreements in anticipation of Mohave's shutdown, said Karl Walquist, spokesperson for parent company Sierra Pacific Resources. The Salt River Project has an option to build a new coal plant in Arizona and has entered power-purchase agreements too, although they will raise the cost of power to utility customers, said Hummel. The tribes also have hedged their bets on the future of the Mohave plant. The Hopi Tribe, for instance, has entered an agreement with Headwaters of Jordan, Utah, to explore building a coal liquefaction plant to make diesel fuel. The Hopi also are exploring the potential for renewable energy projects. The Navajo Nation, through its power authority, is planning a 1,500 MW coal-fired plant, known as Desert Rock, on its land in New Mexico with Sithe Global of Houston. The power would be sold throughout the Southwest, including to California.
