- Associated Press - Tuesday, April 11, 2017

PHOENIX (AP) - A coal mine operator said the price of its coal could be lowered through 2025 if a new buyer takes over a northern Arizona power plant.

Peabody Energy officials are hopeful that new ownership would make the Navajo Generation Station profitable again, The Arizona Republic reported (https://bit.ly/2oUUTG9). Peabody’s Kayenta Mine provides fuel for the power plant near Page that provides power to Arizona and Nevada.

“Let me be clear, the Navajo Generating Station is an economically viable and essential resource to the state of Arizona,” said Brian Galli, Peabody group executive and chief marketing officer.

The power plant is currently owned by the Salt River Project, Arizona Public Service Co., Tucson Electric Power and Nevada Energy. The four entities voted to shut it down by this summer unless they can get a new lease agreement with the Navajo Nation, which owns the land.

The plant owners said it would be more economical to use natural gas as an alternative power source, but Gill questioned whether natural gas would actually be a cheaper move.

“Prudent and responsible energy planning is done on a long-term basis and not on short-term price fluctuations,” Gill said. “The leaders in Arizona need to pay attention to what is being said about the long-term viability of the Navajo Generating Station. We believe there is another side to the story.”

Peabody has hired Navigant consulting to complete an economic analysis of the power plant. It also hired Lazard asset management company to attract new owners.

The new owner would need to negotiate a new lease with the Navajo Nation and establish a long-term purchase agreement for the power from the plant and an economic coal-supply agreement, Lazard Managing Director Juan Correa said. He recommends prospective buyers also have a good understanding of environmental regulations that will affect the plant.

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Information from: The Arizona Republic, https://www.azcentral.com

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