Ryan Randazzo
The Arizona Republic
Apr. 13, 2008 12:00 AM

Navajo Nation leaders are well aware that coal has fallen from favor in thisage of global warming. But to them, plans for a new power plant on the reservation mean more than rising temperatures and climate patterns.

To them it is survival.

The proposed Desert Rock Energy Project in northwestern New Mexico could add $50 million in revenue to their annual budget of about $130 million, excluding government contracts, and bring 1,000 construction jobs and 400 permanent positions to the plant and expanded mine.
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Environmentalists on and off the reservation are fighting the plans, saying that the region already suffers enough air pollution from existing coal plants and mines. They say the poverty-stricken tribe could see a bigger economic boost from developing wind and solar energy.

The jobless rate among the more than 100,000 tribal members living on the reservation is about 50 percent, depending on whether traditional Navajo roles such as gathering herbs are counted as jobs.

It's an understatement to say that attracting industry to the 27,000-square-mile reservation is a challenge. It's likely the largest swath of the continental U.S. without a Starbucks, and long drives into Gallup, N.M., to fill water tanks for homes are common.

The spokesman for the tribe's power authority, Albert Shirley, is one of many people living on the reservation without electricity.

Like many Navajo, he visits a nearby mine in the winter to collect coal to burn for heat.

The importance of electricity hit home last winter, when his 28-year-old daughter-in-law fell ill during a cold snap and died, leaving behind a months-old son.

"That was a reality for me," he said. "It was so cold. I got sick myself. We took her to the hospital, but she fell so fast."

Shirley is all too familiar with the problems linked to poverty. Three years ago, his 22-year-old son, who worked as an art-exhibit tour guide for the New Mexico Legislature, was killed in a violent stabbing outside his home.

"Poverty is a factor in a lot of this," Shirley said. "People don't care. They don't have values."

Better offer

The tribe could buy in and become a partial owner of the coal plant. That's a better deal than past coal developments, some of which paid pennies per ton in mining fees and didn't offer an ownership stake.

And the project would have a Native American hiring preference, something that has served the tribe well at the nearby Four Corners Power Plant run by Arizona Public Service Co., where about 80 percent of the workers are Native American.

"We have to look at more than just the environment," Shirley said. "There is a little bit more to consider."

Desert Rock is planned south of the Four Corners plant and the coal mine that feeds it. Another plant and mine, San Juan Generating Station, lies farther north, just off the reservation, not to mention the Navajo mine to the west in Arizona, which is tapped by both Salt River Project and APS.

Some tribal members say that is more than enough.

Alice Gilmore, 76, keeps time like many Navajo her age, with a reference to The Long Walk, the military roundup of the tribe in the 1860s that temporarily removed them from the land that now is the reservation.

Gilmore grew up chasing sheep on the hills near the Desert Rock site. As she recalled her youth, the draglines from the mine could be heard across the valley.

Through a translator, she explained that relatives are buried in the area and that because of what has happened at Four Corners, she doesn't trust promises about keeping the environment clean.

Navajo council members told her in the early 1960s that the land would be returned to its original condition after it was mined. But she points to it now and says the mine's restoration efforts are falling short and nobody can move back to that area.

Gilmore is helping a Navajo environmental group opposed to the plant, Diné CARE (Citizens Against Ruining our Environment).

The group hopes to see the tribe develop more alternative-energy projects, such as a major wind-power project recently announced, that, if built, could be the first in Arizona.

Shirley acknowledged the difficulty of explaining certain concepts regarding the coal plants, or "big stoves" to tribal elders in their native, wispy language.

"We are obligated to tell people what is going on," he said.

He is helping create translations for some of the terms, such as "the air with a wild spirit," for air pollution.

"A spirit that can hurt you, your health," he added.

The translation efforts have notfound a way to explain the concept of global warming caused by fossil-fuel emissions.

Project delayed

Desert Rock's energy output doesn't have any takers yet. It has been mired in an application for an air permit from the Environmental Protection Agency for four years, triggering a lawsuit from developer Sithe Global Power.

And environmentalists are suing the Bureau of Indian Affairs for withholding operating plans for the facility - namely, where it will get its water.

Sithe officials said they plan to use groundwater, but environmentalists suspect that won't work, and the plant will pull from the nearby San Juan River, just like the Four Corners plant.

"We would be way more amenable discussing the future of this project if it were to allow utilities to decommission another one and bring on a cleaner plant," said Mike Eisenfeld, a staff organizer for the San Juan Citizens Alliance, which is fighting Desert Rock.

Eisenfeld said it's important that the tribe understand global warming.

If Congress passes taxes or limits on carbon-dioxide emissions, which most utility officials believe is imminent, the cost of burning coal will go up.

And if the tribe is a partner in the coal project, that could place some of the expenses, from new taxes or limits, on them.

Navajo Nation President Joe Shirley Jr., no relation to Albert, has a word for people like Eisenfeld and his group in Farmington: foreigners.

He said building the plant is worth the risk, and that technology could help Desert Rock capture its global-warming gasses someday.

"It's all about putting food on the table to me," he said. "Putting shoes on the little feet."

Poverty and crime are too high on the reservation, which stretches across parts of three states, to turn down the opportunity, he said.

"Some of our children are killing each other," he said. "Once upon a time the Navajo Nation was very fierce, very independent. I'd like to get us back to standing on our own two feet."

Ryan Randazzo
The Arizona Republic
Apr. 12, 2008 04:32 PM
Source: http://www.azcentral.com/arizonarepublic/business/articles/0412biz-coalfuture0413.html

Uncertainty about the future of coal power plants could prevent Arizonans from tapping the inexpensive and abundant resource to meet their growing electricity demands, and likely will mean higher energy bills.

Coal powers a hefty portion of American appliances for electric utilities and their ratepayers.

But coal releases more carbon dioxide than other energy sources, and with growing agreement that those emissions must be capped, cut or taxed to address global warming, utility companies see coal as a low-hanging yet forbidden fruit.

With legislation pending in Congress and other parts of the world to charge utilities for CO{-2} emissions, utility officials are hazy on the future of traditionally cheap coal power.

Companies such as Arizona Public Service Co. and Salt River Project are wary of committing to new coal projects that might seem inexpensive now. New global-warming laws could make those plants much more expensive to operate down the road.

They predict they either will have to pay more for the emissions or pay more for yet-to-be-invented equipment to catch those emissions. Or they could rely on more expensive sources of electricity.

Like all other utility expenses, those would be passed on to ratepayers in monthly bills.

For example, Sens. Joe Lieberman, I-Conn., and John Warner, R-Va., support legislation that aims to cut greenhouse-gas emissions 19 percent below 2005 levels by 2020, and 63 percent by 2050.

APS officials used some assumptions to calculate that would cost them $180 million a year in 2012 in operating expenses, based on the coal plants they operate. That would add 5 percent or more to customer bills. SRP officials declined to offer such estimates.

A separate analysis of the bill by the U.S. Environmental Protection Agency estimates that if utilities could pass on the expenses, customers could see bills go up 44 percent in 2030 and more afterward.

Whether that bill or similar legislation gets passed, and when, is completely up in the air. Lenders already are setting new guidelines for coal plants, though, to make sure the potential expenses are accounted for in business plans.

Filling the gap

The uncertain future of coal generation is revealed in the blueprints for the proposed Desert Rock coal-fired power plant outside Farmington, N.M.

Developer Sithe Global Power would be happy to see APS or SRP sign agreements to buy the plant's electricity for Phoenix customers. But the utilities are holding off on new big coal plants until they know about the costs.

A huge gap in the middle of the 1,500-megawatt Desert Rock plant's design could be the deal breaker or deal maker.

Sithe is leaving space for equipment that can capture CO{-2}, but nobody knows how to do that very well yet.

"When you take coal into consideration, you have to take in CO{-2} as part of the equation," said Nathan Plagens, vice president of the Desert Rock Energy Project. "When we get this carbon regulation straightened out, we can put something in that gap."

Plagens takes in the sweeping landscape of the high-desert site near the Four Corners for the proposed plant, with monumental Shiprock and Colorado's snow-capped peaks on the horizon.

The site is on the vast Navajo Reservation and has the endorsement of the tribal government.

A few miles away, draglines work around the clock digging coal for another generator, the Four Corners Power Plant run by APS, and stand ready to fuel Desert Rock if it gets built.

Plagens has a few other hurdles before that happens. His company just sued the Environmental Protection Agency for delays in getting an air permit for the plant. He said the EPA is stalling because coal is "politically incorrect" amid the growing concern over global warming.

He's remains optimistic. Dozens of coal-plant cancellations have drawn lots of attention in the past year, but the U.S. Department of Energy still lists 47 coal plants either permitted or under construction, including an Arizona addition from SRP.

Coal-burning plants, mostly in the Four Corners area, generate 38 percent of the power for APS customers, and 45 percent for SRP's. Nationwide, about half of electricity generation comes from coal plants.

Plagens and other proponents argue the country should use coal, which is more plentiful than natural gas and less complex than nuclear power.

"Our company is technology-neutral," Plagens said. "If we could get the same return on natural gas, we would do that."

The land near Desert Rock is bursting with coal, with a deposit so vast that it breaks through the ground surface in places. Lightning strikes occasionally spark underground coal-seam fires that can burn for years.

Utilities already tap the Fruitland coal formation to fuel the massive San Juan Generating Station and the Four Corners Power Plant. Both existing plants sit next to their mines, as would Desert Rock.

The mine feeding Four Corners has dug an area 14 miles long by three to four miles wide since the plant opened in 1963, providing inexpensive, around-the-clock electricity for the utility, and there is plenty of coal left.

"We are in an interesting position right now as a utility and as a country," said Don Robinson, senior vice president of planning for APS, who added that "interesting" isn't necessarily good. "I don't think anybody can go out today and start a new coal plant without some assurance of where CO{-2} is headed. Whatever tax or system is put in place will factor into whether we continue to run plants or replace them."

APS and other utilities are researching a variety of ways to limit greenhouse-gas emissions, from pumping CO2 underground, which is commonly done to enhance oil wells, to feeding it to algae that is converted into biodiesel or ethanol. But capturing it without significantly reducing the capacity of a plant isn't easy.

Either way, the price of coal power looks to be rising, but how much? And how do utilities compare the unknown future price of coal generation to the also illusionary prices of natural gas, or to expenses of building a nuclear plant with nowhere to permanently store nuclear waste?

APS has begun a series of industry meetings to help the utility decide what major power source to pursue. Utility officials are hopeful they get state regulators' endorsement of the energy plan so that they aren't left on the hook if their energy-price predictions are off the mark.

Customers would pay

If a utility builds or agrees to buy power from a coal plant and emissions are taxed, electric customers will see higher prices. Likewise, if a utility builds a natural-gas or nuclear plant and encounters unexpected costs, customers will pay.

Robinson wouldn't comment specifically on Desert Rock. But he said the utility recently asked for proposals to provide more base-load energy, and has spoken with every energy developer in the region.

"Right now if you tell me somebody is out there who wants to build a coal plant, and they will take the risk and not pass it on to me, I'd certainly consider that. But nobody is going to do that," Robinson said. "They certainly are willing to build a plant and have me take the risk on my customers' behalf."

SRP, which splits electricity service in the Valley with APS, is building a coal generator at an existing power plant but holding off on larger projects for now.

"It is critically important for us to find a way to continue to utilize coal," said John Coggins, who manages resource planning for SRP.

"If we were to look at a coal project today, we certainly would want to know as much as we can about the future of CO{-2} regulations," he said.

SRP is spending $700 million to add a new coal generator to the existing Springerville Generating Station that should come online by 2010. SRP also operates the 773-megawatt Coronado Generating Station in northern Arizona, and has partnerships in several others, including the 2,250-megawatt Navajo Generating Station near Page and the 2,000-megawatt Four Corners plant.

"We really need to pursue every option," Coggins said. "I don't think we can abandon coal. We need to find the right solutions to make it work."


Industry optimism

As environmental groups try to stop new coal development, coal-mining companies promote the fuel, suggesting that "clean" methods of burning it are a breakthrough away from reality.

"I do believe in my lifetime we will have the ability to produce energy from coal with little of the pollutants that are now regulated, and the ability to capture and store carbon," said Joe Lucas, executive director of the coal advocate Americans for Balanced Energy Choices. "Coal is going to have a central role in America's energy future and the world's energy future."

The group began in 2000 and now has a budget of $35 million to advertise and educate people on the benefits of coal. Lucas doesn't want to see inexpensive coal in the United States passed up for imported natural gas or uranium, and emphasizes that relying on other energy sources likely will raise power bills.


Alternatives limited

New nuclear power could play a role with an expansion of Palo Verde Nuclear Generating Station, but the investment is much larger than coal just to get the proper permits, not to mention concerns over where the radioactive spent fuel will be stored.

"For a utility to move forward with a project like that, there already is tremendous risk, $50 million or more, just to get the license, and you don't even know if the project can go forward," Coggins said.

Meanwhile, APS coal plants are coming off a record year, operating well above 80 percent capacity, Robinson said. The performance makes coal that much more attractive and difficult to replace with solar or wind.

He's succinct when asked if alternative energy can replace coal.

"No," he said. "Remember, I've got 1,750 megawatts right now that is running 24 hours a day basically. It is there overnight, all the time.

"If I look at building solar plants, it would be very difficult to replace that 24-hour operation even with something like solar-thermal with backup heat storage and 16 to 17 hours a day of power."

APS and SRP both can meet growing power demand for a few years with new natural-gas and alternative energy, but eventually will have to decide whether coal or another fuel will add to their base energy.

"The big issue with coal right now is the emissions," Robinson said. "The question is, what is going to be the technology that comes about, if any, that helps us eliminate that as an issue?"