04/02/2010

By FELICIA FONSECA  / Associated Press

The challenges facing a proposed coal-fired power plant on the country's largest Indian reservation are stark: the withdrawal of a key federal permit, no secured customer or transmission line, and uncertainty over the future of climate change.

The Navajo Nation acknowledges the challenges, but both the tribe and its partner in building the $3 billion, 1,500-megawatt Desert Rock Energy Project say they are committed to moving forward. Environmentalists who have fought the project contend it will be nearly impossible to do so.

"It would be a big load off the federal government's mind if Desert Rock goes away, and it will make the states happy and the environmentalists happy, and they all dance around," said Steve Begay, general manager of the tribe's Dine Power Authority. "There's a probability of it, but hopefully it's a very small probability."

The plant was scheduled to begin operating this year, with hundreds of Navajos on the employment rolls, and tax and royalty payments of $50 million a year to the financially impoverished tribe. The tribe has partnered with Houston-based Sithe Global Power on the project.

Among the major setbacks was the U.S. Environmental Protection Agency's withdrawal of an air permit in September. Developers haven't resubmitted an application.

With global concerns about carbon dioxide emissions, Begay said: "It's hard to bring that together in an application."

The U.S. Bureau of Indian Affairs also has withdrawn a biological assessment for the project, and the tribe was denied approval of a federal grant to help pay for equipment designed to capture carbon emissions. That's an expense Begay said would be difficult for the developer alone to take on.

Sithe Global executive vice president Dirk Straussfeld said Thursday that attitudes about coal have changed in recent years, but his company remains committed to building a power plant on the Navajo Nation.

"Sithe is still planning to move forward with Desert Rock," he said in a telephone interview.

Sithe recently abandoned another coal-fired power plant in Nevada in favor of original plans for a natural gas plant, and it halted plans for a Pennsylvania waste coal-burning plant. The moves have encouraged environmentalists who have been fighting the Desert Rock project in northwestern New Mexico.

Begay said Dine Power Authority and Sithe have had informal discussions about moving Desert Rock in a different direction, but he believes the tribe ultimately will stick up for utilizing its rich and abundant coal resources.

"The options will come later if they come," he said. "It's good for discussion and consideration. You have to have a contingency plan."

Mike Eisenfeld of the San Juan Citizens Alliance said if developers think they can come up with something better, "we'll be prepared to thoroughly analyze their proposal."

"I think they need to think about what would be successful," he said. "Why aren't they looking at a concentrated solar facility or something they could permit or that's more sustainable?"

Abbas Ghassemi, director of the Institute for Energy and the Environment at New Mexico State University, said a big issue confronting coal-fired power plants is the emissions and particulate matter.

Coal plants remain a critical part of the energy mix, but utilities increasingly are looking to renewable energy sources to meet the nation's demand.

"Everyone is aware that we can't continue to do what we do and expect someone else to clean it up," Ghassemi said. "The question then is how do we do it the most amicably so that we don't end up costing jobs and economic development at the expense of human health and environment."

LoRenzo Bates, chairman of the Navajo Nation Council's Budget and Finance Committee, said tribal lawmakers' support for Desert Rock hasn't wavered even while most of the momentum has been lost.

"Not knowing the challenges and the cost of those challenges, that's where this council has to decide," he said. "Is it worth it?"

___

Associated Press Writer Susan Montoya Bryan in Albuquerque contributed to this report