FLAGSTAFF, Ariz. (AP) — The Navajo Nation is pursuing an ownership stake in a coal-fired power plant in New Mexico as many utilities are divesting from the energy source.
The Navajo Transitional Energy Co. said it is negotiating with the operator of the Four Corners Power Plant for a 7 percent interest as a way to build expertise in energy production. The tribal enterprise bought the coal mine that feeds the power plant near Farmington in 2013.
"We understand the political climate regarding coal, so we view it as a short window to gain as much strength as we can to diversify our company's energy portfolio," said spokesman Erny Zah.
Four Corners was once one of the nation's largest coal-fired plants, producing 2,100 megawatts for customers around the Southwest. Its capacity was reduced by one-quarter with the closure of three of the five units in 2013. The operator, Arizona Public Service Co., said it would be too costly to install pollution controls on the older units.
The Navajo Nation is seeking the interest held by El Paso Electric Co., which entered into an agreement with the Arizona utility earlier this year to sell its stake and divest from coal generation by 2016. The sale by El Paso, set to close in July, is subject to approval by regulators in New Mexico and Arizona.
Spokesmen for the Arizona and El Paso utilities said they could not disclose the selling price.
The Navajo company would negotiate directly with APS for a portion of the units that generate 107 megawatts. If acquired, the tribal enterprise would have to find a buyer for the power, Zah said.
Coal remains a huge revenue source for the Navajo Nation but it's becoming increasingly unpopular with utilities that want to bolster renewable energy portfolios and with environmentalists who say it's not economically feasible given the regulatory challenges many power plants face in controlling emissions.
"I think the Navajo Nation is considering this purchase, and it really should be doing complete due diligence to understand the ramifications of what's coming," said Mike Eisenfeld of the San Juan Citizens Alliance. "Nobody else is buying coal plants and coal mines."
The alliance and other environmental groups this week threatened to sue federal agencies over the approval of an analysis that ensures the continued operation of the Four Corners Power Plant and its sole coal supplier, the Navajo Mine. The groups cited potential impacts to health, air and water.
Zah said the Navajo Transitional Energy Co. is not discounting renewable energy. The company is mandated to invest at least 10 percent of its revenue into such projects once it begins turning a profit. Zah said that should happen sometime next year.
"We're coming into a realm where we're going to be partners with the companies that own the power plants, and this opens up possibilities," he said.