By Brian Young, CAP Power Programs Manager
The Navajo Generating Station (NGS) owners and the Navajo Nation have recently come to terms on a lease agreement that will allow NGS to continue to operate through 2019.
Four of the NGS owners, Salt River Project (SRP), Arizona Public Service (APS), Nevada Energy and Tucson Electric Power (TEP) and the Navajo Nation have executed the lease agreement. The Los Angeles Department of Water and Power (LADWP) and the U.S. Bureau of Reclamation (USBR) have not yet completed their approval processes; however, the approval processes are underway and are expected to be completed before the December 1, 2017 deadline.
The NGS participants also have indicated that through October 1, 2017, they will consider offers to purchase NGS from a buyer acceptable to the Navajo Nation. If an offer were to come through that meets the necessary requirements, there would be a period of time, through mid-2018, for negotiation of any final agreements. Any buyer would have to assume operation of the plant consistent with the Federal Implementation Plan (FIP) approved by Environmental Protection Agency (EPA). In light of the non-U.S. owners' decision not to operate NGS beyond 2019, the federal agencies have paused the larger environmental impact statement (EIS) process, which would need to be reinitiated should an agreement be reached with a potential buyer. If no offer comes in to purchase NGS, the owners will continue to operate the plant safely until it closes down no later than December 22, 2019, at which time decommissioning would commence.
Until December 22, 2019, Central Arizona Project (CAP) will continue to receive power from NGS. However, after that date, CAP will need to replace the vast majority of energy required for its pumping load from new resources. In the current energy market, supplies of low-cost energy are readily available. Later this year, CAP will initiate a request for proposal to secure a portion of future power resources required after NGS closure. The remainder of CAP power requirements will be acquired closer to the time of delivery through a combination of forward energy purchases and daily energy markets.