Yesterday, the utility owners of the Navajo Generating Station made the decision not to continue operating the plant after 2019. This decision does not come as a surprise to CAP, nor is it expected to impact the delivery of CAP water.
For more than four decades, NGS has been a reliable source of energy for CAP as well as the plant’s utility owners—Salt River Project, Arizona Public Service Company, Tucson Electric Power Company and NV Energy. But the electric market has fundamentally changed over the last few years to the point that NGS is now significantly more expensive than other energy alternatives. The utility owners’ decision is based on this new economic reality.
NGS has faced the threat of closure since 2009, when EPA announced its intention to require the plant to install expensive nitrogen oxide emission controls to reduce regional haze. While CAP and the plant’s owners were successful in developing a reasonable alternative to the EPA proposal, the current challenges to NGS are driven by a cheap, plentiful supply of natural gas. CAP understands this is something that is beyond the owners’ control.
Given the lingering uncertainty over NGS in recent years, CAP has devoted considerable effort to identifying alternative ways to satisfy its pumping energy needs. As a result of the owners’ decision, the CAP Board will work to replace the energy from NGS at the lowest cost possible as is reflected by the changes in the energy market.