For decades, residents of Tucson, Phoenix and much of Arizona have benefited from plentiful and relatively cheap power from coal-burning power plants on Navajo tribal lands in Arizona and New Mexico.
Now that those plants are closing due to public-health and climate concerns and higher costs, state regulators are deciding what — if anything — utilities including Tucson Electric Power should contribute to help tribal and nontribal communities that stand to lose hundreds of jobs and tens of millions of dollars in annual revenue due to the coal-plant shutdowns.
The Arizona Corporation Commission is setting up a series of public meetings in coal-impacted communities to help gather stakeholder input on the utilities’ role in a “just and equitable transition” away from coal to cleaner energy generation sources.
Communities including the Navajo Nation and Hopi Tribe have already lost hundreds of high-paying power plant and mining jobs and millions of dollars in revenue due to the 2019 closure of the Navajo Generating Station near Page and the Kayenta coal mine that supplied it since the 1970s.
And those communities stand to lose even more as the Four Corners and San Juan power plants in northwestern New Mexico and TEP’s Springerville plant in Eastern Arizona are set for early retirements — starting with San Juan as soon as this year.
The utility owners of the Navajo Generating Station, including plant owner-operator the Salt River Project, TEP and APS, say they’ve already provided significant support to the tribes and other communities affected by the plant’s closure.
In filings to the Corporation Commission on behalf of the NGS owners, SRP — a self-governed water and power authority not regulated by the commission — noted that the NGS owners in 2017 decided to extend the plant’s operation by more than two years at a cost of about $130 million and extended lease payments to the Navajo Nation, totaling some $110 million over 35 years.
The NGS owners also transferred millions of dollars in buildings and equipment to the Navajos, agreed to fund maintenance of the transmission lines for 10 years at a cost of about $5 million, funded a solid-waste landfill and give Navajo members hiring preference for decommissioning jobs at NGS and jobs at other utility plants.
Committed to an “equitable approach”
TEP, APS and SRP say they have been working with the Navajo tribal and local officials about ways they can support the coal-dependent communities.
APS floated a $144 million package of transition aid to the Navajo Nation, the Hopi Tribe and nontribal communities in Navajo County as part of its last rate case. Besides stakes in NGS, APS owns stakes in Four Corners and the coal-fired Cholla Power Plant, which is south of the Navajo Nation near Joseph City.
But the Corporation Commission balked at that plan, instead approving $14 million in transition aid including $10 million to the Navajo Nation over three years and $1 million to the Hopi Tribe.
TEP has not pledged any new monetary aid on its own, but the company is committed to working with with other plant co-owners on future transition aid and looks forward to the ACC process to see where it can help, TEP spokesman Joe Barrios said.
“We agree there’s a need to address how the transition away from coal-fired power plants to cleaner generating resources will impact surrounding communities,” Barrios said. “We support an equitable approach that considers the interests of our customers, local community members and all plant ownership interests.”
On tribal lands, TEP owns a 7.5% stake in NGS, a 7% stake in Four Corners, and a 20% stake in San Juan.
TEP owns a 20% stake in the San Juan Generating Station.
TEP also operates and owns two of four generating units of the coal-fired Springerville Generating Station near St. Johns in Apache County, with plans to ramp down those units in cooler months before retiring Unit 1 in 2027 and Unit 2 in 2032.
TEP has formed an internal team to explore job transition and increased training and education for displaced workers and says it is working closely with the other Springerville Generating Station participants to align and coordinate community transition efforts.
“Economic fallout”
But the Navajo Nation wants TEP to commit millions of dollars now to help with the transition as a longtime beneficiary of power from NGS, Four Corners and San Juan.
“Coal-fired power plants have provided thousands of Navajos with good paying jobs and acted as a dependable source of revenue for the Nation for decades, all the while providing Phoenix and Tucson with cost-efficient electricity,” Navajo Nation President Jonathan Nez wrote in a filing to the ACC.
“The economic fallout of such a loss to the Nation from the impending closure of these plants is highly significant, and communities across Northern Arizona are going to experience similar losses as more and more coal-fired power stations are retired.”
In a letter to the Corporation Commission during TEP’s rate case, the Navajo Nation said TEP should pay $61.8 million in “seed funding,” based on its ownership and use of the plants, plus in-kind support including technical, economic and electrification assistance, and site new utility-scale solar plants on tribal lands.
“Tucson Electric Power has, for decades relied on Navajo-based coal output to meet its generation and reliability needs,” Nez wrote.
TEP has not responded directly to the Navajo proposal, but spokesman Barrios cited TEP’s part in the transition aid already provided by the NGS owners and its long-term plan to locate significant solar farms on tribal lands.
Barrios said the company is looking forward to further discussions as part of the ACC’s general coal-transition discussions and the second phase of its rate case, which was mostly decided in 2020 but kept open for further action.
“As we continue to explore options, our focus remains on developing a collaborative, inclusive process during commission proceedings,” Barrios said.
Uncertainty at ACC
The Corporation Commission at its open meeting last week voted to set up a policy task force made up of utilities and stakeholders, and to hold a series of town halls in communities affected by coal-plant closures, at locations suggested by stakeholders. The town halls are expected to start this month, and the policy group is to make recommendations by May 2.
Though dates for the town halls have not yet been set, planned town-hall locations include Page, Tuba City, Black Mesa and the Kayenta and LeChee Chapters on the Navajo Reservation, and Kykotsmovi Village — the seat of Hopi government — to address needs related to the closure of NGS.
Other sites include Shiprock and Farmington, New Mexico (Four Corners); Holbrook, Joseph City and Snowflake-Taylor (Cholla); and Springerville-Eagar and St. Johns (Springerville and Coronado plants).
Virtual, online town halls also are being planned.
The policy task force consists of three subgroups that will study possible funding for transition aid to coal-impacted communities, repurposing of abandoned coal facilities and benefits and impacts to ratepayers.
But whether the Corporation Commission will act on recommendations of transition aid remains to be seen.
The two Democrats on the five-member commission, Sandra Kennedy and Anna Tovar, have expressed strong support for utility-funded transition aid.
Among the Republican commissioners, Justin Olson has said he will not support any utility aid that would be borne by ratepayers.
During discussion at the open meeting last week, Olson said he supports job placement and other help the utilities can provide in the normal course of business but opposes transition costs that would “tax ratepayers,” contending that ordering such aid would be beyond the commission’s constitutional authority.
Republican Jim O’Connor voted against the policy task force and town halls, though he had supported the scaled-down aid approved in the APS rate case.
Corporation Commission Chairwoman Lea Marquez Peterson said any transition aid would have to meet several conditions to win her support, including clear plans and accountability for money spent, the support of the tribes and other stakeholders and a single entity to lead the transition programs in each community.
“I need to see clear evidence demonstrating the responsibility of ratepayers as well as how the commission should quantify the amount of funds,” she said, adding that any funding should be earmarked for Arizona residents only.
Several Western states and the federal government have already moved to help coal-affected communities.
In 2019, New Mexico earmarked $40 million in funding for worker retraining and economic support for power plant and mine workers associated with San Juan Generating Station, and Colorado last year established a state “Office of Just Transition” and appropriated $15 million aid to help coal-mining communities.
Meanwhile, the Biden administration last year formed an Interagency Working Group to help funnel federal aid to affected communities, and several bills in Congress — including one sponsored by Arizona District 1 Democrat Rep. Tom O’Halleran — would earmark funding for community transition programs.
