CASE Oped: Why We Must Save One of America’s Largest Coal Plants
Legend credits Mark Twain with the famous quip, “Reports of my death are greatly exaggerated.” In this regard, he may have a kindred spirit in the Navajo Generating Station (NGS), America’s largest coal-generating power plant in the western United States, which of late has been repeatedly off and on the chopping block.
Commissioned in 1974 with the expectation it would operate until 2044, NGS is now facing its fair share of challenges. Ownership concerns over the plant’s operating costs, along with steep competition from low-cost natural gas, have put the plant’s survival in question. A temporary lease agreement has been worked out to keep the plant operating until December of 2019, but what happens beyond this date remains of serious concern to consumers.
Potential conversion of NGS to burn natural gas – a rumored option – remains risky for several reasons. While it’s true that natural gas has been a less expensive resource of late, its future remains unpredictable, both regarding price and supply.
Natural gas prices have fluctuated as much as 50 percent within the same month in recent years, and sufficient supply is far from a sure thing. Demand for natural gas is soaring and while we appear to currently have an ample supply, appearances can be deceiving. Less than a decade ago, our natural gas supply crunch was so acute that energy experts predicted the U.S. would become one of the world’s largest natural gas importers. Those predictions never came to pass, but simply assuming natural gas will stay cheap and abundant is unfair to consumers.
Coal supply and prices, by comparison, are far more stable long-term. Celebrating the current low prices of natural gas while ignoring its future unpredictability could easily lead to an energy cost hangover. This point was underscored by a study this year from Navigant Consulting, who not only concluded that sticking with coal will keep NGS cost-competitive through 2040, but also save owners and customers $400 million in lower operating costs.
But there’s more to the story beyond NGS protecting consumers from sudden spikes in energy costs and worries oversupply and that’s the security it provides to America’s energy infrastructure. The Department of Energy is so concerned about losing NGS’s reliable baseload power that it has entered the fray to work with owners, regulators and local officials to keep NGS online for decades beyond its current lease.
Arizona Corporation Commissioner Andy Tobin echoed the importance of NGS to national security in an open letter to its owners stating, “Power Plants like NGS are critical to national security, given the need for energy sources that can withstand major fuel disruptions.” It went on to add: “The recent and devastating natural disasters in places like Houston, Florida and Puerto Rico confirm that our nation’s power system must maintain healthy and secured baseload generators to meet energy demands.”
Energy security and grid reliability are no small matters to consumers nationwide. Over-reliance on any one source of energy undermines the energy mix which is necessary for a secure grid.
Far from dead and buried, NGS is finally being recognized for its long-term ability to provide reliable and cost-competitive energy for the southwest region, while playing a vital role in our nation’s energy security. This is not only good for consumers but crucial in helping our nation maintain an energy mix that protects us from supply shortages that can undermine our grid.
Matthew Kandrach, president of Consumer Action for a Strong Economy (CASE), a free-market oriented consumer advocacy organization.