EPA overreach at Navajo Generating Station yields bad energy policy for Arizona


By Douglas Little, Phoenix Conservative Examiner

In one of the most egregious abuses of it regulatory power, the EPA is forcing the Navajo Generating Station (NGS) located near Page, AZ to make unnecessary and costly modifications to the generation facilities that would have no measurable effect on emissions in the region.

Using the Clean Air Act as its regulatory authority, the EPA claims that emissions from NGS are contributing to haze in the Grand Canyon area and in February of this year, proposed a regional haze restriction that would require NGS expenditures of $1.1 billion on additional emission reduction controls. This claim also ignores the fact that prevailing winds in the region result in plant emissions being blown away from the Grand Canyon, not towards it.

At the same time the EPA issued their ruling, a U.S. Department of Energy study concluded there would be no visibility improvement at the Grand Canyon after the controls were added. Why would the EPA pursue such a expensive and punitive rule when it would have no perceptible effect on haze at the Grand Canyon?

Opponents of the EPA action are reporting that the EPA doesn’t care about haze at all. They say what the EPA really wants is to provide a precedent for shutting down coal-fired electric generating plants. The Obama administration has a stated objective to reduce carbon emissions and last year attempted to implement a “cap and trade” approach to regulating fossil fuels. Republicans in the US Congress voted down the enabling legislation, with some calling it a “war on coal”.

Why is the EPA going after NGS and why is NGS so critical to Arizona?

The Navajo Generating Station was constructed at a cost of $650 million beginning in 1970 and ending in 1976 when the last of the three generating units was completed. The project was sited in its current location based on readily available coal fuel, a reliable source of water for cooling and the proximity of the city of Page which could provide for many of the project’s infrastructure needs, including an available skilled labor pool. The plant is located approximately 100 miles northeast of the Grand Canyon.

The primary purpose of the NGS was to provide power to support the Central Arizona Project (CAP) which is responsible for supplying Arizona’s share of Colorado River water to central and southern Arizona. To get water from the far northwest corner of Arizona to the rest of the state, CAP built a network of pumps, pipelines and and surface canals over 336 miles in length to transport Arizona’s annual allocation of 1.5 million acre-feet of water to Maricopa, Pima and Pinal counties. The pumps must raise the water over 3000 feet to allow it to flow into central Arizona. The majority of the power generated by NGS powers the CAP pumps.

NGS has a long history of taking a proactive approach to emissions reduction. In 1999, NGS completed a $420 million retrofit that reduced sulfur dioxide emissions from the plant by 90%. In additional overhauls conducted between 2003 and 2005, electrostatic precipitators were overhauled for reliability and performance gains. In 2007, the Salt River Project, the plant operator, conducted studies on how to reduce nitrogen oxide emissions to reduce haze in the region and voluntarily installed emission reduction equipment on each of their three plants between 2009 and 2011.

Apparently, the best efforts of NGS were not good enough. The EPA rule proposed in February is one of the most stringent regional haze rules in the entire nation. It imposes a standard that is more rigorous that the standards for a brand new coal plant. At the 1600 megawatt Prairie State Energy Campus which first came online in 2012, the permitted level of NO emissions are 0.07 parts per million (ppm) while the standard for NGS, a 37 year old plant, is 0.055 ppm.

In an attempt to find a reasonable middle ground, a working group consisting of the EPA, U.S. Department of the Interior, the Salt River Project, the Central Arizona Water Conservation District, the Environmental Defense Fund, the Gila River Indian Community, the Navajo Nation and the Western Resource Advocates began negotiations to find a “Reasonable Progress Alternative” to the BART rule issued by the EPA in February.

These negotiations were closed-door sessions and while the working group included non-stakeholder environmental activists like the Environmental Defense Fund, they did not solicit or accept input from important stakeholders like the Arizona Corporation Commission, which is the primary regulatory body for energy and water resources in the state. Arizona’s Attorney General was also excluded from legal review and comment on the proposed agreement.

Under the proposed settlement, visibility standards and haze causing nitrogen oxide standards are not even addressed. However, in one section of the proposed agreement, the Department of the Interior makes commitments to reduce or offset carbon dioxide emissions by 3% per year “in furtherance of the President’s 2013 Climate Action Plan”. It further states that “This commitment is intended to accomplish two aims: reduce carbon dioxide emissions and demonstrate the workability of a credit-based system to achieve carbon dioxide emission reductions” (emphasis added).

This action by the Department of the Interior and the EPA essentially unilaterally implements “cap and trade” at NGS even though they do not have Congressional authority to do so.

The working group proposal also calls for the early shutdown of one generation unit in 2020 or the equivalent reduction of output equal to the closure of one unit from 2020 to 2030. There is no consideration in the plan for any increased cost in replacement power or an increase in water rates due to those increased power costs.

While clearly not a great deal for SRP, the Navajo and CAP, why are they supporting it? The original rule issued by the EPA would have imposed the most stringent nitrogen oxide standards in the country and would require retrofits to the generating plants at a cost of over a billion dollars. Had that rule been implemented, the economic viability of the entire plant was in jeopardy. The Arizona stakeholders felt that the EPA was holding the plant hostage under its rule-making authority. They felt that the working group agreement was probably the best deal they could get under the circumstances, enabling them to keep the plant going at least until 2035.

Unfortunately, the working group agreement has some fairly large holes in it. Many of the commitments made by the Department of the Interior may require Congressional action to implement. In the current belt-tightening by the federal government, Congress may not be willing to fund the $100 million in commitments made by the Department of the Interior. Furthermore, the agreement anticipates a dramatic increase in water rates, but make no provision for it. In addition, it does not address the loss of jobs, economic benefit and tribal revenues that will result from the terms of the agreement.

A critical reading of the proposed working group agreement seems to indicate that these regulations are not about reducing regional haze. There is no meaningful reduction of nitrogen oxide in the proposed agreement. Instead, there is a focus on carbon dioxide emission reduction. Carbon dioxide is an odorless, colorless gas and has no impact on visible haze.

In addition, the agreement is an apparent attempt to unilaterally implement a “cap and trade” system for regulating carbon emissions for which the Department of the Interior and the EPA have no statutory or regulatory authority.

Finally, it appears to be a blatant EPA attack on coal-fired generating plants with the full support and encouragement of environmental activists.

Is the EPA doing all of this for a reduction in haze that the federal government’s own study said would be imperceptible to the human eye? More likely, the haze standard simply gives the EPA the opening they need to accomplish their real objectives of shutting another coal plant and promoting Obama’s energy agenda.

EPA overreach? Good energy policy? The right choice for Arizona? You decide.

The public comment period on the proposed agreement will close on October 4th, 2013.

You can go here to comment: http://www.regulations.gov/#!documentDetail;D=EPA-R09-OAR-2013-0009-0111


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