The corporations negotiating to buy the biggest coal-fired energy plant within the southwestern U.S. have ended their pursuit, which suggests the two,250-MW Navajo Generating Station (NGS) close to Page, Arizona, stays scheduled to shut by year-end 2019.
Avenue Capital, a New York-based international funding agency centered on distressed belongings, and Chicago-based Middle River Power on September 20 instructed the Navajo Nation in a letter that, “We have concluded, regrettably, that the steps required to facilitate our possession and operation of NGS are not doable inside the required timeframe.”
Russell Begaye, president of the Navajo Nation, earlier this 12 months stated a lease settlement for brand new possession of the NGS wanted to be finalized and offered to state lawmakers in October of this 12 months. Begaye on the time stated the events concerned acknowledged it was a brief timeline.
The corporations on Thursday stated they have been unable to search out anybody keen to purchase energy from the plant. Uncertainty over the end result of a November poll measure supporting the enlargement of renewable power in Arizona additionally solid a shadow over the plant’s future.
Joe Greco, senior vice chairman for Middle River Power, and Craig Hart, portfolio supervisor for Avenue Capital, in a letter to the Navajo stated the timeline to barter a lease settlement and start an environmental assessment offered a problem to the negotiations.
“We have all the time identified that regardless of the promise of NGS, the go-forward timeline was a difficult one,” Greco and Hart wrote, in line with the Navajo Times. The tribes publicly disclosed their negotiations with Avenue Capital and Middle River Power in July. “And the environmental impression assertion [EIS] course of would probably govern the schedule. As now we have all mentioned, that EIS course of would wish to start out as quickly as doable with a purpose to meet milestones. However, we imagine the schedule has grow to be just about unworkable because of the delays in discussions with potential counterparties relating to energy buy agreements as a result of latest occasions.”
Todd Fogarty, a spokesman for Middle River and Avenue Capital, instructed the Navajo Times: “Unfortunately, latest developments in California and [in] Arizona will create further challenges for baseload energy vegetation, and it has not been doable to safe from counterparties commitments to buy a enough quantity of energy generated from [NGS] to allow a workable working paradigm.”
“We have welcomed the chance to work carefully with the Navajo Nation and Hopi Tribe, and different key stakeholders over the previous a number of months as now we have sought a path ahead for NGS through which Middle River Power’s operation of the plant would permit it to proceed to offer dependable, cost-competitive energy past 2019, and stay an necessary contributor to those native communities and economies,” Fogarty stated.
Middle River’s curiosity in NGS was first reported by Bloomberg in April, based mostly on emails it obtained that confirmed a consultant with the Lazard funding firm reached out to a consultant of the Central Arizona Project (CAP). The CAP has been a serious purchaser of electrical energy from the NGS; the NGS was constructed to maneuver water via a collection of canals, operated by the CAP, serving a lot of the state’s inhabitants. CAP officers earlier stated they might purchase less-costly energy from different mills and not would contract with the NGS.
Lazard was retained by Peabody Energy, proprietor of the close by Kayenta Mine that gives coal for the facility plant, to search out potential patrons for the plant and coal mine.
The plant’s 5 homeowners—Arizona Public Service, NV Energy, Salt River Project, Tucson Electric Power, and the U.S. Bureau of Reclamation—cited poor economics after they voted in February 2017 to shut the plant until a purchaser may very well be discovered. Closure of the NGS means the Kayenta Mine additionally will shut, because the plant is the…