By SETH MULLER
Sun Staff Reporter
03/28/2004

The Mohave coal-fired electric plant in Laughlin, Nev., is expected to shut down for at least 31/2 years starting in 2006 -- a closure that would cost the Navajo and Hopi tribes a total of 240 jobs and $86 million a year in coal royalties.

Brian Katz, business manager with Mohave Generating Station's parent company, Southern California Edison, said Friday that a timeline longer than two years is anticipated to complete a water study to ensure continued delivery of the coal slurry.

The study comes with coal company Peabody Energy's plan to switch aquifers at the request of the Hopi tribe due to water supply concerns. Peabody is initiating studies to move off the Navajo aquifer and tap into the Coconino aquifer -- which also serves Flagstaff -- via welll fields near Winslow.

On top of that is the timeline of upgrading emission controls at Mohave, a $1 billion-plus project that would take 30 months to complete. Katz said that gives Mohave Generating Station a tentative reopening date sometime in 2009, unless all parties take an aggressive approach to the process and work to shorten the timeline.

"We still have unresolved issues," said Katz, adding that Edison wants to have the water issue squared away before it considers the required emissions upgrades. "No one would make the investment if they didn't have a resolution of water and coal supply. We have to answer the question: Do we have water available for the coal slurry?"

TIME CRUNCH ON PEABODY, TRIBES

Peabody, which mines coal through an agreement with the Navajo and Hopi tribes, has moved into a serious nail-biting phase because its 35-year coal supply agreement to Mohave expires the same date as the start of the expected shutdown.

But the real nail-biters go to the tribal members because of the prospective job and revenue losses for both Hopis and Navajos. The smaller Hopi tribe stands to lose $7.7 million a year, which is one-third of its general annual revenues, according to tribe spokeswoman Vanessa Charles.

"Unfortunately, if the Mohave Generating Station shuts down, the Black Mesa Mine will follow because of exclusive rights (Edison) has for that coal," said Beth Sutton, spokeswoman with Peabody.

Edison signed an out-of-court settlement with the Flagstaff-based Grand Canyon Trust and other groups that sued the Mohave plant six years ago. They agreed to have the plant up to the desired pollution control standard by Jan. 1, 2006.

However, the company has not moved to start improvements on the plant because of the aquifer question. And attempts to extend the deadline on the consent decree have been unsuccessful, according to Katz.

"It's extremely likely the Mohave will shut down, at least for some time," said Rick Moore with the Grand Canyon Trust.

Sutton said that Peabody is moving forward with getting off the N-aquifer, which supplies pristine well water that's used to slurry coal to Mohave via a 273-mile pipeline, and using the less pristine waters of the C-aquifer. Studies have determined that the C-aquifer holds 400 million acre-feet and is more than three times larger than the N-aquifer. It is the aquifer tapped by municipal and private wells throughout the Flagstaff region and during years of normal precipitation has an annual recharge that far exceeds losses from groundwater pumping.

The pipeline would deliver 6,000 acre-feet a year for the coal slurry, and could lead to additional water infrastructure development for the tribes, both of which could tap into the line.

But this new venture will require further study on how the pumping could affect the groundwater and the construction of a $100 million to $200 million pipeline to deliver the water to the mine 140 miles to the north.

CONCERN OF PERMANENT CLOSURE

In addition to water supply, Peabody and the tribes have a greater concern that Mohave will shut down completely.

Edison has turned to the California Public Utilities Commission for guidance. It has asked the commission to decide whether it is in the public interest to shut down the plant or continue operation of the plant, which provides electricity to 1.5 million homes, mainly in California.

The commission held a conference in February to listen to stakeholders as it moves toward its final decision, but a final hearing date has not been set. Meanwhile, the tribes are taking this as a high priority. Navajo President Joe Shirley has identified it as a crisis for the Navajo Nation and is working to keep the coal flowing.

"President Shirley has been monitoring this and aggressively working toward maintaining the jobs and revenue for the Navajo Nation," said Deana Jackson, spokeswoman for the president's office. "He has had numerous meetings with all of the partners and entities."

Charles explained that the tribe is facing serious financial questions this year. It could end up losing some or all of its coal revenue, and, in May, its citizens will vote on whether to build a casino near Winslow or lease out its slots to another tribe.

"The two are not directly linked," Charles said of the potential loss of coal revenue and the casino vote. "But these things have forced the tribe into a precarious position."

Peabody operates two mines in the Black Mesa vicinity through an agreement with the Navajos and Hopis. Its second, larger mine is the Kayenta Mine, which supplies coal to the Navajo Generating Station in Page. Combined, the mines have 650 employees --more than 90 percent of whom are Native American.

Both mines give the Hopi tribe 65 percent of its general annual revenue and the Navajo Nation 21 percent of its revenue, according to Peabody reports. As far as Edison, it generates 850 megawatts with Mohave and has a combined 5,000 megawatt output from its southern California plants. Katz said it has been using Mohave as a way to "hedge" costs to generate electricity because coal is affordable when compared to natural gas, which has experienced a volatile market.

Katz said Edison is willing to make the permanent shutdown of Mohave if the entities and companies "are unable to resolve issues."

Brian Dunfee with Peabody said that he believes that, one way or another, everything will be settled and the mine will continue operating and delivering coal.

"We're confident we'll resolve this because there's so much at stake," Dunfee said.

Reporter Seth Muller can be reached at 913-8607 or smuller@azdailysun.com

originally posted at: http://www.azdailysun.com/non_sec/nav_includes/story.cfm?storyID=84520

Please also see Rush put on keeping Mohave, Black Mesa open