Oct. 21, 2005
Copyright © Las Vegas Review-Journal


Plant's future still up in the air

Some think coal-fired plant may be spared because it produces electricity fairly cheaply

By JOHN G. EDWARDS
REVIEW-JOURNAL

For the Mohave Generating Station, there may be life after death. But nothing's sure yet.

The coal-burning, emission-spewing, 35-year-old power plant at Laughlin was expected to close Dec. 31 because the plant owners, which include Nevada Power Co., have not installed $500 million in pollution-control equipment required under a federal court agreement.

Three environmental groups, who sued the Mohave plant owners, won federal court approval in 1999 for an order that allowed Mohave to continue operation for a few years. But the order also requires the owners to close the power plant at least temporarily if pollution-reduction equipment hasn't been installed by the end of this year.

The plaintiffs in the lawsuit -- the Sierra Club, Grand Canyon Trust and National Parks Conservation Association -- earlier this year said they will not agree to an extension of that deadline. For years, area residents have complained about air pollution from the plant, including sulfur dioxide, nitrogen oxide and mercury.

Representatives for Mohave's owners haven't approached the environmentalists about an extension and spokesmen for the plaintiffs said they have not agreed to one.

Utilities and regulators are expressing a desire to continue operating Mohave because it burns relatively inexpensive coal, unlike the plants that would be used to replace Mohave's 1,580 megawatts of generating capacity, said attorney James Ham, who represents the Hopi Tribe.

In written testimony filed Sept. 26 with the California Public Utilities Commission, Southern California Edison, the operator and majority owner of the Mohave plant, said: "The recent sharp run-up in natural-gas prices ... has underscored the high importance and value of Mohave to diversify. (California state officials) have expressed concern regarding the near-term reliability of supply in the Southern California region, which Mohave supports," the utility continued.

"In this context, (Edison) believes there is both increased importance to and improved prospects for reaching resolution that would allow for continued Mohave operation pending installation of the required pollution controls (probably with some short-term interruption of operations)," the California utility said.

Customers of utilities, including Nevada Power, may benefit from continued operation of Mohave because the coal it burns is relatively cheap, compared with increasingly pricey natural gas burned at most other generation plants. High natural-gas prices are expected to continue, in part because hurricanes damaged Gulf Coast gas-production plants.

It cost about 1.5 cents to generate a kilowatt hour of electricity at Mohave in August, compared with 8 cents for a kilowatt hour from an efficient gas-fired power plant, documents filed with federal regulators show. At the spot price for natural gas in August, Nevada Power would pay about $92 million more for power from a gas-fired plant to get the same amount of electricity that it received last year from the coal-fired Mohave power plant.

Roger Clark of the Grand Canyon Trust and Rob Smith, Southwest regional director for the Sierra Club, suggested Edison expressed optimism about Mohave in an effort to show increased costs that would justify a higher electricity rate increase. The environmental groups are concerned about the 18,000 tons of nitrogen oxide, 38,000 tons of sulfur dioxide and 9.6 million tons of carbon dioxide, as well as 399 pounds of mercury that the plant emitted in 2003, according to the Environmental Protection Agency.

Hopi Tribe attorney Ham, however, said the testimony was reason for optimism about continued operation of Mohave.

The possible Mohave shutdown is "now on the regulators' radar screen. It's got their attention," because of skyrocketing prices for gas and power generated with gas, Ham said.

"The economics of that plant make installing the pollution controls now more than ever extremely attractive," Ham said.

Roberto Denis, senior vice president of Nevada Power, acknowledged that coal fired-plants like Mohave are more important financially because they do not rely on expensive natural gas for generation.

"With the ever rising gas price, that economic interest increases. You balance economic interests with environmental interests," Denis said.

He remains pessimistic about avoiding a temporary plant closure but said the plant owners will preserve the power plant in case they decide to resume power generation there.

Denis pointed to an earlier letter from environmental groups who won the 1999 court order.

"It sounded pretty grim to me that there's any hope that they would relent," Denis said.

He also saw no signs of progress in efforts to secure contracts for coal and water from the Hopi Tribe and Navajo Nation. Water is needed to transport the coal as a liquid slurry through a pipeline.

The Hopi Tribe, however, reported progress is being made on the coal and water issues. Edison has agreed to spend $200 million to build a new 273-mile coal slurry line from the coal mine on Indian land to Mohave, according to the tribe.

The U.S. Geological Survey reported that the Coconino Aquifer, an underground water source, continued enough water to operate the slurry and provide water for economic development on the Navajo and Hopi reservations.

"That is extremely hopeful development," Hopi Chairman Wayne Taylor Jr. said.

The plant closing would affect not only 340 employees at the power plant in Laughlin but also the Navajo Nation and Hopi Tribe, which benefit from jobs at a coal mine and from royalties on coal from the mine.