About the Project

ABOUT THE NAVAJO GENERATING STATION-KAYENTA MINE COMPLEX PROJECT

Navajo Generating Station and Reclamation’s Role

The Navajo Generating Station-Kayenta Mine Complex (NGS-KMC) is the name given to a proposed project that would renew the leases and contracts to allow the Navajo Generating Station (NGS) to keep operating after the current lease and other related agreements begin to expire on December 22, 2019.

The NGS is a 2,250 megawatt (MW) coal-fired power plant located on the Navajo Indian Reservation in northern Coconino County, near Page, Arizona. It has three 750 megawatt (MW) generating units, which provide baseload power to customers in Arizona, Nevada, and California. NGS is owned by four utilities. Salt River Project Agricultural Improvement and Power District (SRP) owns 42.0% of NGS, and also owns an additional 24.3% which it holds for the use and benefit of the United States. Other current NGS owners include Arizona Public Service Co. (14.0%); Nevada Energy (11.3%); and Tucson Electric Power (7.5%). Reclamation manages the Federal 24.3% interest in NGS on behalf of the Secretary of the Interior under a 1969 delegation of authority. The four NGS owners, and the United States acting through Reclamation, are collectively known as the “NGS participants.” All five NGS participants have the same roles and responsibilities regarding operation and expenditure decisions. Major decisions require consensus among/agreement of all six NGS participants.

The United States’ share of NGS electricity is used to operate the Central Arizona Project (CAP). Congress, through the Colorado River Basin Project Act of 1968 (Public Law 90-537), authorized the Federal government’s participation in NGS in conjunction with creation of the CAP. The CAP is a 336-mile water distribution system built to deliver more than 1.5 million acre-feet of Colorado River water annually from Lake Havasu in western Arizona, to agricultural users, Indian tribes, and millions of municipal water users in Maricopa, Pinal, and Pima counties, Arizona. Approximately two-thirds of the United States’ share of NGS power provides the vast majority of the power used by the CAP pumps; the Federal share of NGS power not used to operate the CAP pumps is sold as “surplus” power. The revenues from surplus power sales are deposited in the Lower Colorado River Basin Development Fund and are available to assist the Central Arizona Water Conservation District (CAWCD), the operating agent of the CAP, in repaying the costs of constructing the CAP, and to fund Indian water rights settlements in central Arizona as identified in the Arizona Water Settlements Act (Public Law108-451).

The NGS plant lease was executed with the Navajo Nation (Nation) on January 19, 1971, and expires on December 22, 2019. The total acreage on the Nation affected by NGS-related lease and rights-of-way renewals is estimated to be approximately 7000 acres.

Kayenta Mine Complex and its Relationship to the NGS

Coal used by the NGS is supplied by Peabody Western Coal Company’s (PWCC) Kayenta Mine. Kayenta Mine is located approximately 80 miles southeast of the NGS near Kayenta, Arizona, in northern Navajo County, on lands leased from the Navajo Nation and the Hopi Tribe. PWCC has coal leases with the Navajo Nation and the Hopi Tribe, which allow for the recovery of up to 670 million tons of coal from the leased areas.[1] The Kayenta Mine operates under a permanent program permit which was issued by the Office of Surface Mining Reclamation and Enforcement’s Western Region (OSMRE) in 1990 pursuant to the Surface Mining Control and Reclamation Act of 1977 (SMCRA, Public Law 95-87). The existing permanent program permit area covers approximately 40,000 acres.

Under SMCRA, mining operations may continue under the permanent program permit, as long as the permit is renewed every five years. The last permit renewal occurred in January 2012, but was retroactive to July 2010. An environmental assessment (EA) was prepared to support the decision to approve the permit renewal application. The next permit renewal on hold pending completion of compliance with the National Environmental Policy Act. PWCC is currently producing about 8 million tons of coal per year from three active resource areas within the Kayenta Mine. Coal is delivered to NGS via a dedicated electric railroad operated by NGS. Presently, NGS is PWCC’s only Kayenta Mine customer; Kayenta Mine is the sole source of coal used at NGS.

Under PWCC’s existing permanent program permit there are sufficient coal reserves approved to be mined to supply coal to NGS through at least 2019; however, there are insufficient coal reserves currently under permit to supply NGS past 2026, at current production rates. Among the actions included in the proposed project is the consolidation of shared facilities located on the adjacent and now closed Black Mesa Mine and, if approved, a change to the name of the Kayenta Mine’s permanent permit to the Kayenta Mine Complex (KMC).

[1] To date, approximately 400 million tons of coal has been mined, leaving approximately 270 million tons available to be mined under the current leases.