Southwest Utilities Move Closer To Renewable Solar & Wind Energy Generation to the Benefit of Some National Parks

Utilities are usually the poster child for hate relationships when it comes to solar energy. However, having said that, I think these frenemies are warming up to the changes slowing coming over popular society and are jumping on the solar bandwagon, cleaner air and a sustainable future. (It did not go unnoticed that California utilities opted out of the Prop 23 fight.)

Case in point. Southern California Edison has announced plans to sell its share in of the country’s largest coal-fired power plants in New Mexico. Coal fired power plant emissions from the New Mexico plants have affected some of the areas National Park monuments as reported by environmental officials. Southern California Edison has signed contracts to receive a larger part of their electricity from solar and wind farms.

The Southern California Edison coal-fired 2,038-megawatt Four Corners plant on Navajo Nation land in northwestern New Mexico is being sold to Arizona Public Service Co. is the first of several plant that are either being sold or shut down reports the Solar Home and Business Journal.

State and federal air quality regulations are impelling the transaction, which is expected to result in the shutdown of three of the plant’s five generating units. Southern California Edison in the past two years has signed contracts to receive large amounts of electricity from new solar power plants and wind farms, as well as from solar photovoltaic installation on commercial rooftops.

Since August, the state of California has licensed planned solar power plants with a joint peak generating capacity of about 3,500 megawatts. Construction and operation of the plants will put thousands to work in an area with one of the nation’s highest unemployment rates.

Although the Four Corners plant’s generating capacity will decline by about one-fourth, Arizona Public Service said in a news release that there will be no layoffs at the power station, which employs about 550 workers, about three-quarters of them members of the Navajo Nation.

Ironically, while the massive Four Corners plant and another giant coal-fired power plant nearby deliver energy to the urban population centers of the U.S. Southwest, the 280,000-member Navajo Nation is one of the most underserved regions of the country for electricity. Charitable enterprises such as the Bill and Melinda Gates Foundation have helped give some poor rural Navajo communities with solar electricity and telephone and Internet service.

The coal power plants have been blamed for regional hazy air pollution that affects views at Mesa Verde National Park and other parks and monuments in the area. Significantly reduced emissions will result from the shutdown of three of the Four Corners plant’s generation stations, Arizona Public Service said.

The Four Corners plant is so named because it is located near where the state lines of Arizona, New Mexico, Utah and Colorado come together. The Four Corners region’s other big coal plant, the San Juan Generating Station, which also is subject to stricter emissions restrictions, has a capacity of about 1,800 megawatts.

The utility Public Service of New Mexico is working with state and federal officials on emission controls at that plant, which, like the Four Corners plant, is located in a coal-mining area west of Farmington. A third major coal power plant, the Navajo Generating Station, is on the west side of the Navajo Nation, about 160 miles away, near Page, Ariz.

Arizona Public Service said it has entered into an agreement to buy Southern California Edison’s ownership in Units 4 and 5 of the Four Corners plant. The utility plans to close the plant’s older, less efficient Units 1, 2 and 3 and install more emission controls on the remaining units, supplementing electrical demands with wind and solar farms the company announced.

APS said it would pay $294 million for the Southern California Edison share, which is substantially less than other generation alternatives would cost.

“This course of action represents the best alternative for APS and its customers and provides a cleaner environment while preserving a needed reliable and affordable supply of energy for the Southwest,” said Mark Schiavoni, APS senior vice president of fossil generation, in the company’s news release.

The Four Corners plant and the supporting coal-mining operations have a $225 million annual impact on the New Mexico and Navajo economies, the utility company said.

“This proposal enables us to continue to support the Navajo Nation and the Farmington area with high-quality jobs that are important economic drivers for the region,” Mr. Schiavoni said. Continued operation of Units 4 and 5 is expected to offer more than $6.3 billion in economic value to the region over the next 30 years, at least 70 percent of which will benefit the Navajo Nation and its citizens, the company said.

APS, the plant operator, owns 100 percent of Units 1, 2 and 3, which are subject to significant environmental upgrades under rules proposed by the U.S. Environmental Protection Agency in October. “These rules would present a major economic challenge for continued operation and require us to look at alternatives for Units 1, 2 and 3,” Mr. Schiavoni said.

With the anticipated shutdown of Units 1, 2 and 3, capacity at the coal-fired station would be reduced by about 500 megawatts to about 1,540 megawatts, of which APS would own 970 megawatts.

The Four Corners power plant has been a major emitter of air pollutants such as nitrogen oxide. Arizona Public Service said that emissions of nitrogen oxide would decline by 36 percent, mercury by 61 percent, particulates by 43 percent, carbon dioxide by 30 percent and sulfur dioxide by 24 percent. APS would replace the energy lost through the closure of the three older units with 739 megawatts from Southern California Edison’s 48 percent share of the newer, more efficient Units 4 and 5. APS now owns 15 percent of those two units.

“Closing the three smaller, less efficient units and keeping the cleaner, more efficient Units 4 and 5 in operation would dramatically reduce the carbon footprint in the region and enable the plant to stay compliant with state and federal environmental standards,” said Mr. Schiavoni. “As always, our commitment to outstanding performance and environmental stewardship at the plant remains unwavering.”

The company noted that the Four Corners plant meets or exceeds all current state and federal environmental regulations and has performed at a high level for more than four decades.

However, a California law signed by Gov. Arnold Schwarzenegger in 2006, SB 1368, limits long-term investments in higher-emissions power generation by utilities serving the state. Southern California Edison has informed the coal power plant’s other owners that it will end its participation in the plant by 2016, when the current lease with the Navajo Nation expires.

The transaction requires approval from the Arizona Corporation Commission, the California Public Utilities Commission and the Federal Energy Regulatory Commission. The personalized aspect of this acquisition is contingent on the Navajo Nation’s approving a lease extension for the plant beyond 2016. It also requires successful negotiation of a new fuel contract with coal-mine operator BHP Billiton for the post-2016 period. Assuming timely receipt of required approvals and extensions of the land-lease and fuel contract, Arizona Public Service said the companies are targeting closing the purchase by the end of 2012.

“Installing emission-control equipment at Units 1, 2 and 3, or shutting them down and seeking replacement power elsewhere would have imposed substantial additional costs on our customers. The proposal to acquire Southern California Edison’s share of Units 4 and 5 saves customers nearly $500 million over the next best alternative, second only to a solar farm,” said Jeff Guldner, APS vice president of regulation. “While reducing overall power plant emissions in the Southwest, this proposal maintains a healthy diversity in APS’s generation portfolio as we integrate more renewable resources and manage our exposure to volatile fuel sources such as natural gas.”

Despite having three of the country’s largest and highest-emission power plants on or adjacent to their land, the Navajo Nation’s residents have some of the most limited access to electricity in the United States. In addition to the Bill and Melinda Gates Foundation, the Solar Electric Light Fund and the Sandia National Laboratories have worked with the Navajo Tribal Utility Authority to provide solar photovoltaic systems to the largest tribal indigenous nation in the country.

The Navajo represent a unique segment of the U.S. population because some areas have never had electrical service. As of 2004, about 18,000 Navajo households had no electricity, according to a report by the U.S. Department of Energy’s office of Energy Efficiency and Renewable Energy. Solar is the way to cleaner air and local jobs.