Max Jarman
The Arizona Republic
Oct. 19, 2004

Northern Arizona communities from Bullhead City to Kayenta are bracing for the probable closure next year of the Mohave Generating Station near Laughlin, Nev., and the potential loss of more than 600 high-paying jobs.

After years of negotiations with Hopi and Navajo tribes over water and coal leases, and environmental groups over pollution at the Grand Canyon, plant operator Southern California Edison says it is now making plans to shut the plant at the end of next year.

That's bad news for the northwestern Arizona communities of Bullhead City and Kingman, where many of the plant's employees live.

"Any time you lose that many jobs in a community of this size, there is definitely an impact," said Richard Adams, executive director of the Bullhead Regional Economic Development Authority in Bullhead City. "Those are high-paying jobs that will be very hard to replace."

But the impact of the plant's closure would also be felt on Black Mesa in northeastern Arizona, where coal is mined to fuel the plant, and in metropolitan Phoenix, which relies on Mohave's electricity.

The Black Mesa Coal Mine near Kayenta and a 273-mile coal slurry line that feeds Mohave exist solely to supply the plant, their only customer.

The 1,580-megawatt plant is partially owned by Salt River Project and provides the Valley with 320 megawatts of low-cost electricity, enough to light 100,000 homes. That power would have to be replaced when Mohave shuts down.

At issue is the 4,000 acre-feet of groundwater per year that is required to operate the coal mine and transport the coal in a pipeline to the power plant.

The Hopi Tribe believes the pumping is depleting the Navajo aquifer and causing sacred springs and water sources to dry up. Mine operator Peabody Energy Corp. asserts that the water being pumped amounts to only one-tenth of one percent of the water stored in the aquifer, which would be quickly replenished when mining ceases. But the tribes are unwilling to allow the pumping of groundwater for mining beyond 2005.

In addition, the Navajo Nation, to whom the Black Mesa is a sacred site, is balking at continuing to allow Peabody to mine there.

The tribe has sued Peabody to void the coal lease at Black Mesa, alleging the company has shortchanged it on royalty payments. The tribe is asking for $600 million in damages that could be tripled.

Peabody officials don't believe there is any merit to the suit but acknowledged it is an obstacle to the continued operation of the mine.

The plant employs about 325 people and pumps an estimated $365 million a year into Laughlin and northwestern Arizona communities. The Black Mesa Coal Mine employs 240. An additional 50 people work for the Black Mesa Pipeline, which caries the coal to the plant.

"Tragically, these two operations would cease if the plant closes," said Beth Sutton, a spokeswoman for Peabody.

Combined the plant, coal mine and pipeline provide jobs for 615 people and have an annual economic impact of more than $411 million.

The power plant could reopen in 2009 or 2010, according to Southern California Edison. But that would require spending an estimated $1.1 billion to upgrade the 35-year-old plant and install pollution control equipment required under a 1999 consent decree with environmental groups. Without the upgrades, the plant cannot legally operate past 2005, when its initial 35-year operating permit expires.

Southern California Edison Chief Executive Officer Al Fohrer said the company would like to continue to operate the plant for another 20 years but added that it is not willing to invest in the upgrades without a binding agreement for water and coal for the plant until at least 2026.

As a 20 percent owner, SRP would have to come up with $200 million as its share of the cost of the Mohave upgrades.

SRP spokesman Jeff Lane said the utility has begun looking at options for replacing the 320 megawatts it will lose when Mohave closes. Possibilities include buying one of the recently built Arizona power plants that are said to be on the market or expanding an existing power plant near Springerville.

"The important thing is that we have options," Lane said.

Mohave is important to both SRP and Southern California Edison because it burns coal. Most new plants burn natural gas, which is more expensive than coal and is subject to volatile price swings.

Peabody's Kayenta Coal Mine, adjacent to the Black Mesa mine, would continue to produce coal for the SRP-operated Navajo Generating Station near Page until 2011. The coal is shipped via rail.

While negotiations continue with the Hopi and Navajo tribes and the U.S. Department of the Interior, Southern California Edison's chief negotiator Ann Cohn said the parties are not close to an agreement.

Peabody is looking for new sources of water and is exploring the Coconino aquifer, which is much larger than the Navajo body and is beneath private land that could be acquired by the company. Arizona water laws give property owners access to the water beneath their land.

The closure of the power plant and mine would hit the Hopi and Navajo reservations - where jobs are scarce and unemployment high - particularly hard.

The Hopi Tribe receives $7.7 million, one-third its operating budget, from coal royalties. Some members are concerned about the mine closing.

"Shutting down the plant - forcing closure of the mine - would have a devastating impact on the Hopi Tribe. Our situation is dire," Hopi Tribal Chairman Wayne Taylor Jr. said in a statement this summer.