Peabody confirmed that a number of qualified potential investors have expressed interest in pursuing an ownership position in the Navajo Generating Station for operation beyond 2019, meeting a milestone for identifying a new ownership structure.
The ownership transition process, led by Lazard Fréres & Co., remains on track with the transition timeframe outlined by plant majority owner and operating agent Salt River Project, which has agreed to help facilitate an ownership transition subject to negotiation of definitive agreements.
The power plant is sited on tribal lands, using Navajo and Hopi energy resources to create tribal jobs and revenues, helping the government fulfill its trust responsibility. It was commissioned to run 75 years through 2044.
The plant historically has been among the most efficient coal plants in the Southwest and is consistently among the highest dispatching coal plants in the region, except for a brief period in 2016 when natural gas prices hit a historic low. Natural gas prices have since rebounded back to higher levels.
Regional power prices have surged to an average of 90 percent above 2016 levels, according to Platts. The Navajo Generating Station recently has been running at about an 80 percent capacity factor and is competing cost-effectively to add reliability and resilience to the electric grid.
Fueled by Peabody’s Kayenta Mine, the Navajo Generating Station began operating in 1974. The mine and the power plant support 825 jobs and provide nearly 85 percent of the Hopi Tribe’s annual general fund budget and 22 percent of the Navajo Nation’s annual general budget. Virtually all the mine’s hourly workforce is Native American, and last year the mine contributed $430 million in direct and indirect economic benefits into regional economies.