June 6, 2018 / 8:57 PM / 2 months ago

CORRECTED-U.S. Interior Dept weighs plan to save Navajo coal plant from closing

(Corrects name of agency in second paragraph to Bureau of Reclamation instead of Bureau of Land Reclamation)

By Valerie Volcovici and Scott DiSavino

June 6 (Reuters) - The U.S. Interior Department may use executive powers to prevent a large coal-fired power plant from shutting down next year in Arizona, the latest attempt by the Trump administration to throw a lifeline to at-risk coal and nuclear plants.

The head of Interior's Bureau of Reclamation said on Friday that a 1968 law gives Interior Secretary Ryan Zinke power to require an Arizona water project to buy energy from the Navajo Generating Station, or NGS, a 2,250-MW coal-fired power plant that is scheduled to close in 2019.

Such a move could delay the plant's closure.

The proposal fits neatly with a broader effort by the administration of President Donald Trump to keep aging coal and nuclear plants from retirement, arguing their closure would constitute a threat to national energy security.

Hundreds of coal-fired power plants have shut in recent years, along with several nuclear plants, under pressure from cheaper alternatives like natural gas and advances in wind and solar energy.

Assistant Secretary for Water and Science Timothy Petty wrote a letter, dated June 1, to the board of directors of the Central Arizona Project, or CAP, saying the 1968 Colorado River Basin Project Act gives the secretary "governing authority" to decide the generation source for the project.

"With the 1968 Act in mind, the Department expects to consider several options going forward, including the feasibility of continued use of NGS-provided power," the letter, reviewed by Reuters, said.

A spokesman for the Bureau of Reclamation, Dan DuBray, said no final decisions had been made.

The CAP board is due to meet on Thursday to discuss future options for sourcing cheaper power to run the project.

DeEtte Person, spokeswoman for CAP, said the board was focused on seeking the most competitively priced power and that "it's not our understanding that we are obligated in that way to buy power from NGS."

"If a new NGS ownership group materializes and can provide competitively priced power, CAP remains open to considering that alternative," she said in an email.

The NGS and a coal mine that supplies it are both on Native American reservation land and employ as many as 750 people, mostly members of the Navajo and Hopi tribes.

The plant was uncompetitive because of competition from cheaper natural gas-fired facilities and will shut at the end of next year unless it finds new buyers. The Hopi tribe, the coal miners union and coal mining company Peabody Energy Corp last month sued CAP - the biggest energy user in the area - to force it to keep buying power from the NGS.

Zinke has said in previous statements that he will work with all parties - including any future owner - to keep the plant open to support "good paying tribal jobs." (Reporting by Valerie Volcovici in Washington and Scott DiSavino in New York; Editing by Peter Cooney and Jonathan Oatis)

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