How to Sell a Power Plant No One Wants to Buy

largest coal fire power plant west of the Mississippi. And it's also probably going to shut down at the end of the year because its owner can't seem to find anyone to buy it. This isn't just any power plant, though, Bloomberg Environment Stephen Lee joins us today to talk about why this may be one of the most important coal fire power plants in the country and why keeping it open has proven to be really, really difficult. Stephen, thank you for joining us. Thank you, David steven So, first off,

let's talk about the Navajo gender Radio Station. Where is it we already talked about. You know, it's in northern Arizona, north of the Grand Canyon. But where exactly is it and why is that important? It's in northern Arizona. It's near our town called Page. And the thing that is important about its location is that it is on Navajo Nation land. And when was it built, what was it built for. It was built in the nineteen seventies. I think it was completed in nineteen seventy six. It provides

power to Arizona, Nevada, and California. And as you mentioned, so just to sort of fill out the picture of what this plant is, as you mentioned it, it's one of the biggest coal fired power plants in the nation. It is the biggest in the West, the biggest west of the Mississippi. And you know, when people talk about this plant, why does it matter? It's just another coal plant. So there's a few reasons. First of all, there is its size. It's twenty two hundred and fifty megawatts. It's

a big one. And it also is really crucial to the economies of the Navajo and Hopi tribes. They really depend on the income that is generated by this power plant. But you know, there's another reason that it matters, and that is that it has really taken on a symbolic value.

It's become a symbol for this ongoing tug of war over fossil fuels, and you know, you've got people on both sides, and both sides are just so dug in that it has become a fight that, at least in my view, neither side can really afford to lose at this point without looking like they've suffered a pretty heavy blow that has overtones for coal going forward. So I want to get into the symbolic value of this power plant in a little bit, but I kind of want

to get more into why it's scheduled to close. I am surprised that a power plant of this size could close within a few months. What's going on here? Why does the owner of this plant? Why are they having so much trouble finding a buyer? Okay, so the plant's lease is expiring at the end of this year. It would have to be renewed. But the problem is that the current majority owner, which is a public utility out west called the Salt River Project, they do not want

to renew it. They have been very very clear about that. They are not renewing. So they're looking to sell. Well, they're they're just looking to get out. If somebody rights that's good. We're going to get to that in a second. Is because there's some people who say they are not looking to sell. But yeah, sorry, good right, okay, so so does why does SRP want to get out? They've determined that they can't make money off this plant anymore.

They want to go to natural gas. And you know, another wrinkle here is that one of the power plants big customers, which is a water aqueduct out west called the Central Arizona Project, They've said that they are not going to continue to buy coal fired power from NGS. So, in other words, the plant is losing its customers. And I should say here this is maybe not totally relevant, but I grew up in Arizona and I was at one point a regular consumer of Central Arizona Project water myself,

and it was delicious. So the customers don't want to buy this power, or the owner of the power plant wants to sell. They've had a few buyers in mind. There was a Hedge fund, I guess it was looking to buy, and then the Navajo Nation itself wanted to buy the plant. Both of those bids I guess fell through, though, And I think just recently you reported that the Navajo Nation was saying that the Salt River Project the owner

of this plant is not operating in good faith. They're pretending to want to sell it, but they don't actually want to sell it. This sounds really complicated. What's going on here? Well, last year there was a Chicago based investment firm that was called Middle River Power. They were kind of sniffing around. They walked away in September. September, they concluded that the plant doesn't have enough customers. That's

been about it. There really has been very very little interest in anyone buying this plant because investors see the same risks that the current owner does. They just don't seem to think there is a path to profitability. So you mentioned the Navajo group, so they're currently the only player that is involved here. This is a group called the Navajo Transitional Energy Company or en TECH. They represent

the Navajo Nation. Even here this has been a really rock That's a really good point that, yeah, I've misstated

that a little bit. They represent the Navajo Nation, but are not the Navajo Nation itself, and that distinction is really important because, as you've reported, the leaders of the Navajo Nation, or the new leaders of the Navajo Nation, are also not totally keen on buying this plant either, so to make it even more complicated, Yeah, so that whole relationship between Navajo Transitional Energy Company on one hand, which is a business, yeah, and Navajo Nation on the

other hand, which is the tribe, that's not really clear. N TECH is a wholly owned limited liability corporation. They are authorized to negotiate on the Navajo Nation's behalf, but as you say, there is uncertainty about whether NTECH really

represents the wishes of the Navajo people. Yeah. So if that's not complicated enough, And TECH was looking to buy the plant or thinking about buying the plant, and then that deal fell through I think last week, right, Oh, it's still on there still, Well, that's what they say. So even here it's a little murky because, yeah, there's just been a lot of back and forth and as you alluded to, and TECH put out this statement last week that was really very sharply, you know, critical of

the plant's current owners. That's not the kind of thing that you would expect to happen in a negotiation if you have two sides. I mean, you don't usually publicly criticize your bargaining partner saying you're negotiating a value. Yeah, it was kind of a strangely worded statement that they put out. But that said, n Tech also tells us that they still want this deal to go forward. So who knows, who knows. But let's get into the politics here.

We talked about the business, and let's talk about the politics. And we should also mention that we're talking about this power station. This this big coal fired power plant, the Napo Generating Station. But there's also an addition to that, which is that it has its own coal mind. There is a whole mind that just to feed this power plant that is owned by Peabody Energy, which is a big coal conglomerate. If the plant closes, would the mine,

I guess presumably also close in all likelihood. Yeah, it's the Cayenta mine. It's owned by Peabody, and it's a mine that is you know, was built and serves only NABO generating station. There is no one customer. Yeah, and they don't have a rail line to connect to the outside world. So if the power station goes down, in

all likelihood, the coal mine shuts down. And then again the concern is there's a lot of Navajo and Hope people who work at not only the power plant, but also the mind They really really depend on those revenues for their survival. So this would affect the tribal nations, but it would also mean affect the coal industry pretty strongly, and this is an industry that the Trump administration has for a long time very publicly backed. You reported that

the Trump administration was sort of getting involved. Former Interior Secretary Ryan Zink said, we want to keep this plant open, we want to find a buyer's what's going on here? How far did the Trump administration go and how far do you think they will go to keep this running. I don't know that there's any evidence that the administration has really put its thumb on the scale. I just don't know that. I mean, you mentioned Zinke made those comments.

Beyond that, I'm just not aware of anything directly that the administration has done here. So it sounds like the administration has said it wants to keep this plant open, but it hasn't taken any concrete actions as of yet to do that before the plan closure at the end of this year. That's my understanding. I mean, I just don't know if there's anything that has gone on beyond

kind of talking trying to help find a buyer. I mean, you know, as you mentioned, this administration has tried everything that it can, every which way to prop up coal. So in that sense, it has it has really tried to help not just NGNGS, but all kinds of coal plants. You know, they scrapped a clean power plan. They propose to use national security rationale to keep unprofitable plants up

and running. So they have tried a lot. At this point, I just don't know if there is you know, what else they could do to help NGS in particular, short of buying it themselves. Yeah, which would that would be unprecedented. Yeah, there's no there's They've they've shown no interest in doing that, and we have to presume that it's because they see the same problem that everyone else sees. The writing's on the wall. So finally I wanted to talk about the

coal industry itself. Speaking of the writing on the wall, I mean, this has been an industry that's been in decline for a long time. There are other cheaper fuels out there that it's having a lot of trouble competing with. If Navajo Jen and Radio station closes, and I guess presumably it's the mind that feeds it also closes. That would obviously be catastrophic for Peabody Energy, But would this

have ripple effects throughout the broader coal industry. Would this be sort of a nail in the coffin potentially for the coal industry or would it just be another in a long series of setbacks that the industry has suffered for for a long time now. It sure wouldn't be good. Okay, So even Cole's sharpest critics acknowledge that coal fired power is going to be with us for many decades. It's going to be part of the energy mix for a

long time in some way. So we can't say that any one plant going down is signals, you know, really the imminent death of the industry. But look, this is a huge plant. It consumes a lot of coal from Peabody. Peabody is the biggest producer in the country. And again it's important symbolically. If the Trump administration and a major effort by the nation's biggest coal company could not keep this plant alive, then what kind of signal does that

send to to investors, to environmentalists, to coal supporters. Yeah, all right, that was Bloomberg Environment Stephen Lee talking about the future of the Navajo Generating Station in Page, Arizona. Steven has been doing fantastic reporting on this, so if and when the plant finds a buyer, or if and when it shuts down, you'll find out about it at our website news doop Bloomberg Environment dot com. That website,

once again is newsdop Bloomberg Environment dot com. This episode of Parts Pavilion was produced by myself with helt from Jessica Coombs. Our editor is Rissa Horn, and our audio engineer is Nicholas an Zelada. The music for Parts Pavilion is a message by Jizarre. Thanks for listening.