FLAGSTAFF, Ariz. (AP) — Two northern Arizona tribes that lost millions of dollars in annual revenue with the closure of a coal-fired power plant in southern Nevada are set to benefit from the sale of pollution credits.
Coal mined from the Navajo and Hopi reservations and sent exclusively to the Mohave Generating Station in Laughlin through a 273-mile slurry line was a major source of revenue and jobs for the tribes. The plant closed in 2005, leaving its owners with credit for sulfur dioxide emissions that could be sold as part of a program to control acid rain.
The tribes and conservationists successfully went after revenue that the plant's majority owner, Southern California Edison, could generate from the sales. The California Public Utilities Commission voted this week to direct the money to renewable energy projects that could be located on or off the reservations but that would have to benefit the tribes.
Southern California Edison had proposed that the proceeds from the sales be credited to its 4 million to 5 million customers.
"It's not a big dollar amount for our customers," said project manager Paul Klapka. "But it was always the principle of the thing. These are assets we got on behalf of the ratepayers."
Roger Clark of the Grand Canyon Trust praised the commission's decision as a sign of environmental justice. He said it "affirms the need to offer some opportunity to those who have sacrificed so much for Southern Californians to enjoy decades of cheap power."
At least $3.5 million sits in a fund from sales so far, but future revenue projections are wide-ranging because of the market's instability. The commission said it is "reasonable to conclude that the value will not be very large."
Southern California Edison has about 29,000 credits a year that it can sell, based on emissions per ton. The average price per allowance between April 2011 and August 2011 was $3.50, down significantly from the $101 average from October 2007 to August 2011, according to the commission's documents.
The commission's order dictates that the money must go to the tribes for lease, rent, or royalty payments for renewable energy projects, or at least one of the tribes has to have a minimum 50 percent ownership in a project. The commission accepted the Hopi Tribe's proposal that one or both of the tribes have a 33 percent ownership stake in projects located off the reservation.
The money from sales of the credits will go into a revolving fund controlled by Southern California Edison to be used by developers to jump-start projects. The money must be repaid, eventually making its way to Southern California Edison customers but not until after 2026, the cutoff date for sales. Any unsold credits must be retired the following year, the commission said.
Southern California Edison shut down the power plant because it needed pollution-control upgrades to comply with a settlement with environmentalists, a new water supply and pipeline upgrades costing $1.1 billion. The plant that once supplied electricity to more than 1 million customers is expected to be fully decommissioned this spring, a spokesman said. A switch yard will remain at the site along the Colorado River.
Other plant owners included the Salt River Project with 20 percent, Nevada Power Co. with 14 percent and the Los Angeles Department of Water and Power with 10 percent.
The tribes and conservationists did not seek revenue for sulfur dioxide allowances from utilities other than Southern California Edison, which held 56 percent ownership of the plant.