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Industry News

Desert Rock Energy Facility Clears Navajo Nation Hurdles

LCG, December 30, 2008--Right-of-way approvals were issued by three Navajo Nation committees for the 1,500-MW Desert Rock Energy Facility to be constructed in Navajo Nation lands in the Four Corners area. The proposed coal-fired, electric generating facility is a joint venture of Desert Rock Energy Company, a subsidiary of Sithe Global Power LLC., and Dine Power Authority, an enterprise of the Navajo Nation.

The approvals were issued by the Economic Development, Resources and Intergovernmental Relations committees. Disagreement within the committees surrounded language regarding the Navajo Nation waiving sovereign immunity and potential right-of-way fees. Those supporting the project highlighted the economic benefits, estimated at $52 million a year in revenues to the tribal government, and the potential for up to 400 jobs on the reservation.

Others opposing the plant look to President-elect Obama and his administration to provide an avenue through the Environmental Protection Agency (EPA) to block the project. The Attorney General of New Mexico recently stated, ?The incoming administration will give us the opportunity to make our arguments against EPA?s grant of Desert Rock?s air permit.?

The EPA issued an air permit on July 31, 2008 for the Desert Rock Energy Facility. The receipt of an air permit was a key milestone for the project. The application for the air permit was submitted in early 2004, and the EPA has one year to issue a decision by law. Sithe and Dine Power Authority sued the EPA in March 2008, claiming that the EPA was delaying the permit.

The State of New Mexico opposed the project, and the Attorney General challenged the EPA following the issuance of the air permit. The New Mexico Governor stated that the, "EPA is bending to the will of corporate, financial and misguided political interests that will pollute New Mexico's skies....EPA's decision ignores its obligations to protect the health of residents and the environment in New Mexico and the region. We will not allow this ill-advised decision to stand."

The estimated cost of the Desert Rock Energy Facility is approximately $3 billion. The project will include two, 750-MW, super-critical boilers, and the estimated heat rate for facility is 8,792 Btu/kWh (net, higher heating value basis). The coal supply will be low sulfur, sub-bituminous coal from the Navajo Nation.
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