DALLAS — Arizona Public Service Co. is dismantling three coal-fired generators at the Four Corners Power Plant near Farmington, N.M., as part of a $182 million deal with Southern California Edison to meet environmental regulations.
The investor-owned utility completed its purchase of units 4 and 5 of the plant in the Navajo Nation on Dec. 30. As part of the plan originally announced in 2010, APS closed the plant's older, less efficient Units 1, 2 and 3, and will install additional emission controls on the remaining two units at an estimated cost of $350 million.
With the closing of the APS-owned Units 1, 2 and 3, capacity at Four Corners is reduced from 2,100 megawatts to 1,540 megawatts, enabling the plant to serve half a million homes. Acquiring Edison's 48% interest in the larger Units 4 and 5 cost about $182 million and will increase APS's total Four Corners capacity from 791 megawatts to 970 megawatts. APS now owns 63% of Units 4 and 5, which constitute the plant.
The units that were closed Dec. 30 had operated since 1963. In 1994, Farmington issued $65.7 million of tax-exempt pollution control revenue bonds for the plant. Standard & Poor's downgraded those bonds to BBB-minus from AA-minus after the debt was remarketed in 2010.
Dismantling and removal of the older units and any associated structures is expected to last about three years.
Employees with responsibilities operating and maintaining Units 1, 2 and 3 now will focus on decommissioning activities, APS said.
APS expects to invest $350 million by August 2018 upgrading Units 4 and 5 to meet EPA pollution standards.
APS is expected to seek higher rates on its more than 1 million customers in Arizona to recover the cost of buying the new units.
The plant and a nearby coal mine generate about $225 million a year in economic benefits to the Navajo Nation and New Mexico economies, according to APS. Unemployment on the reservation is about 50%, making the closing of the power generators more painful, APS said. More than 80% of the positions at the plant are held by Native Americans. The operations are responsible for about 30% of the Navajo Nation's general fund, according to the company.