Mohave plant could be reborn, providing power for growing Phoenix

Mohave plant could be reborn, providing power for growing Phoenix

Washington (Platts)--28Sep2006

Salt River Project, which is 20% owner of the shut 1,580-MW coal-fired Mohave
station in Laughlin, Nevada, said Tuesday that it "is accelerating efforts to
return the plant to service."

Southern California Edison, which had operated the plant fueled by 4.8 million
short tons/year of slurried Peabody Energy coal from Arizona, said in June
that it would not restart the plant after struggling for years with the cost
of retrofitting it with emissions controls to comply with a 2003 settlement
agreement with environmental groups over haze from the plant (PCT 6/20).

At the end of last year, when Mohave shut down as scheduled, Peabody idled the
mine dedicated to supplying the plant with the slurried coal, the Black Mesa
surface operation in Arizona (PCT 1/5).

In a Tuesday statement, SRP said it will seek a new ownership group to
participate in the project and will consider increasing SRP's ownership share
of the plant. "Returning the Mohave facility to service will provide
much-needed energy to SRP's rapidly growing service territory in the greater
Phoenix metropolitan area," SRP said.

SCE owns 56%, or 885 MW, of Mohave; SRP owns 20%, or 316 MW; Nevada Power,
14%, or 221 MW; and the Los Angeles Department of Water and Power, 10%, or 158
MW. In June, SCE, Nevada Power and LADWP announced they would no longer pursue
a restart of the plant.

Meanwhile, Peabody and the Navajo and Hopi owners of the Black Mesa coal are
considering their options for future customers.

"We're continuing to explore opportunities that would allow Black Mesa to
resume operations, which would greatly benefit the local economy and tribal
members," Peabody spokeswoman Beth Sutton told Platts Wednesday. "We'll be
happy to discuss details when decisions are made."

Lots of environmental work, expense ahead
"SRP has met with the Office of Surface Mining regarding the efforts required
to complete the Environmental Impact Statement for the project." SRP said.
"SRP has requested OSM and other cooperating agencies to resume work on the
EIS as soon as possible. SRP intends to work with OSM and others to publish a
draft EIS and schedule public hearings so that the final EIS can be published
by summer 2007."

The EIS covers Peabody subsidiary Peabody Western's mines near Kayenta,
Arizona, including Black Mesa; the 273-mile slurry pipeline that carries coal
from the mine to Mohave; and the development of a new system to supply water
from the Coconino Aquifer (C aquifer) near Leupp, Arizona, and the transfer of
that water 108 miles to the mine for use in the slurry pipeline and
coal-mining process (CO 7/3).

Also, the operator of Mohave will have to carry out construction of about $500
million in additional pollution-control systems, as required under the consent
decree. "The new emission-control systems will include advanced retro-fit
technology that will protect public health and visibility in the Grand Canyon
and other national parks," SRP said

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