MEMORANDUM DATE: October 7, 2014 TO: Clean Power Plan for Existing Power Plants; Docket ID: EPA-HQ-OAR–2013-0602 FROM: Melanie King, Office of Ai r Quality Planning and Standards SUBJECT: September 15, 2014, Meeting and Tribal Consultation with Navajo Nation Regarding Proposed Clean Power Plan for Existing Power Plants SUMMARY A meeting was held between EPA and the at tendees listed below on September 15, 2014, to discuss the proposed Clean Power Plan for Existi ng Power Plants and the forthcoming Supplemental Proposal for Indian Country and Territories. The Clean Power Plan for Existing Power Plants was proposed on June 2, 2014, and published in the Fe deral Register on June 18, 2014. A presentation provided by the Navajo Nation is attached. ATTENDEES Navajo Nation  President Ben Shelly  Michele Morris, Executive Staff Assistant, Office of the President  Stephen B. Etsitty, Executive Director, Navajo Nation EPA  Harrison Tsosie, Attorney Ge neral, Navajo Nation DOJ  Bidtah Becker, Assistant Attorney General, Natural Resources Unit, Navajo Nation DOJ  April Quinn, Attorney, Natural Resources Unit, Navajo Nation DOJ  Anthony Peterman, Executive Staff Assistant, Office of the Speaker, Navajo Nation Council/Legislative Branch  Derek Dyson, Attorney for Nava jo Tribal Utility Authority  Eugenia Quintana, Environmental Department Manager, NNEPA/Air & Toxics Department  Sharilene Jeff, Acting Executive Direct or, Division of Natural Resources  Jill Grant, Jill Grant Law  Bethany Fisher, Jill Grant Law  Dr. Jim Staudt, Andover Tec hnology Partners, Consultant to the Navajo Nation EPA  Janet McCabe, EPA Acting Assi stant Administrator for OAR  Jane Nishida, EPA Principal Deputy Assistant Administrator for OITA  Jared Blumenfeld, EPA Region 9 Administrator  EPA/OAR: William Niebling, Peter Tsirigotis, Ke vin Culligan, Jeremy Schreifels, Melanie King, Mary Johnson, Nick Swanson, Laur a McKelvey, Pat Childers (by phone)  EPA/Region 9: Deborah Jordan, Ann L yons, Anita Lee, Amy Zimpfer (by phone)  EPA/OGC: Rick Vetter, Tod Siegal (by phone)Attachment: Presentation provided by Navajo Nation

# Navajo Nation Consultation with



# US EPA September 15, 2014 

# Santa Fe, NM

# Navajo Nation is a uniquely

disadvantaged people

• Unemployment of 52% compared to 6.1% for US • Per capita income less than one third that of poorest state (Mississippi) • Many Navajo have no access to basic services



# – 32% don’t have electricity

– 38% lack water

– 60% lack telephone

# Income and Energy Use

0 20,000 40,000 60,000 80,000 District of Columbia... Connecticut... North Dakota... Massachusetts... New Jersey... Maryland... New York... Wyoming... New Hampshire... Alaska... Virginia... Minnesota... California... Washington... Rhode Island... Illinois... Colorado... Pennsylvania... Vermont... Hawaii... South Dakota... Iowa... Delaware... Kansas... Texas... Wisconsin... Florida... Oklahoma... Maine... Ohio... Louisiana... Oregon... Missouri... Tennessee... Michigan... Montana... Nevada... Indiana... North Carolina... Georgia... Arizona... Alabama... New Mexico... Utah... Kentucky... Arkansas... West Virginia... South Carolina... Idaho... Mississippi... Navajo Nation

Per capita income, $ 

### Per capita personal income [Dollars] Navajo Nation

0 10,000 20,000 30,000 Wyoming Kentucky District of Columbia North Dakota Louisiana South Carolina Alabama West Virginia Mississippi Arkansas Indiana Nebraska Tennessee Oklahoma Iowa Georgia Virginia Idaho Missouri North Carolina Kansas Texas Montana South Dakota Washington Ohio Delaware Minnesota Nevada Florida United States Wisconsin Oregon Pennsylvania Arizona Maryland Illinois New Mexico Michigan Colorado Utah New Jersey Vermont Maine Massachusetts Connecticut New Hampshire Alaska New York Rhode Island Hawaii California Navajo Nation 

## kWh per capita Navajo Nation



## Data from NTUA, Bureau of Econonmic Analysis and California Energy Commission

# Unemployment

Data from NTUA and Bureau of Labor Statistics 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

United States Navajo Nation Employed Unemployed

# Access to electricity

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% North Africa Latin America China & East Asia Middle East Developing Asia World* Nepal Developing countries

Indonesia Ghana South Asia Navajo Nation Bangladesh Sub-Saharan Africa 

## Access to Electricity

with
without



# Data from NTUA, International Energy Agency, and World Bank

# Navajo Nation economy is highly dependent upon coal power plants • Employment at power plants and associated mines provides high paying jobs with benefits • No similar industries available for employment 

# • Taxes and fees used to support Navajo Nation government and basic services • Recent environmental decisions affecting 

# plants have had very negative impact on Navajo Nation • Need to preserve viability of power plants !

# Employees at Plants and Mines Navajo Employees FCPP 406 Navajo Mine 402 NGS 446 

# Kayenta Mine ~200 SJGS 90 San Juan Mine 230 Total ~1774
• These are high paying jobs that average over $50,000 plus benefits. • There are no replacements for these jobs within the Navajo Nation

# Four Building Block Equation

• A = CO 2 

## emissions from the coal plants in 2012 less 6% or 4% ( alternate case ) to account for heat rate improvements • B = CO 2 

## emissions from other electric generating units • C = CO 2 

## reductions that result from transfer of coal generation to existing NGCC generation to raise the NGCC capacity factor to 70% • D = MWnet generated in 2012 • E = MWhnet from planned and expected growth in no/low carbon 

# generation • F = MWhnet in demand - side energy efficiency With the rate equal to : 

# [A + B – C] / [D + E + F]

# Rate and Mass Limit Development

• Navajo Nation should be allowed to use historic CO 2 

# rate to set mass cap • Building blocks generally do not apply to the Navajo Nation .

# A, Building Block One

• Relies on reduction of heat rates from 2012 levels • Both plants have already dramatically reduced 

# heat rates • Further heat rate reductions are not possible • Navajo Nation wishes to use CO2 allowances to help promote economic development

– Use historical emissions/generation rather than reduced emissions/generation after unit retirement

# Use Highest Previous Mass Emissions

Why? The Navajo are a uniquely disadvantaged people.

0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 40,000,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 

## CO2 Emissions, tons

Navajo Generating Station Four Corners Steam Elec Station

# 2012 Not a representative year

Waiting to hear from SRP and APS on reason for low generation.

1.00E+07 1.20E+07 1.40E+07 1.60E+07 1.80E+07 2.00E+07 2.20E+07

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 

## Generation, MWh

Four Corners Steam Elec Station Navajo Generating Station

# Heat Rate Reductions Have Already

Happened

Data from US EPA’s Air Markets Program Data Net heat rate will be higher due to plant loads 8,000 8,500 9,000 9,500 10,000 10,500 11,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 

## Gross Heat Rate, Btu/kWh

Four Corners Steam Elec Station Navajo Generating Station

# CO2 Rate Reductions Have Already

Happened

Data from US EPA’s Air Markets Program Data CO2 rate with respect to net output will be higher due to plant loads 1700 1800 1900 2000 2100 2200 2300

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 

## CO2 rate, lbs/MWh gross

Four Corners Steam Elec Station Navajo Generating Station

# A, Building Block One

• Older, (pre - 2000 ) CO2 emissions should be used to set any baseline for heat rate improvements or for CO2 allowances, for 

# reasons provided above

# Use Highest Previous Mass Emissions

CO 2 tons year 2000 CO 2 tons 2005

CO 2 tons 2012

CO 2 tons Navajo Gen. Sta. 20,458,265 2002 16,939,714 16,015,459 14,491,314 Four Corners 17,483,077 1999 20,137,721 19,677,241 16,925,558 total 

### 37,941,342* 37,077,435 35,692,699 31,416,873 4% reduction 36,423,688 35,594,337 34,264,991 Heat rate reductions already performed 6% reduction 35,664,861 34,852,789 33,551,137 * This is the recommended budget. Because of the special situation of the Navajo, it is recommended that the Navajo Nation use the proceeds from sale of extra allowances to help finance clean energy projects on the Navajo Nation or retraining of coal power plant and mine workers.

# Heat rates and CO 2 

# rate using high

CO 2 

# emission years.
Navajo (1998) Four Corners (1999) 2012 combined
lbs CO2/ MWh Btu/ k Wh lbs CO2/MWh Btu/ k Wh lbs CO2/MWh Btu/ k Wh Gross 2,210 10,770 2,173 10,589 1,957 9535 Net 2,398 11,685 2,350 11,453 2,120 10,330 4% reduction 2,302 11,218 2,256 10,995 Units had already implemented HR reductions 6% reduction 2,254 10,984 2,209 10,766 

## Net is an estimate based upon an assumed plant load – do not currently have detailed data from plants

# B. Building Block Two

• No NGCC plants currently in the Navajo Nation.

# C. Building Block Three

• Electricity used by the Navajo Nation is already virtually all carbon - free (mostly hydro) and is a negligible amount compared 

# to generation at the two power plants

# D. Building Block Four
• FCPP and NGS electricity is primarily exported • Per capita electricity usage in Navajo Nation is ~10% that of its nearest neighbors • Energy usage in the Navajo Nation needs to be 

# increased, not decreased , and a CO 2 

# rate should account for this.

– We recommend that targeted annual electric demand 

# per capita should be increased from about 1000/kWh to 5000/kWh, or an increase of 720 million kWh.

– This will raise rather than decrease the value of allowed rate

# Four Building Block Equation A = CO 2 

## emissions from the coal plants in 2012 less 6% or 4% (alternate case) to account for heat rate improvements B = CO 2 

## emissions from other electric generating units C = CO 2 

## reductions that result from transfer of coal generation to existing NGCC generation to raise the NGCC capacity factor to 70% D = MWnet generated in 2012 E = MWhnet from planned and expected growth in no/low carbon generation 

# F = MWhnet in demand - side energy efficiency With the rate equal to : [A + B – C] / [D + E + F] Demand needs to be increased, not decreased Effect is to increase allowed rate 

# rather than decease it.

# Use Clean Power Plan to address

Navajo Nation needs
• Provide a means of assuring future operation of FCPP and NGS • Provide a means of helping transition displaced coal plant workers • Provide a means of economic development of 

# Navajo Nation

# Concerns About Renewable

Development
• As currently crafted, the Clean Power Plan discourages states from working with Navajo Nation on renewables projects. • Need to allow renewables projects in Navajo Nation to count toward state renewables goals under Clean Power Plan

– Can address concerns about “double - counting”

# Ownership of Allowances

• All CO2 allowances under a trading program should be controlled by Navajo Nation – same rights as states • Clarification that DOI CRCs are completely separate from this program and don’t impact it.

# Closing Points • Navajo Nation is uniquely disadvantaged • Navajo Nation has already suffered from cutbacks at power plants 

# • Power Plants have already reduced heat rate • Navajo Nation needs more electricity, not less • Navajo Nation should receive CO2 allowances • Need to preserve renewables development by states on Navajo Nation