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* Navajo plant upgrades could cost $1.1 billion
* EPA emissions controls to reduce smog in Grand Canyon
* Plant provides power to Arizona, California and Nevada
By Scott DiSavino
Jan 18 (Reuters) - An Arizona power company said Friday the future of a giant Navajo coal-fired power plant in Arizona was uncertain because federal environmental regulators want emissions-control equipment installed that could cost as much as $1.1 billion.
"We appreciate the EPA appears to have attempted to take into consideration the complex timing issues that this decision creates for the (Navajo) owners," John Sullivan, chief resources executive at Salt River Project (SRP), said in a statement.
Salt River Project operates the 2,250-megawatt (MW) plant for its owners. The plant is located on the Navajo Nation, less than 20 miles from the Grand Canyon near Page, Arizona.
"Unfortunately, the proposal may not allow the owners enough time to resolve uncertainties facing the plant before they will be required to make a significant financial commitment," Sullivan said.
The U.S. Environmental Protection Agency (EPA) said in a statement Friday it wants the plant to reduce nitrogen oxides (NOx) emissions to improve visibility, as required by Congress under the Clean Air Act, at 11 national parks and wilderness areas in the Southwest.
Nitrogen oxides react with other chemicals in the atmosphere to form ozone, which causes a white or brown haze in the air that has been associated with asthma and other breathing disorders, the EPA said.
The EPA said the Navajo plant can meet the agency's proposed emission limit by installing a selective catalytic reduction (SCR) system.
Before investing $1 billion in new equipment, SRP's Sullivan said the plant owners would want to renew the plant lease and other critical agreements, which expire starting in 2019, among other things.
The Navajo owners are already renegotiating the lease with the Navajo Nation, but, SRP said the new lease will require federal reviews that could take at least five years and the approval of the U.S. Secretary of Interior.
The EPA proposed to give the plant until 2023 to install the new controls to achieve the emission limit, recognizing the plant's importance to numerous tribes and the environmental benefits already provided by the plant's installation of the low-NOx burners between 2009 and 2011.
SRP said the low NOx burners cost nearly $45 million and had reduced NOx emissions by more than 40 percent.
SRP said the EPA was required to take into account the economic impact of its decisions.
The plant employs 520 people, more than 85 percent of whom are Navajo, and the Kayenta Mine, which supplies coal to the plant, employs more than 400, more than 90 percent whom are Native American, SRP said.
The EPA said a selective catalytic reduction system combined with the low-NOx burners would reduce emissions by 84 percent, or a total of 28,500 tons per year, by 2018.
SRP, however, said most of the NOx in the air in nearby parks and wilderness areas originates from wildfires, control burns, windblown dust and emissions from metropolitan areas - and not from the Navajo coal plant.
The EPA said a 90-day public comment period with public meetings would begin once the agency publishes its notice in the Federal Register.
SRP said the Navajo owners would continue to work with the EPA to find a solution to reduce haze in the parks.
The Navajo plant is owned by SRP, the U.S. Bureau of Reclamation, Los Angeles Department of Water & Power, Pinnacle West Capital Corp's Arizona Public Service, NV Energy Inc's Nevada Power Co and UniSource Energy Corp's Tucson Electric Power.
There are three 750-MW coal-fired units at Navajo that entered service in 1974, 1975 and 1976.