Ross D. Franklin, file, Associated Press
FILE - In this Sept. 4, 2011 file photo shows the main plant facility at the Navajo Generating Station, from Lake Powell, in Page, Ariz. Requiring this coal-fired power plant on the Navajo Nation to further regulate pollution would not force its retirement but would increase water rates for agricultural users and American Indian tribes by up to 16 percent, according to a report releases Wednesday Jan. 18, 2012.

FLAGSTAFF, Ariz. — Requiring a coal-fired power plant on the Navajo Nation to further regulate pollution would not, by itself, force the plant's retirement, but it could significantly increase water rates for agricultural users and American Indian tribes, a study released Wednesday found.

The U.S. Environmental Protection Agency has been considering how to lower nitrogen oxide emissions from the Navajo Generating Station near Page. The power plant already has low-nitrogen oxide burners, but the EPA could mandate that the owners install more expensive technology such as selective catalytic reduction.

The federal government created the 2,250-megawatt plant to ensure a low-cost water supply for the Central Arizona Project, which delivers the water through a series of canals to 80 percent of the state's population. It also ensures that water rights settlements with tribes are met.

A significant increase in the cost of power would affect settlements with some tribes and could bump up water rates for Central Arizona Project users by up to 32 percent, according to the study produced by the National Renewal Energy Laboratory at the request of the U.S. Department of Interior. Agricultural users and tribes could end up paying up to 16 percent more for water if selective catalytic reduction is required and double that when adding other emission-controlling technology, the study said.

The cost burden of additional retrofits or a shutdown would fall most heavily on the U.S. Bureau of Reclamation, which built CAP, because it lacks a comparable rate structure for recovering capital costs unlike the plant's other owners, which are utilities, the study said. The Reclamation Bureau and the Central Arizona Water Conservation District rely on the plant for 92 percent of electricity needed for the canals, while other plant owners rely on it for between 9 percent and 26 percent of their electric supply.

Central Arizona Project spokesman Bob Barrett said shuttering the plant or requiring further upgrades to reduce regional haze could put farmers out of business or lead to an increased use of groundwater. That's partly because users likely would be unable to absorb the costs of the project having to buy power on the open market, he said.

"We recognize the power plants are going to go away. That's inevitable," he said. "But our issue now is that the alternative sources of power are not advanced enough yet to be a substitute. Eventually CAP will switch over to alternative systems."

The Interior Department had asked the EPA to hold off on a decision for pollution controls under a rule meant to reduce visibility in pristine areas like the Grand Canyon while the impacts of retrofitting the plant, a shutdown due to the cost of retrofits, or no action were analyzed. The comment period on the study ends Feb. 6.

A second phase of the study is expected to look at alternatives to coal generation such as solar or geothermal. Environmentalists have been pushing for a transition from coal, saying the plant is an environmental and health hazard. No epidemiological studies have been done on the health impacts from the plant's emissions or coal mining operation, the study said, and other reports offer differing conclusions on the impact of mining on local groundwater.

Marshall Johnson, a Navajo from Black Mesa, said the use of groundwater in an arid region, the desecration of tribal land and people's health should have been factored into the costs of mining the coal and operating the plant. He and other tribal members have said they've subsidized their livelihoods for the benefit of others in the state for far too long.

"With the technology we have now, the conversation leaders really need to be having is 'how jobs and revenues can come from clean energy instead of dirty coal, and what's the transition path to take us there?'" he said.

The owners, along with the Navajo Nation, have been pushing EPA to accept the low-nitrogen oxide burners as the best way to reduce regional haze.

The added capital and production costs from installing selective catalytic reduction technology ranges from $57 million and $70 million a year over 20 years, the study found. The plant's operator, Salt River Project, said the cost of controls, a right of way extension, a site lease and a coal supply lease add to the uncertainty of the plant's future.

"We have to get reasonable solutions to each of those issues," said Kelly Barr, senior director of environmental policy and compliance for SRP. "Any of those can trip the stool, if you will."

The study noted installing the more expensive pollution controls would be cheaper than shutting down the plant and replacing the power with other sources in the West.

The study also looked at the impact to the Navajo and Hopi tribes, whose reservations hold the coal that feeds the plant, the impact on energy production and the remaining life of the plant. It was inconclusive on how EPA rules would impact air quality, saying that would require a deeper inquiry and more time than that what was allowed for in the study

The EPA said Wednesday it will consider the study, among others, before making a determination on pollution controls, which is expected later this year.