Retired Arizona coal plant to reopen as natural gas facility

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(The Center Square) - Arizona Public Service will be bringing a retired coal plant back online by converting two units to natural gas.  

The Cholla Power Plant, located in Navajo County, closed after 63 years of operation, with its four units closing down over a 10-year period from 2015 to 2025.

According to Ann Porter, APS’ communications director, Unit 1 and Unit 3 are expected to go online in 2029.

She said the “project will undergo permitting, reviews and approvals for the next 18 months.”

APS will use the plant’s “existing infrastructure and facilities,” Porter told The Center Square, answering questions via email this week.

The exact cost of converting the coal plant to natural gas “is ongoing and will be included in future regulatory proceedings," she said.

Last week, the Navajo County Board of Supervisors applauded APS’ decision to reopen the Cholla Power Plant.

Supervisor Jason Whiting said the power plant has been part of the northeastern Arizona county’s “history for generations.”

“This investment marks a strong new chapter. I appreciate APS for working with us over the past several years and for investing in Navajo County,” Whiting said.  

“This project supports good‑paying jobs, strengthens our economy, helps our schools and ensures Arizona continues to have reliable, affordable power,” he added.

Porter told The Center Square the project would create hundreds of construction jobs and “support approximately 35 high-quality jobs when in operation.”

With a projected service date in three years, Porter said the project expects to “generate approximately $4 million annually in property tax revenue beginning in 2031.”

“The project will support local jobs, drive contractor and supplier spending, and provide ongoing community contributions that strengthen the regional economy,” she explained.

Nick Myers, chairman of the Arizona Corporation Commission, told The Center Square this week that towns surrounding these types of coal plants are “structured to support the operation of those coal plants.”

“If those coal plants were to go away, those towns may go away. They are so reliant on the income from that [plant]. The entire workforce is made up mostly of the people in the local communities.”

Converting part of Cholla Power Plant to natural gas keeps it online for future generations of workers and provides an “economic benefit directly to the local area,” Myers said.

According to Porter, APS expects to add approximately 380 megawatts of power to its grid, which will provide energy to nearly 61,000 Arizona homes.

The additional energy being added to APS’ grid will help the utility company “meet Arizona's growing electricity needs, including demand from large energy users such as data centers,” Porter said.

“The growth in Arizona is not just data centers. Our service area is still seeing strong residential growth, small- and medium-sized business development and advanced manufacturing continues to expand,” the communications director explained in her email to The Center Square.

Porter said natural gas’ flexibility to support numerous Arizona energy needs will allow APS to increase its “portfolio of nuclear, renewables, battery storage and other resources.”

Having a “diverse energy mix” allows APS to support “reliability while keeping electric bills as low as possible for our customers,” Porter said.

“The costs for this project will not be reflected in customer rates for many years,” she said.

Myers called the plant converting from coal to natural gas a “positive for ratepayers because separate generation doesn’t need to be built from the ground up.”

The chairman noted that when the power plant was winding down its operations, the extended timeline allowed APS to add generation online to replace what would have been lost when the plant went offline.

Now that the power plant is coming back online, that additional power generation will “support the growth of Arizona,” he added.

Looking ahead, Porter said APS owns three of the four units at the power plant and currently has no plans for Unit 2.

She said Pacificorp owns Unit 4.