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Arizona House committee approves proposed tax exemption for Navajo coal plant

An Arizona House committee approved a proposal to exempt the coal used at Salt River Project's Navajo Generating Station from the state's sales tax in a bid to increase buyer interest in the power plant, the Associated Press reported.

The tax cut would cost the state general fund about $35 million and would cause Navajo County to lose excise taxes it collects on the coal sales.

A lobbyist for Peabody Energy Corp., whose Kayenta coal mine fuels the plant, told committee members the state's losses would be much greater if the mine and power plant cease operation. Navajo Tribal Council Speaker LoRenzo Bates said Arizona could lose $18 billion in gross state product between 2017 and 2044, including up to 4,300 jobs, the report said.

In February 2017, owners of the 2,250-MW coal-fired power plant said they would back away from it once its lease ends in December 2019 amid economic challenges to coal-fired power posed by cheaper natural gas. Utility owners of the plant include Salt River Project, Arizona Public Service Co., Nevada Power Co. and Tucson Electric Power Co.

The bill passed the House Committee on Ways and Means on a 6-3 vote.