A federal judge in Arizona dismissed a lawsuit that sought to force the state's major water supplier to continue buying power from the Navajo Generating Station (NGS), a 2.25 gigawatt (GW) coal-fired power plant in Arizona.

NGS is the largest coal plant west of the Mississippi River. But in 2017, its owners decided they would close the plant by the end of 2019, as profits steadily eroded.

The Central Arizona Project (CAP), which buys millions of megawatt-hours of power a year from NGS to operate pumps that irrigate and hydrate higher-elevation portions of Arizona, said it would buy power elsewhere after NGS closed. CAP has maintained for several years (PDF) that coal-fired power from NGS has been more expensive than natural gas and renewable power on the wider market.

Meanwhile, Peabody Western Coal Company, which owns the Kayenta Mine that feeds coal to NGS, sought a buyer to take over NGS so that Peabody could keep Kayenta's biggest customer. But Peabody said it was having trouble finding a buyer after CAP's announcement that it would buy power elsewhere. Peabody and the Hopi Tribe, which receives royalties from the coal industry in Arizona, sued to compel CAP to keep buying power from NGS. The plaintiffs cited Section 303 of the 1968 Basin Project Act, which outlines how the CAP is allowed to contract with private interests like NGS to buy power for pumping water.

Peabody specifically cited a failed deal with investment company Middle River as proof that CAP's decision to walk away from NGS is hurting a potential sale. According to a letter provided by Peabody, "Middle River envisioned that [CAP's managing board] would retain its existing ownership interest in NGS and would continue to utilize its share of the plant."

But in his recent order (PDF), federal Judge Steven Logan dismissed the lawsuit, meaning CAP is not required to keep buying NGS power, even if the coal plant is sold to a new owner. Logan wrote that the closure of the plant doesn't seem to hinge on whether CAP remains as a customer or not. In fact, the primary owners of NGS decided to close the coal plant even while CAP was still buying electricity from it.

CAP's management "is not the only party who will or could have a detrimental impact on the sale process," the judge wrote. "While the Court accepts as true that a potential buyer will be more inclined to want to buy NGS with its largest consumer intact, so too could a buyer be more inclined to want to buy if state legislatures do not pass environmental laws that could negatively affect NGS's viability."

The decision closes yet another avenue for supporters of the NGS coal plant to throw it a lifeline before it has to be shut down at the end of 2019.