Demand for electricity in the Southwestern United States is expected to outpace installed capacity. The western utilities identified the Arizona/New Mexico/Southern Nevada sub-region of the western United States (of which the Four Corners area is a part) as an area in need of additional power generation to sustain growth. In a report by the Western Electricity Coordinating Council, it states, resource capacity margins for this summer peaking area range between 11.7 percent and 23.8 percent for the next ten years. As with other areas within the WECC, the future adequacy of generation supply over the next ten years in the area will depend on how much new capacity is actually constructed. The Western Electricity Coordinating Council's 2005 Ten-Year Coordinated Plan Summary identified the Arizona/New Mexico/Southern Nevada of the western United States as an area in need of additional power generation to sustain growth. The plan estimates that summer loads in Arizona, New Mexico and South Nevada region will increase at a compounded growth rate of 3.2 percent. This will result in summer peak loads increasing from 26,972 MW in 2005 to 35,060 MW in 2014 and increase of 8,088 MW. Desert Rock will contribute 17% of the new generation that will be required to serve the planned load growth in the Arizona, New Mexico and Southern Nevada region by 2014. ”

Natural gas prices have increased substantially over the last three years and prices have been extremely volatile. Navajo coal sold under a long-term contract is expected to cost less than 25 percent of the cost of natural gas per MMBtu and because it can be contracted for as long as 25 or 30 years it should have much less price volatility.