Arizona Public Service plans to convert two units at its retired Cholla Power Plant in Navajo County to natural gas generation, providing up to 380 MW of energy, the utility announced Thursday. The plant's coal units were retired over the last decade due to federal environmental mandates, with the final retirement occurring in March 2025. At peak generation, the plant supplied around 1 GW of power.
The utility said earlier evaluations of converting the plant to natural gas didn't provide an economic benefit for customers. But Arizona's increasing demand for around-the-clock energy and the long timelines for adding new generation have made the conversion a viable option. Last year, APS said it expects its electric sales will grow by 4% to 6% a year through 2027, mainly driven by the addition of large loads onto its system. In April, the Arizona Corporation Commission said APS estimates its peak demand load for large customers will reach approximately 13.1 gigawatts this year.
"Cholla has been an important part of the communities of Joseph City, Holbrook, Navajo County and northeastern Arizona for decades and has been foundational to Arizona's energy grid," said Johnny Penrod, APS vice president of generation. According to the utility, the conversion will preserve the plant's legacy while leveraging existing transmission lines and infrastructure to support Arizona's energy future. Penrod added that repurposing the Cholla Power Plant for natural gas allows the company to build on that legacy.
The shift from coal to natural gas reflects Arizona's changing energy landscape as demand surges. Federal environmental regulations initially forced the plant's closure but also provided an option to convert it to natural gas in the future. The conversion became economically viable only after Arizona's electricity demand began growing rapidly, driven by large industrial customers. APS said the new gas facility will further support the utility's diverse energy mix, which includes nuclear from the Palo Verde Generating Station, natural gas, coal, solar, wind and battery energy storage.
Construction on the gas conversion is expected to begin in 2028, with a target in-service date of 2029. The project will need to go through formal permitting and planning processes, and APS will take public comment through open houses and via phone and email. The repurposing offers a faster path to adding generation capacity than building entirely new facilities in a state where energy demand is climbing at rates not seen in years.