Officials of New Mexico and the Navajo Nation have weighed in to oppose a move by Arizona regulators to open the state’s retail electric markets to competition, contending it would likely result in the closure of the Four Corners power plant and decimate the area’s economy.

Six New Mexico legislators, the mayor of Farmington, N.M., and Navajo leaders cite a decision by Arizona Public Service Co. to hold off on plans to buy part of the Four Corners Generating Station in Fruitland, N.M., because of the Arizona’s pending exploration of electric competition.

APS had planned to buy interests in two of Four Corners’ five coal-burning generating units from Southern California Edison, shut down the three APS-owned units and install advanced pollution controls on the remaining two units to comply with environmental regulations.

In a regulatory filing in June, APS parent Pinnacle West Capital Corp. said it was putting the deal on hold, specifically citing the Arizona Corporation Commission’s competition proceedings.

If APS backs out of the deal, Four Corners would likely be shut down, dealing a heavy blow to the local economy in San Juan County and to the Navajo Nation’s coal-mining operations that supply the plant, the New Mexico officials said in letters to the Arizona Corporation Commission.

“Hundreds of high-paying jobs will be lost and the local tax base will be dramatically reduced,” Farmington Mayor Tommy Roberts wrote.

Collapse of the Four Corners deal would be “catastrophic” for the Navajo Nation, where unemployment already exceeds 50 percent, the tribe said in a letter to the Corporation Commission signed by Navajo President Ben Shelly and Tribal Council Speaker Johnny Naize.

The Corporation Commission opened an exploratory docket on electric competition in May, soliciting comments from stakeholders. In June, the commissioners stated their intention of deciding quickly — at a meeting perhaps as soon as September — whether to pursue the idea further with a formal rulemaking proceeding.

Consumer groups including AARP oppose the move, which they say will raise rates and give rise to consumer abuses. The competitive move is backed by groups representing competitive power providers, large power users and the conservative Goldwater Institute, who say competition will improve services and tamp down rates.

Arizona passed its first rules to make retail power markets competitive in 1996, separating generation from the transmission and distribution of electric power so that competitors could sell power in competition with incumbent utilities like Tucson Electric Power Co.

The state essentially abandoned the rules after California’s botched attempt at a competitive power market made headlines in 2000 and 2001, and a state appellate court found Arizona’s competition rules fatally flawed.

Contact Assistant Business Editor David Wichner at 573-4181 or or 573-4181.