"We are very close to a settlement," Taylor said. "In fact, we hope to have this settlement in hand by the end of the year."

But even if the parties can agree, the plant will shut at least temporarily at year's end unless three environmental organizations can be convinced to push back a deadline for So Cal Ed to install about $1 billion of upgrades to Mohave's pollution control system.

Involved in coal and water talks are representatives for So Cal Ed, a subsidiary of Edison International, the Navajo Nation, the Hopi Tribal Council, Peabody Energy Corp. and the Salt River Project, an Arizona public utility and behind So Cal Ed, the second-largest owner of the Mohave power station.

The three environmental groups -- Grand Canyon Trust, Sierra Club, and National Parks Conservation Alliance -- have a court-sanctioned consent decree in hand that was reached in 1999 ordering the plant to shut unless the pollution upgrades were in place by Jan. 1, 2006.

With less than two months until the plant's possible shutdown, So Cal Ed is likely going to seek an extension to the deadline from the environmental groups, Taylor said.

So Cal Ed officials would not comment whether it would try to change the deadline.

"Any request to extend the deadline is a nonstarter," said Roger Clark, air and energy director for the Grand Canyon Trust, based in Flagstaff, Arizona. "We've allowed them to violate the law for some time now. (Any request) would have to be quite compelling."

A So Cal Ed spokesman said that the company did not wish to pursue the upgrades while the coal and water issues were not solved.

"SCE is working hard on all reasonable options that could make possible the continue operation of the plant," said Southern California Edison in a statement. "At this time, it appears likely the plant will shut down for some period on Dec. 31, 2005, but we hope to minimize any such shutdown."

But Clark of the Grand Canyon Trust said the company has had years to fix the water and coal supply issues. He pointed out that So Cal Ed wanted to sell the plant and when it entered the consent decree did not think it would still have to deal with Mohave by 2005.

In a unique situation, Mohave runs on coal that is shipped by pipeline 273 miles from the Black Mesa mine owned by Peabody and on land owned by the Navajo and Hopi. The coal is shipped by crushing it and then mixing it with water to create a slurry that is then shipped via the pipe to the power plant near Laughlin, Nevada.

The two tribes say the underground aquifer source of the water Peabody is now using needs to be preserved for their drinking supply. An alternate aquifer -- also under land owned by the tribes -- can be used, but a 100-mile pipeline will have to be constructed.

Taylor of the Hopi tribe said So Cal Ed has agreed to pay $200 million to build the new pipeline, but company officials declined to confirm that.

Taylor said the Hopi can agree to allow Peabody to use the current water source until the new pipeline is built.

Clark said the owners of Mohave "have had six years" to renegotiate water and coal rights with the Navajo and the Hopi and with Peabody. The coal and water rights agreements were set to expire at the end of 2005 long before the environmental groups filed suit against Mohave's owners in 1997, Clark said.

Peabody, the biggest nongovernmental coal company in the world, is a major employer of both tribes, which have unemployment rates of 50 percent or more.