Navajo Nation, NGS Reach Tentative Agreement to Extend Lease to 2044
In a move that would translate to increased revenues and additional benefits to the tribe, the Navajo Nation and the Navajo Generating Station (NGS) are considering extending the power plant’s lease until 2044. The tribe would also sign-off on the grants of rights-of-way for the plant, transmission, water lines and the railroad, a press release states.
The current site lease and the grants of rights of are set to begin expiring in 2019. Further details of the proposed agreement will not be made public until they are presented to the Navajo Council for final determination.
If the tribe approves the lease extension, it goes to the Secretary of the Interior for reviews under several Federal environmental programs that could take up to five years to complete and may be subject to legal action.
Salt River Project, as operating agent of NGS, worked with a team from the Navajo Nation comprised of individuals from several areas of its government to develop the agreement. The proposed lease agreement will provide increased revenues to the Nation in lease payments and in-lieu taxes annually through the year 2044.
The NGS owners have also proposed to provide the Navajo Nation with additional funds for local scholarships and for various community projects.
“This proposed lease agreement with the Navajo Nation reflects a sincere desire on behalf of all the parties to develop terms that recognize the economic importance of extending the life of the plant,” said Mike Hummel, SRP’s power system executive. “NGS provides great value to its customers throughout the Southwest and the owners were very committed to developing a lease agreement that would allow the plant to continue operations while providing the appropriate benefits to the Navajo Nation.”
NGS, located just outside Page on Navajo land, was completed in the mid-1970s. The plant supplies power to customers in Arizona, Nevada and California and also supplies most of the energy used to pump water through the Central Arizona Project.
NGS is a valuable economic engine to the Navajo Nation, the local economy and the state of Arizona. The plant directly employs approximately 520 people, more than 85 percent of whom are Navajo. The nearby Kayenta Mine, the plant’s coal supplier, has more than 400 employees, more than 90 percent of whom are Native American.
According to a recent study prepared by the W.P. Carey School of Business at Arizona State University for SRP and the Navajo Nation, the closure of NGS—combined with the potential impact on Kayenta Mine—could result in an annual loss of nearly 3,400 jobs and more than $20 billion in economic contributions throughout the state for a period measured from 2011 to 2044. A full copy of the report is available at www.ngspower.com and www.srpnet.com.
If the lease extension is approved, there are challenges that still face NGS. The Environmental Protection Agency recently issued a Best Available Retrofit Technology (BART) proposal that could require an investment of up to $1.1 billion in additional emission controls at the plant to address regional haze.
According to Hummel, a Record of Decision (ROD) from the Department of the Interior is necessary before NGS owners could consider such an investment.
NGS is operated and partly owned by SRP. The other owners of NGS are Arizona Public Service Co., Los Angeles Department of Water and Power ,Tucson Electric Power Co. and NV Energy. In accordance with Federal statutes, a portion of the electricity generated by NGS is committed to Federal purposes, including the operation of the Central Arizona Project and financial support of certain Arizona Indian water settlements. The Federal interest in NGS is managed by the U.S. Bureau of Reclamation.
To comply with state law, the Los Angeles Department of Water and Power will not participate in the plant’s operations beyond 2019 and has announced its intention to divest of its ownership share by 2015.
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