Until last month it was still uncertain, but last week we confirmed the Navajo Generating Station (NGS) will be allowed to operate until Dec. 22, 2019.
This has been a year of uncertainty. Last December, the news broke in the Gallup Independent that the NGS owners were considering ending their participation in the plant because of changing economics in the power industry. That was confirmed on Feb. 13 when NGS owners, Salt River Project (SRP), Arizona Public Service, NV Energy and Tucson Electric Power voted to do that.
All year long we have asked our NGS team members to “finish strong.” It is a testament to their work and safety ethic that they have done so, and continue to do so every day. It is with an immense sense of relief for managers, supervisors and all of our employees that we now have a two-year cushion to plan where we go from here. SRP has assured all NGS employees that they will have a retention bonus to stay on the job as well as a replacement job within the company so they can continue to care for their families.
Because of the coordinated efforts of the NGS owners and the Navajo Nation, the Nation will now receive $167 million in payments over the next 35 years, access to the use of 500-kilovolt transmission lines to fulfill its dream of producing and selling renewable power, the NGS lake pump system that could provide a way to access Lake Powell water, the NGS warehouse and other buildings worth millions of dollars, the railroad and – also critical to the Navajo Nation – SRP’s support for the Nation as it seeks to secure rights to Arizona’s water allocation, a portion of which NGS has used since it went online in 1974.
From SRP’s perspective, as well as that of Navajo leaders, the continuation of employment for our 400 Navajo workers was the most critical and really the driving force behind the effort to enter into a new lease beyond 2019. It will still be difficult enough for our team members, connected as they are to their homeland, to move to other jobs during the next two years. But the prospect of having to uproot hundreds of Navajo families by Christmas would have been unimaginably stressful.
Earlier this year came months of lease negotiations with the Navajo Nation. The objective was to allow the NGS owners to continue producing electricity until the end of 2019, to keep NGS employees working, and then allow time to decommission the plant after the expiration of its 50-year-old lease on Dec. 22, 2019. Those negotiations were successful and a new lease was approved by the Navajo Nation Council last June.
With that completed, new deadlines emerged. The Nation and four of the NGS owners needed to approve and execute the lease by July 1. An initial September deadline to try to find a new owner or owners for the plant was extended to Oct. 1. Signatures from the Los Angeles Department of Water and Power and SRP on behalf of the United States were required by Dec. 1. Those deadlines were met because of the efforts of many people.
Before the federal government could authorize SRP to sign the new lease and related agreements for the U.S. interest, the Bureau of Reclamation needed to complete an Environmental Assessment (EA). That was required under the National Environmental Policy Act, or NEPA. The Bureau of Indian Affairs also needed the EA completed before that agency could approve the new lease and related agreements. The EA process was finally completed on Nov. 27.
Without all of those signatures, NGS would have been forced to comply with its 1969 lease with the Navajo Nation. That would have required many of the buildings, the power plant, equipment, landfills and ponds to be properly mitigated or removed from the NGS lease site starting this month. Without those signatures, work to meet that truly ultimate deadline would have had to begin immediately to meet the deadlines in the existing lease.
That, in turn, would have meant that all of our employees at NGS would end their employment around the end of 2017 – and without any assurance they could continue with SRP. The agreement reached with the Navajo Nation, and all of the benefits it provides to allow us more time to decommission, would also have been lost.
We have seen recent news stories and heard predictions about the financial impact closing NGS will have on the city of Page, Page businesses, Page schools, the Navajo Nation, the Hopi Tribe, Coconino County and the entire state of Arizona. The retirement of a major economic driver such as NGS will certainly leave a substantial mark. SRP will continue to work with the Nation, the city and the county on economic development activities in the area to ease this transition. Even with NGS closing, the work to decommission the plant and prepare and transfer assets to the Navajo Nation will bring hundreds of jobs and millions of dollars in revenue to our city and area.
We are grateful to the Navajo Nation task force and SRP team members who negotiated the lease extension, the Navajo Nation Council for its approval, President Begaye, Coconino County and city of Page officials for their efforts and support, and, especially, our community and our NGS employees for having faith despite constantly changing circumstances.
Joe Frazier, Plant Manager, Navajo Generating Station
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