Navajo Generating Station to remain open through 2019

Replacement lease approved in 18-4 vote

The coal-fired Navajo Generating Station in northeast Arizona provides almost 1,000 jobs between the plant and the mine that supplies it, but the plant’s operators have said they plan to shut it down after 2019. (Photo by Amber Brown/Courtesy SRP)

The coal-fired Navajo Generating Station in northeast Arizona provides almost 1,000 jobs between the plant and the mine that supplies it, but the plant’s operators have said they plan to shut it down after 2019. (Photo by Amber Brown/Courtesy SRP)

WINDOW ROCK, Ariz. — On June 26, after more than eight hours of debate, the Navajo Nation Council voted 18-4 to approve a replacement lease for the Navajo Generating Station (NGS), allowing operations of the plant to continue until December 2019.

According to the speaker’s office, NGS owners informed Navajo Nation officials June 27 they will sign the lease agreement before July 1. The agreement also requires the signature of Navajo Nation President Russell Begaye to become final.

The legislation was approved with nine amendments.

The owners made the decision in February to end their participation in NGS when the current lease term ends in 2019 after it became clear that current and forecasted low natural gas prices as compared to coal prices made coal generation at the plant uneconomical.

On July 27, Interior Secretary Ryan Zinke said in response to the approval of the replacement lease legislation that since the first weeks of the Trump administration, one of Interior’s top priorities has been to figure out a way to extend NGS and Kayenta Mine operations after 2019 and that the approval of the legislation was the first step.

“Now, NGS operations can continue while stakeholders examine opportunities for a new operating partner to extend the life of the plant beyond its original 50-year lease,” Zinke said.

Nadine Narindrankura of Tó Nizhóní Ání, a Native community group, said after the vote that the rest of the world is moving toward a clean energy economy because coal can no longer compete economically against cleaner sources of energy, which is why utilities are moving away from NGS and coal.

“It’s ludicrous for our leaders to cling to coal,” she said. “Tying our people to a sinking ship will only bankrupt us and put off the inevitable for two short years.”

Legislation sponsor Speaker LoRenzo Bates thanked his council colleagues and the negotiating team for supporting the jobs of over 800 Navajo workers at NGS and Kayenta Mine and for securing significant revenue for the Nation through 2019. He said, in addition, the legislation allows time to continue pursuing other energy sources including renewable energy and other economic opportunities.

“To this point, it has been a very challenging process in terms of finding some middle ground, especially when you consider all of the issues that were brought forth from delegates, grassroots groups, the workers and many others,” Bates said. “At the end of the day, this council voted in support of the legislation and we look forward to finalizing the agreement.”

Bates previously explained the lease would be for a term of 35-years to include the operation of the power plant through 2019, the retirement of the power plant site and long-term environmental monitoring required by federal environmental laws. The 35-year lease would provide up to $110 million in lease payments to the Navajo Nation.

In addition, the agreement identifies certain assets at the NGS site that the Nation would retain to promote economic development projects including the railroad track and related facilities, a lake pump facility, two electrical distribution lines, fencing and equipment.

The Nation would also receive $18 million from the owners for the cost savings of not having to decommission the assets and $39 million in minimum coal royalties for 2018 and 2019 combined. Additionally, the Nation would have the ability to use the two transmission lines to sell electricity on the open market to generate additional revenue for the Nation.

Council Delegate Edmund Yazzie was the first council member to offer comments on the legislation June 26. He, along with several other delegates, requested the council members approve the legislation to preserve jobs and revenue for the Navajo Nation.

“I am for jobs, Yazzie said. “I am for revenue that goes back to the Nation. I am going to vote in favor of the legislation because when an individual gets laid off, it hits the family, it hits the children — I say this from personal experience. If this doesn’t pass, it’s going to hit the families hard and the revenue that comes in.”

Mike Hummel, deputy general manager of SRP said in a statement that the owners were pleased the council approved the replacement lease, which would provide meaningful benefits for all involved and creates a path forward during the challenging transition.

“Importantly to us, the replacement lease paves the way for SRP employees at the plant to remain on the job for an additional two-plus years and allows us to fulfill our commitment to redeploying all regular NGS employees to other SRP facilities after 2019 should they so choose,” Hummel said.

Council Delegate Seth Damon recalled Bates’ statement indicating the legislation could be the most significant decision that the current council would have to make during its current four-year term, which would have long-standing impacts for the Navajo Nation in terms of providing revenue to the central government, the Nation’s 110 chapters and many other programs and direct services.

“It will help the families in the coming years and I ask you to support this legislation,” Damon said during the council session.

Although the majority of the delegates spoke in support of the bill, several were very vocal in their opposition to the waivers contained in the legislation and the agreement, particularly the request for the Nation to waive Navajo laws in any potential litigation. 

Council Delegate Leonard Tsosie was adamant in his opposition to the waivers requested of the Navajo Nation and strongly urged his colleagues to vote down the legislation as a means of protecting the Nation’s sovereignty and to uphold Navajo laws.

“They’ve been on our land for over 50 years — they should know us by now. Do they regard our laws of being from the cave man years or think theirs are superior? They’ve never given me a clear answer,” Tsosie said, in regard to the waiver of Navajo laws.

Scott Harelson, spokesman for SRP, said in an email June 28 that Navajo law, especially fundamental law, which is unwritten and ever changing, can be difficult to understand.

“The U.S. court system provides certainty to the NGS owners as they understand the federal and state court systems and law,” he said.

Harelson said that the retirement guidelines for the plant were negotiated between the Nation and SRP, on behalf of the owners and the owners have committed to complying iwth all applicable federal laws.

Following the eight-hour debate, the council approved Legislation No. 0194-17. Council Delegates Leonard Tsosie, Amber Kanazbah Crotty, Nelson S. BeGaye, and Jonathan Perry issued the four opposing votes. The bill required two-thirds approval, or 16 supporting votes to pass.

The resolution does not require the consideration of the president, however, the president’s signature is required in order to finalize the final lease document.

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