Talks continue on future of Navajo Generating Station

Navajo Nation, Salt River Project hopeful for NGS lease renewal through 2019

The Navajo Generating Station uses coal to produce electricity. Because of recently declining prices of natural gas, the station is facing an uncertain future. Adobe stock

The Navajo Generating Station uses coal to produce electricity. Because of recently declining prices of natural gas, the station is facing an uncertain future. Adobe stock

FLAGSTAFF, Ariz. — Officials from the Navajo Nation and the Salt River Project (SRP) report that negotiations for a replacement lease that would allow the Navajo Generating Station (NGS) to continue operating through the end of 2019 have been productive and that considerable progress has been made.

The owners of NGS voted in February to extend operations of the power plant to the December 2019 end of its lease rather than close the plant later this year. That commitment requires agreements with the Navajo Nation to allow the NGS owners to conduct removal and restoration activities, as necessary, after 2019.

A task force from the Navajo Nation has been meeting on a regular basis with representatives of SRP, which is seeking terms for a replacement lease on behalf of the owners.

A replacement lease would preserve, for more than two years, continued employment at the plant as well as revenues for the Navajo Nation and the Hopi Tribe.  It also provides the Nation or others with the potential to acquire and operate the plant beyond 2019 should they so choose – although the current non-governmental group does not intend to be participants at that time.

While there are a number of details that require additional discussions, both the Navajo Nation and the NGS owners are optimistic that a successful conclusion can be reached soon.  If a draft agreement can be reached soon, it will provide time for required approval from the Navajo Nation Council and the NGS owners.  The NGS owners require a final decision by July 1.

The agreements will also define the retirement and restoration of the leased lands in the event that another ownership group is not identified in time.

The participants in NGS include SRP, the plant’s operator, the U.S. Bureau of Reclamation; Arizona Public Service Co.; Tucson Electric Power Co.; NV Energy.

Additionally, an April 12 meeting between the Department of Interior and NGS owners, stakeholders and government officials was held in order to determine the fate of NGS. During the meeting speakers addressed coal prices and questioned different ways to keep the plant open.

The Coconino County Board of Supervisors participated in the meeting, as well.

Navajo Nation President Russell Begaye said the primary goals of the Navajo Nation are to renew the lease and explore all ways to keep NGS open until 2029. He said shutting the plant down prematurely will create a devastating impact for Navajo, and 40 percent of the Nation’s budget and infrastructure is tied to revenue generating from both NGS and the Kayenta Mine.

“Should NGS close, we are asking the Department of Interior to guarantee access to transmission lines for development purposes,” Begaye said. “We are exploring options to develop solar, wind and other renewables, which we will need access to the transmission lines on our land in order to export it.”

The Coconino Board of Supervisors said that closure of NGS will not only impact the Navajo Nation and Coconino County, but will have significant downstream impacts on Arizona’s economy. It is estimated that over 3,100 jobs will be lost when NGS is closed. In addition to these job losses, the board of supervisors said the closure will negatively affect the revenue used to support critical services to the region, including law enforcement and court services and core public health and education services.

“Closing NGS will greatly affect schools, hospitals, libraries and public services across the region,” said Coconino County Board of Supervisor for District Five Lena Fowler. “Our special districts rely on these funds to provide services to the most vulnerable populations.”

She said she was encouraged by the participation of Secretary of the Interior Ryan Zinke at the meeting and that the issue was receiving appropriate attention in Washington.

“Everyone at the table understands the full impact that closing NGS will have,” Fowler said. “We are committed to making sure these impacts are understood and all partners work together to find solutions.”

Supervisor Jim Parks said the board of supervisors supports Begaye and the Salt River Project in their work to renew the lease agreement and keep the station in operation through 2019.

“That will give us time to breath and design education and agricultural opportunities in order to re-direct employment options for the Navajo Nation, Hopi and all those who will be impacted by the closure,” Parks said.

A press release said the board of supervisors remains committed to working with its partners to ensure an extension of the operation of NGS and subsequent decommissioning of the plant to allow for a measured transition of the area’s economy.

Begaye said the Nation would also like to assume the rights to water and minerals on its land.

“Currently, we have no rights to minerals beneath our soil,” Begaye said. “As we seek economic independence, we would like rights to the uranium, coal and other minerals beneath our soil.”

He also implored both the owners of NGS, which includes Salt River Project and the federal government, to employ the Nation’s highly skilled people within their operations.

“Due to the rural area that NGS is located in, it is unlikely for our people to find replacement jobs that match their skill set,” Begaye said.

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