Dive Brief:
- The Navajo Council has approved a new lease for a 2,250 MW coal plant, allowing it to continue serving Salt River Project customers.
- The coal-fired plant provides about $30 million in revenue each year to the Navajo Nation, but SRP had indicated it needed a decision on the new lease agreement before July or it would begin decommissioning activities.
- The new lease is not a done deal, however, and officials for SRP say some work remains to address language included in amendments approved by the Navajo Council. Plant owners say they hope the lease can be finalized by July 1, in order for the plant to continue operating until the end of the current lease on Dec. 23, 2019.
Dive Insight:
The Navajo Generating Station provides millions in revenue each year to the Navajo Nation — about a third of the government's budget — and opponents of renewing the lease its provisions left Navajo leaders essentially hamstrung in negotiations.
“There’s no other way to put it: with this agreement, the Navajo Nation had their hands tied behind their back. We are being saddled with hundreds of millions of dollars of liability,” Adella Begaye of the Navajo community group Diné CARE said in a statement issued by Sierra Club.
“The deal was rammed through by holding the Navajo tribal council hostage through an 11th-hour ultimatum from the very same people that were given permission to exploit and plunder our natural resources," Begaye said.
Earlier this year, the plant's owners decided to extend operations through the end of its current lease in 2019, rather than close it later this year – provided the necessary agreements could be reached with the Navajo Nation to allow decommissioning activities to take place after 2019.
According to SRP, the resulting 35-year replacement lease includes $110 million in lease payments, minimum fuel purchase revenues assurances for the Navajo Nation of $39 million in 2018 and 2019, and "valuable use of transmission from the NGS transmission station to sites off the reservation."
Under the replacement lease, plant owners also agreed that the Navajo Nation could retain additional assets associated with NGS, including additional commercial buildings, the railroad and the lake pump system. SRP said the savings for not decommissioning these assets has been shared with the Nation and is more than $18 million.
Mike Hummel, deputy general manager of SRP, said the new agreement "provides meaningful benefits for all involved and creates a path forward during this challenging transition."
NGS participants include SRP, which operates the plant; the U.S. Bureau of Reclamation; Arizona Public Service Co.; Tucson Electric Power Co.; and NV Energy.
The Navajo Council voted 18-4 to approve the new lease. It required at least 14 votes to pass.
