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Navajo Nation approves NGS lease extension

Posted: Thursday, Jul 25th, 2013

(UPDATED July 25 with next steps; additional background)

Navajo legislators agreed July 18 to extend the Navajo Generating Station’s property lease through 2044, a “significant step in continuing NGS operations beyond 2019,” according to the plant’s majority owner.

“We are currently reviewing the amendments that were included in the final vote, but the initial indication is the amendments are acceptable,” said Mike Hummel, chief power system executive for the Salt River Project. “The owners and the Navajo Nation will continue working together to address the other necessary approvals....”

The initial term of the lease and various rights-of-way for the plant are set to expire in 2019. 

About 25 NGS workers and numerous Peabody miners attended the Navajo Nation Council meeting for the vote, which took place around 9:45 p.m., said George Hardeen, an NGS consultant. The Peabody mine supplies the coal that fuels the plant.

The lease extension provides significant economic benefits to the Navajo Nation before the existing lease expires, as well as millions of dollars in increased revenues beginning in 2020, including contributions for education and community improvements, according to a statement from SRP.

Company officials, however, did not provide specific amounts in response to questions from the Chronicle.

The next steps are to get approval from all NGS “co-tenants” and for Navajo Nation president Ben Shelly's to sign the deal. Then SRP must complete an environmental impact statement and obtain approval by the U.S. Department of the Interior, according to SRP’s Jeffrey P. Lane.

“Some of the current co-tenants will not sign a lease amendment that will commit them to payments and participation beyond 2019,” Lane wrote in an email. “As a result, before all the co-tenants will sign, we have to change who the co-tenants are through ownership changes so that all we are left with are co-tenants that are willing to sign the lease amendment.”

Navajo legislators voted in April to approve the lease, but added a number of amendments to the agreement.

SRP officials quickly responded that several of the amendments would not be acceptable.

Among those removed, according to an SRP spokesman, are:

• Adding the Bureau of Reclamation as a signatory to the lease amendment.

• Making it a requirement that NGS comply with the Navajo Business Opportunity Act, as well the Navajo Preference in Employment Act.

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