LECHEE – Navajo Nation officials are considering having the tribe take over Peabody Western Coal Company’s Kayenta Mine and its sole customer, the Navajo Generating Station, that is scheduled to close before Christmas this year.
The NGS’s five owners, including the U.S. Bureau of Reclamation, voted in February 2017 to close the power plant, citing competition from natural gas. But the Bureau of Reclamation, along with the Hopi and the Navajo tribes, wanted to explore options to keep it going.
Peabody then launched a long-shot bid to find a buyer to save the plant and the Kayenta Mine that has no other customers.
Chicago-based Middle River Power and its parent company, global investment firm Avenue Capital showed interest and touted a plan to run the plant at less than half its capacity to prolong its life.
MRP officials announced in September that both companies terminated the effort, saying they could not get anyone to commit to buying power from the plant, delaying the start of an environmental review.
With no companies willing to take the reins, Navajo officials said on Nov. 2, 2018, they want the tribe to take control of the troubled plant and requested Navajo Transitional Energy Company, which owns Navajo Mine, in Farmington, New Mexico, to negotiate a deal with the plant’s owners and with Peabody.
“We believe there is a clear and beneficial path forward to acquire and operate both NGS and (the) Kayenta Mine as a vertically-integrated entity,” said Clark Moseley, CEO at NTEC.
NTEC Board Chair Tim McLaughlin said this is a business decision about a business transaction for the company.
“We are going to thoroughly evaluate plans and make sound business decisions that arebeneficial for NTEC and the Navajo Nation,” McLaughlin said.
NTEC officials say they want to keep the plant and the Kayenta Mine open for at least 10 more years to preserve jobs, which are occupied by mostly Navajos, as well as the revenue.
The NTEC board met Jan. 4 and unanimously approved continuing negotiations to take over both the plant and the Kayenta Mine.
Moseley said continuing negotiations complies with NTEC’s operating agreement to improve the economic, financial, tax and revenue interests of the Navajo Nation and its Diné people.
NTEC officials say they will negotiate with both Salt River Project, the plant’s operator, and with Peabody to conduct further feasibility studies and due diligence.
During the 23rd Navajo Nation Council’s Dec. 27 Naabik’íyáti’ Committee meeting, Moseley announced that the best way to move forward is to have a vertically integrated energy company.
“Such a company could operate through 2029,” Moseley said. “Early findings show this project could be very beneficial for the Navajo Nation and its communities. NTEC is not going lightly into this venture. I assure you that. We do have the expertise in coal-mining, and a prudent track record of managing a contract miner, and we are partial owners (7 percent) of Four Corners Power Plant.”
No agreements or contracts have been signed, according to Moseley.
NTEC was created to buy the Navajo Mine. In July 2018, NTEC acquired a 7-percent stake in units 4 and 5 of Four Corners in a purchase from 4C Acquisition LLC., an affiliate of Arizona Public Service, Four Corners’ majority owner. APS also owns 14 percent of NGS.
Since NTEC has become a partial owner, Moseley said, the energy company has gained insights into power marketing.
“NTEC has been actively selling power,” he said. “It now has considerable expertise in the Southwest power market. NTEC also has a considerable amount of credibility in the energy industry and with financial institutions that work with energy corporations.”
Moseley said experience will help NTEC clear what had been a major hurdle for other companies that pulled out of negotiations for the troubled NGS.
Coal, however, is on the defensive in the nation’s power industry. The pressure to shift more of the country’s electric supply to renewable sources is not just a rallying cry for environmentalists. Now, utilities are changing their ways.
Moseley said preliminary findings show that there are entities that are interested in purchasing power from NGS.
“They are looking forward to working with tribal entity which brings unique opportunities,” said Moseley, adding that the NTEC has been working for years to get Section 17 corporation status.
“Section 17 status has been underway for years, pre-dating the (Navajo) Council’s recent request that NTEC assess the feasibility of acquiring NGS,” Moseley said. “Contrary to some recent reports, the delay in consideration of Section 17 will have no impact on any possible acquisition of NGS.”
Dozens of demonstrators braved the cold last week outside the Navajo Nation Council Chamber in Window Rock, Arizona, and rallied against the possibility that NTEC could take over the plant and the Kayenta Mine.
“We’re following this … because we strongly believe that the Navajo Nation is currently being set up by … Speaker (of the 23rd Navajo Nation Council) LoRenzo Bates and by the (federal) government to take over liability and reclamation that Peabody is directly responsible for,” said Nadine Narindrankura, an activist with Tó Nizhóní Ání. “We believe that the Navajo Nation will enable itself to absolve Peabody from those liabilities and obligations of full reclamation. Not just to the lands, but also to the water.”
Narindrankura says she and other demonstrators believe that the tribe needs Section 17 corporation status to buy the plant and also the Kayenta Mine.
“The members of the (23rd) Council recently approved a policy statement supporting the acquisition of NGS,” Bates said in an interview, “but it will ultimately be the decision of the … (incoming) 24th Navajo Nation Council to decide on the future of NGS.”
The 24th Council will be sworn in on Monday, Jan. 14, in Window Rock.