CHANDLER, Ariz. – Navajo Transitional Energy Company officials on March 2 outlined points to the Navajo Nation Council that led to last week’s stalled negotiations with Salt River Project for the acquisition of Navajo Generation Station.
Negotiations for Navajo Generating Station stalled last week due to SRP’s insistence on a direct and unlimited guarantee from the Navajo Nation itself for any and all of the obligations and liabilities NTEC would assume under the acquisition. NTEC has made repeated attempts to offer alternate, and commercially reasonable assurances to SRP, including a significant bond amount. NTEC voiced opposition to SRP’s demands and has publicly stated the Nation should not accept the demand for the unlimited guarantee and that the tribe created NTEC to protect the tribe’s sovereignty.
The meeting lasted five hours as the NTEC board answered questions from the 18 Council delegates that attended the meeting. The purpose of the work session was to continue discussions regarding the status of NTEC’s efforts to acquire NGS and Peabody Western Coal Company’s Kayenta Mine.
NTEC’s Management Committee presented to the council. The seven-member Management Committee is comprised of Navajo professionals in various fields, including engineering, science, legal and business.
“NTEC believes all the points leading to stalled negotiations with SRP and NGS owners were explained and outlined diligently and tactfully by the board to the delegates that attended the meeting,” said NTEC CEO Clark Moseley.
On Saturday, NTEC’s Board informed the Council that talks with NGS majority owner SRP had stalled because of SRP unreasonable demands such as having the Navajo Nation provide unlimited guarantees on the purchase of the power plant.
Some Council members stated that SRP has a monopoly in the desert southwest power grid and expressed the idea that the Navajo Nation soon could become its main competitor. Others voiced concern that SRP was protecting the 50,000-acre feet water currently assigned to SRP and that the utility would prefer to return the water rights over to the State of Arizona rather than the Navajo Nation.
Tim McLaughlin, NTEC board chair, began by stating that the Navajo leadership had requested that NTEC assess the feasibility and advisability of purchasing NGS and Kayenta. McLaughlin reported to the Council that NTEC had concluded that such an acquisition would be in the best interest of both the Navajo Nation and NTEC. He further explained that the Management Committee had directed the company to proceed with negotiations.
McLaughlin also took the opportunity to explain NTEC’s corporate status and purpose as a wholly-owned tribal entity.
NTEC was created under Navajo Law as a separate legal entity and was formed to manage and develop the Navajo Nations energy assets. The 22nd Navajo Nation Council gave NTEC full authorization and authority to pursue energy acquisitions. Most importantly the Navajo Nation wanted an entity that could assist the tribe in taking back control of its natural resources.
As McLaughlin stated, the proposed acquisition of NGS/Kayenta is precisely the type of opportunity NTEC was created to pursue.
During the session, a number of participants voiced their concern that SRP, as a regulated monopoly in the desert south west power grid, was intentionally trying to block any deal to prevent the entry of a significant competitor in the market.
Others voiced concern that SRP was protecting the 50,000-acre feet water currently assigned to the NGS plant and that the utility would prefer to return the water rights over to the State of Arizona rather than the Navajo Nation.
“We consistently reminded the Council the acquisition is too important to the Navajo people,” Moseley said. “Aside from breaking up Navajo families because the main bread winners would have to leave the Navajo Nation to look for jobs, closure of NGS would have a major economic impact to the Nation.
Estimates over another 10-year period of operation for NGS will yield an estimated economic impact of $2.6 billion to Northern Arizona, the Navajo Nation, and the Hopi Tribe.”
The meeting with the Navajo Nation Council ended with the Council proposing to have emergency legislation regarding to address several important issues: to support NTEC’s proposition to acquire the assets and to inform SRP that the Navajo Nation would not agree to the demand for an unlimited guarantee from the Nation, and to inform the U.S. Department of Interior that the Navajo Nation wishes to continue with acquiring both assets.
“We feel this vote is extremely important to the outcome of further negotiations,” Moseley added. “We are still open and optimistic that an agreement can be met between NTEC and the NGS owners and having the Navajo Council’s support would help our prospects to continuing creating a strong tribal business entity that responsibly manages energy assets of the Navajo Nation. We still believe the acquisition would make the Nation stronger for the long term.”