Negotiations over NGS acquisition break down

WINDOW ROCK

Are the negations between Navajo Transitional Energy Company and the owners of Navajo Generating Station in trouble?

During Thursday’s Naabikiyati Committee meeting Speaker Seth Damon said that there was a “breakdown” in the talks between NTEC and the Salt River Project, one of the NGS owners, regarding NTEC possibly taking over the coal-fired power plant.

“There appears to be conflicting positions,” said Damon, who said the specifics could only be divulged in an executive session. “The negotiations at this time are not public and nondisclosure agreements have been signed not only by SRP but also NTEC, and the other four owners.”

SRP, which own 49 percent of NGS, and other owners, including Arizona Public Service Co., have been negotiating with NTEC about a possible handover since December 2018. And on Saturday NTEC, along with members of the 24th Navajo Nation Council, are to meet at Wild Horse Pass in Phoenix from 9 a.m. to noon for more talks.

Damon said that there are two hindrances on the purchase and they are:

• NTEC had always stated they would not come to the Nation and ask for the Nation to guarantee all liability and waivers.
• NTEC also indicated they won’t approach the Nation with this, because they believe acquiring NGS is a business transaction between the two companies, and the Nation doesn’t need to “entangle” itself in the deal.

But SRP has just recently indicated that the only way it will sell NGS to NTEC is if the Nation waives all claims against the owners, and provides full-unlimited financial guarantee regarding the financial liabilities and reclamation.

“This could involve all the Nation’s assets including the Permanent Trust Fund,” said Damon, “if the liability exceeds bond protection procured by NTEC, and/or the Nation, and the amount put into escrow by the owners.”

According to Damon, this provision is “non-negotiable” for SRP.

NTEC stated in a press release today it’s still open to active good-faith negotiations for the acquisition of NGS despite a statement from SRP to the contrary.

“NTEC remains firmly committed to continued negotiation with the Salt River Project and other utilities concerning a potential acquisition of Navajo Generating Station. NTEC has been working diligently and in good faith to develop an acquisition strategy for NGS that would not require the Navajo Nation to directly guaranty any liabilities associated with NGS,” stated the release.

“NTEC stands behind the commercially reasonable proposal it has made to SRP, which would achieve the twin objectives of keeping NGS and Kayenta Mine operational without requiring the Nation to assume liability related to past operations of NGS,” it continues. “NTEC left yesterday’s meeting having clearly stated its position to SRP and the other owners and optimistic that the parties will come to some agreement on the outstanding issues.”

Damon said that NTEC’s release was jumping the gun and said there are two different messages here. He said NTEC’s message is they’re still open “to good faith negations” while SRP has indicated “the window for negotiations, or doors, have probably closed.”

“What it comes down to is the breakdown of communication and also an understanding SRP is asking of the Nation something NTEC does not want the Nation to give up,” said Damon.

Navajo Department of Justice attorney April Quinn was in Phoenix attending other meetings and was unavailable for delegates to speak to about this issue during Naabikiyati.

She is the primary attorney that has been working on NGS and was at a Wednesday meeting between NTEC and NGS owners, after which she informed Damon about SRP’s demands. But delegates were able to go into executive session and speak to Quinn via conference call.

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