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NTEC in negotiations to take over NGS

NTEC in negotiations to take over NGS

By Krista Allen
Special to the Times

LECHEE and PAGE, Ariz.

Officials of the Navajo Transitional Energy Company said Friday the company’s board unanimously approved continuing negotiations to take over the troubled Navajo Generating Station and the Kayenta Coal Mine.

NTEC CEO Clark Moseley said there is a clear and beneficial path forward to acquire and operate both NGS in LeChee and Peabody Western Coal Company’s Kayenta Mine on Dziłyíjiin, 75.7 miles away, where low-sulfur coal for the plant is mined.

“This is a business decision about a business transaction for NTEC,” said Tim McLaughlin, NTEC board chair, in a statement to the Navajo Times. “We are going to thoroughly evaluate plans and make sound business decisions that are beneficial for NTEC and the Navajo Nation.”

The plant’s five owners – Arizona Public Service, Bureau of Reclamation, NV Energy, Salt River Project, and Tucson Electric Power – voted in February 2017 to close the 2,250-megawatt power plant, citing competition from natural gas.

The plant’s fate might have been sealed if not for the federal government and the Navajo and the Hopi tribes. The Bureau of Reclamation owns 24.3 percent of the plant. Outgoing Interior Secretary Ryan Zinke last year made personal appeals to keep it open.

But with no companies willing to take the risk, Diné leaders said on Nov. 2, 2018, they want the tribe to take control of the plant, saying they requested NTEC to negotiate a deal with the plant and the mine owners, allowing for continued operations and preserving jobs and revenue for both tribes.

NTEC since then has put in place a technical team made up of energy experts to work with Moseley and NTEC management on the deal, according to Erny Zah, NTEC spokesman.

Mosely said continuing negotiations comply with NTEC’s operating agreement to improve the economic, financial, and the tax and revenue interest of the Navajo Nation and its people.

Moseley says NTEC will continue negotiations with SRP and Peabody Energy, and conduct further feasibility studies and due diligence.

Outgoing Speaker LoRenzo Bates said NTEC is currently conducting due diligence to evaluate the many moving pieces to determine the feasibility of a possible acquisition of NGS by NTEC.

“The members of the Council recently approved a policy statement supporting the acquisition of NGS,” Bates told the Times on Friday afternoon, “but it will ultimately be the decision of the … 24th Navajo Nation Council to decide on the future of NGS.”

Bates says NTEC will have to carefully examine every aspect of every detail as negotiations proceed, as it takes only a minor issue to either make or break a potential agreement.

“It’s also very important to clarify that legislation petitioning for NTEC to become a Section 17 corporation has no relation to NGS,” Bates emphasized. “Since NTEC was first created years ago, Section 17 status has been a goal of their management.”

Moseley confirmed that becoming Section 17 corporation is unrelated to NGS as it has been in the works for years. Section 17 status would confer a federal charter on the corporation and allow it certain tax advantages and more autonomy.

A legislation allowing the tribe to petition the U.S. Secretary of the Interior to review and approve federal charter of incorporation for NTEC went before the tribal council late last month. Delegate Benjamin Bennett (Crystal/Fort Defiance/Red Lake/Sawmill), the bill’s sponsor, said he withdrew his sponsorship because there were not enough votes to pass it. The legislation had stirred protests among environmentalists who suspected it was the first step toward NTEC taking over the plant, which they oppose.

Whether NTEC becomes a Section 17 corporation or not, it will have no impact on the possible acquisition of NGS, according to Bates.

“If the new … Council decides not to support the NGS acquisition, they will have to address the lost annual revenue of … $30 to $40 million, and the hundreds of lost jobs,” Bates added. “As I’ve said before, if NGS goes away then the water permits for the 50,000-acre feet of water used for NGS goes back to the state of Arizona, which will make it very difficult for the water claims of the Navajo Nation.”

During the Dec. 27 Naabik’íyáti’ meeting, Moseley said the best way to move forward is to have a vertically integrated company and that such a company could operate through 2029.

Moseley said the decision about moving forward to implement plans to continue plant operations is not being taken lightly.

“NTEC is not going lightly into this venture, I assure you that,” Moseley added. “We do have the expertise in coal mining and a prudent track record of managing a contract miner, and we are partial owners of Four Corners Power Plant.”

No agreements or contracts have been signed, according to Zah.

Peabody spokeswoman Charlene Murdock did not immediately respond to a request for comment.

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