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Navajo nation OKs coal plant lease extension

27 Jun 2017 20:22 (+01:00 GMT)
Navajo nation OKs coal plant lease extension

Washington, 27 June (Argus) — Tribal leaders have approved legislation to extend the lease on the largest coal-fired power plant in the western US beyond 2020.

The Navajo Nation Council in Arizona voted 18-4 yesterday to extend the Navajo generating station's lease from 23 December 2019 through 22 December 2054 in exchange for cash and other concessions.

That means a tentative agreement reached last month by the Navajo nation and utility owners is all but complete.

The coal plant will still end operations as planned on 23 December 2019. But the 35-year replacement lease will give operator the Salt River Project (SRP) time to decommission the plant and carry out required long-term environmental monitoring. It will also provide the Navajo Nation with a stable source of revenue as its economy is expected to be disrupted by the loss of $30mn/yr in revenue and 400 jobs from the plant.

SRP said the language of some amendments to the measure still needs to be reconciled before the agreement can be finalized. It declined to provide specifics, but a representative for plant co-owner the US Bureau of Reclamation called the negotiations a formality.

SRP said utility owners were hopeful the remaining details could be worked out before 1 July, which is the date by which they would have to begin decommissioning the plant if an agreement is not reached.

The bill, introduced by Council speaker LoRenzo Bates on 24 May, calls for the Navajo plant to be decommissioned between 23 December 2019 and 23 December 2024. Navajo nation president Russell Begaye and some other parties would like to keep the plant open beyond 2019, but utility owners voted in February to retire the plant by the end of 2019.

SRP owns the plant along with the US Bureau of Reclamation and utilities Arizona Public Service, Tucson Electric Power, and NV Energy.

Under the agreement, the owners will pay $110mn to the Navajo plus $18.1mn over three years beginning in 2020 to share the cost-savings the lessees expect to realize as a result of not having to demolish the plant. They also will make about $1.66mn in other payments tied to costs and savings over the term of the lease.

The replacement lease would also allow for the ongoing operation of the Navajo nation's electric transmission system, SRP said.

SRP said it was pleased by the decision. "This agreement provides meaningful benefits for all involved and creates a path forward during this challenging transition." The company added it plans to let all employees at the Navajo station transfer to other facilities when the plant is closed, if they choose to do so.

The Navajo Council did not respond to a request for comment.

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