The Navajo Nation has reached an agreement in extending a lease for a coal-power plant that would give the tribe a substantial boost in annual payments.
The proposed agreement, posted Friday on the tribe’s website for public comment, is for a 25-year lease that will expire in 2044 and will increase lease payments from $3 million a year to $45 million a year to the tribe.
The original lease allows the owners of the power plant to extend it without the approval of the Navajo Nation, but plant operator Salt River Project said it wanted to gain the tribe’s support before taking the lease extension to the U.S. Department of the Interior.
“It’s an agreement we think still makes economic sense for the plant and obviously also benefits the nation going forward,” SRP spokesman Scott Harelson said Saturday.
Navajo Nation spokesman Erny Zah said the tribe took advantage of the negotiations as a way to gain more favorable terms. He said the additional money the tribe would receive each year could be invested in finding other energy sources.
“This is probably the best deal we can muster right now,” he said.
The Navajo Nation Council has not scheduled a vote on the proposal. However, council committees can start considering the legislation starting Feb. 20.
The Interior Department also will have to sign off on the extension, following an environmental review that SRP said could take up to five years.
“It’s obviously very important. It’s very key,” Harelson said. “It’s one of the many things going on surrounding the plant.”
The federal government created the power plant to ensure a low-cost water supply for the Central Arizona Project, which delivers Colorado River water through a series of canals to Arizona’s major metropolitan areas. It also fuels the economies of the Navajo and Hopi tribes and fulfills water settlements with other American Indian tribes.
Original lease signed and became effective in fall of 1969. It is set to expire in December 2019.
Meanwhile, a recent proposal from Environmental Protection Agency said the power plant needs to reduce haze-causing nitrogen oxide emissions by 84 percent, or 28,500 tons per year within 10 years. EPA said its proposal will help improve air quality at national parks, like the Grand Canyon, and wilderness areas.
But the plant’s owners said upgrades could cost more than $1 billion and may be economically unfeasible if they cannot first secure the extension of the site lease with the Navajo Nation and other right-of-way agreements.
Environmentalists say the coal plant is dirty, want owners to transition off coal. They have praised EPA’s proposal on pollution controls, saying it will improve air quality and health.