Navajos approve lease extension for New Mexico power plant

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Albuquerque, New Mexico (AP) March 2011

The president of the Navajo Nation signed an agreement with an Arizona utility to extend the lease for a coal-fired power plant on tribal land in northwestern New Mexico, the tribe announced recently.

President Ben Shelly’s approval of the agreement with Arizona Public Service Co. came three weeks after the Tribal Council voted in favor of extending the lease for the Four Corners Power Plant until 2041.

The current lease expires in 2016, but the utility will begin making annual payments to the tribe of more than $7 million starting this summer. The payments will be adjusted to reflect inflation.

In signing the lease, Shelly pointed to the plant’s economic impact on his tribe.

In addition to the annual lease payments, Shelly said the plant generates about $65 million in taxes for the tribe and $100 million in payroll. More than 700 Navajos work at the plant and the adjacent coal mine that feeds it.

“This is a step in the right direction, and it’s a business decision we did not take lightly,” Shelly said in a statement.

Damon Gross, a spokesman for Arizona Public Service, said the utility was pleased that Shelly signed the lease extension. He called it an important step in ensuring the long-term viability of the plant and in preserving a reliable source of revenue for the tribe.

Had the Navajo Nation not approved the lease extension, the utility had said it would have to shutter the plant.

The lease marks the first step in the utility’s plan to close three of the plant’s generating units and seek majority ownership of the remaining two from Southern California Edison. Gross said the utility is also in discussions to secure a new coal contract as it works to gain state and federal regulatory approval for purchasing Southern California Edison’s share in the plant.

“This is a long process and we’re in the earliest stages of it,” he said.

The 2,040-megawatt Four Corners Power Plant is one of the largest coal-fired generating stations in the United States. It provides electricity to about 300,000 households in New Mexico, Arizona, California and Texas.

The plant is also the largest single source of nitrogen oxide emissions in the country and has been under increased scrutiny over other emissions as well.

The U.S. Environmental Protection Agency has proposed cutting nitrogen oxides at the plant by 87 percent under a regional haze rule but has not developed carbon dioxide regulations.

The Navajo Nation EPA regulates sulfur dioxide emissions from the plant at a level consistent with federal standards, and tribal officials have said they would roll any decision federal regulators make on other emissions into the plant’s operating permit.

As part of the lease extension, the plant is required to have the best available technology to reduce sulfur oxide and carbon dioxide emissions – an amendment that was added over tribal lawmakers’ concerns about pollution.