Tribe creates energy company to oversee potential mine purchase

By Noel Lyn Smith
Navajo Times

WINDOW ROCK, May 2, 2013

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The Navajo Nation Council passed legislation to create an energy company to oversee the purchase, ownership, and operation of Navajo Mine.

The Navajo Transitional Energy Company would oversee the merger of BHP Navajo Coal Co., which is owned by BHP Billiton New Mexico Coal, and the tribe for the benefit of negotiating the sale of the coal mine.

The tribe has not issued its final decision to buy the coal mine, which is located near Upper Fruitland, N.M., but the purchase price is estimated at about $85 million.

The Council approved creating the energy company in a vote of 17 in favor and 4 opposed during a special session Monday.

It is now waiting for President Ben Shelly's consideration and action to veto or to concur with the Council's decision.

Speaker Johnny Naize (Blue Gap-Tachee/Cottonwood-Tselani/Low Mountain/Many Farms/Nazlini), who sponsored the bill, said the energy company would be established as a limited liability company then transition into a Section 17 Corporation.

The company's manager would be responsible for signing documents to finalize the purchase in addition to signing the coal supply agreement, the mine management agreement, and the stockholders purchasing.

Craig Moyers, a member of the due diligence team that has been investigating the deal, said the deadline to decide on the purchase is July 1.

In order to have the transaction close by July 1, the application for the transfer of ownership must be submitted to the U.S. Office of Surface Mining this week, he said.

Otherwise, he said, the tribe would not meet the July 1 deadline, which is required by Arizona Public Service Co. to acquire the percentage held by Southern California Edison in the Four Corners Power Plant, which uses the coal for fuel.

Southern California Edison plans to sell its share of the plant to Arizona Public Service, which operates the power plant, because it must divest in all coal-fired power plants by 2016 under California rule.

Moyers also mentioned that if the purchase is not done, it could result in the closure of both the mine and the power plant in 2016.

"NTEC can be the bridge to the future," he said.

It is not an easy bridge to cross and delegates were not easily persuaded to approve the bill.

After reviewing the legislation, Katherine Benally (Chilchinbeto/Dennehotso/Kayenta) said she was concerned with the bill because it went beyond establishing the energy company.

In addition to managing the merger and the coal mine, the energy company would also oversee the tribe's future energy investments and projects, she said.

She advised the delegates to exercise caution when making their decision.

After hearing Benally's concern, Duane Tsinigine (Bodaway-Gap/Coppermine/K'ai'bii't—/LeChee/Red Lake-Tonalea) mentioned that the energy company would be replicating the duties of the Diné Power Authority.

Diné Power Authority was created in 1985 by the Council to develop the tribe's energy resources. It ceased operation in 2011.

With that in mind, Jonathan Nez (Navajo Mountain/Oljato/Shonto/Ts'ah bii Kin) issued a directive to delete Diné Power Authority from Navajo law and develop legislation to complete this action.

"We need to get rid of that," Nez said. "There's so much negative baggage on DPA and it needs to go away, it needs to go away quickly because of this new corporation that's being developed."

Lorenzo Curley (Houck/Klagetoh/Nahata Dziil/Tsé Si áni/Wide Ruins) reminded the Council that their decision is being watched by the Navajo people and at the national level.

He said he was in Washington, D.C. last week to meet with representatives about the reduction in federal funds to the tribe.

What puzzled them, he said, was the tribe is examining the possibility of purchasing Navajo Mine in addition to opening another casino but was requesting that federal funding not be cut.

"I think we are jumping the gun," Curley said. "Why can't we sit down and discuss whether this purchase is a good investment or not?"

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