Make NGS truly the Navajo Generating Station

By Dwight Witherspoon
Special to the Times

February 28, 2013

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A lthough the Navajo Generating Station carries the name of the Navajo people, its lease previously negotiated in 1968 and 1969 had significant flaws for the Navajo Nation.

First, five power companies along with the United States Bureau of Reclamation planned a way to generate cheap electricity and deliver water throughout the State of Arizona by using the Navajo Nation's resources. Second, the Navajo Nation was exploited for use of its land, water and coal with little benefit.

Therefore, it is critical for the Navajo Nation to re-negotiate Navajo Generating Station's use of Navajo land, water, and coal, including taxes and ownership so the Navajo Nation experiences maximum benefits.

The Generating Station is operated by Salt River Project (SRP), which has 21.7 percent ownership plus another 24.3 percent share designated to it by the U.S. Bureau of Reclamation.

This designation of ownership from the Bureau of Reclamation to SRP was intended for two purposes: 1) to attempt to alleviate a conflict of interest the bureau would have as a trustee for the Navajo Nation (yet it allowed, if not influenced, the Navajo Nation to waive claims to the Upper Colorado River Basin for the life of the Generating Station or 50 years to provide cheap energy), and 2) to establish a non-profit entity called the Central Arizona Project (CAP) to annually deliver 1.5 million acre-feet of cheap water throughout Arizona.

The energy designated for SRP from BOR is used to lift the water for transportation from the Lower Colorado River and to help repay BOR for the construction of the Central Arizona Project. CAP delivers 50 percent of the water for Phoenix and 80 percent of the water for Tucson, as well as water to the central Arizona tribes and to recharge the overdrawn aquifers in Phoenix Valley and Tucson.

NGS owners also include: Arizona Public Service Company at 14 percent; Department of Water and Power of the City of Los Angeles at 21.2 percent; Nevada Power Company at 11.3 percent; and Tucson Gas & Electric Company at 7.5 percent.

The planned exploitation of Navajo land, water, and coal to generate cheap electricity and deliver water throughout Arizona was negotiated in 1968 and 1969. Some 7,466 acres of Navajo land is used for the NGS including rights of way for train rail to deliver the Navajo coal to NGS, rights of way for power lines, coal ash placement, and other smaller land uses.

In 2010, the Navajo Nation received $608,000 for its land lease(s) to NGS. In the same year, the Navajo Nation received no taxes from NGS, but taxes were paid to the state of Arizona. The Navajo Nation did not receive any money for taxes until 2011.

The generating station is able to use 34,100 acre-feet of the 50,000 acre-feet of water apportioned to the state of Arizona from the Upper Colorado River Basin for a small delivery fee to the Bureau of Reclamation (which used to be $7 per acre-foot).

The Navajo Nation had to waive its claim to the 50,000 acre-feet and any claim above the 50,000 acre-feet apportioned to the state of Arizona for the life of the Generation Station or 50 years, whichever comes first, and 50 years will be in September 2019.

The Navajo Nation waiver by Resolution CD-108-68 allows for 34,100 acre-feet of the 50,000 to be used for NGS. The Navajo Nation was influenced by possible coal revenues from Peabody and NGS jobs. At the standard rate of $1,000 per acre-foot, the Navajo Nation is sacrificing $34.1 million per year.

Peabody Western Coal Company pays the Navajo Nation 12.5 cents per ton of the exclusively Navajo coal and 6.25 cents on the Navajo/Hopi joint coal. The PWCC pays $471 per acre-foot for lease of the Navajo Aquifer water (which is some of the best water in the country) and uses it for dust suppression, cleaning trucks/large mining equipment, and human use (including water-hauling for Navajos).

PWCC used to pay a little over $1,000 per acre-foot for use of Navajo Aquifer Water from the 10-year negotiated period of 1997 to 2007. The PWCC uses around 1,200 acre-feet per year and used to use much more to slurry coal to the Mohave Generation Station in Nevada, which was shut down in 2005.

Therefore, the Navajo Nation will be seeking to maximize its benefits from the generating station through lease(s), taxes, ownership, and water waiver in the re-negotiations.

Credit goes to the grassroots people and organizations for educating me on issues regarding the "Arizona" Generating Station and for suggesting that the Navajo Nation should push for ownership in NGS. When meeting with NGS representatives, the small benefits to the Navajo Nation were clearly drawn out and it was also clearly pointed out that there needs to be an ownership provision or the Nation will be advocating to charge the highest possible for the lease, taxes, and water waiver to rectify a poor 1969 agreement.

Only through a Navajo Nation ownership provision will the re-negotiation be a win-win for all; otherwise, the re-negotiation will be a win-lose for one and a loss for the other (meaning electricity and water rates will dramatically increase throughout Arizona). Only through increases in land lease, taxes, ownership, and ability to make claim to the water in 2019 can the Generating Station truly be called the "Navajo" Generating Station. Editor's note: Dwight Witherspoon is a member of the Navajo Nation Council representing Black Mesa, Forest Lake, Hard Rock, Piñon and Whippoorwill.

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