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Still Awaiting the Lease Agreement

Still Awaiting the Lease Agreement
May 08
14:48 2017

As far as one Arizona official sees it, it’s going to be all about the details.

Andy Tobin

Commissioner Andy Tobin of the Arizona Corporation Commission is aware that the Navajo Nation and the owners of the Navajo Generating Station are close to a lease agreement that would keep NGS open and operating until the end of 2019. However, he is still skeptical.

Tobin said that certainly two years is better than July first, which is the date NGS has been in danger of closing. That date still looms until the agreement is actually signed.

“The question is, what happens during that two-year period of time,” he asked. “We should have been here, at this two-year agreement, last year, if SRP was doing their math right. They should have had this conversation a year ago.”

Tobin agrees that if the two-year lease is signed and approved by the Navajo Nation Council, everyone will still have to play as if it’s the bottom of the 9th inning. Two years is only 24-months.

“This thing has started and stopped so many time it’s like being at the Indianapolis 500 and you have a lot of small crashes; they put the yellow flag up and you’re never quite sure when it will end.

That start and stop favors closure because the deadline nears.”

He believes the nearer we are to the deadline for getting the lease agreed upon and signed, the less the Navajos have with which to negotiate, and the better SRP’s position becomes.

“Remember, they’ve already made allocations for closure,” Tobin reminded us. “They already acquired a facility in Gila River for five hundred megawatts. So in their mind they have already left.”

And that is why Tobin really wants to see what is in the lease agreement Navajo President Begaye was touting last week. Meanwhile, he tells us there are many intricate parts that have to be placed under the microscope.

For one, there’s that purchase of the Gila River plant.

“SRP’s acquisition of that facility cost one hundred million dollars. Nobody’s adding that to the cost of coal versus natural gas and those schematics you keep seeing,” said Commissioner Tobin.

“SRP and others will have to buy a lot more of these natural gas burning facilities which is more expensive than the one hundred million because this (the Gila River facility) is an existing facility.”

He wonders what that will do to the cost of natural gas to consumers.

“And remember, if they close Navajo (NGS), that’s a lot of asset that we’ve been paying for that now goes where? Somebody’s going to claim that it’s an abandoned asset and they’ll want us to give break relief in order to pay for it? So there are a lot of moving parts here,” he concluded.

Meanwhile, the US Department of the Interior has scheduled some meetings around the state of Arizona in order to give the public a chance to express their views on the possible closing of the Navajo Generating Station.

May 15 1 p.m at the Heard Museum in Phoenix
May 17 4 p.m at the Page Community Center
May 18 4 p.m. at the community center in Kykotsmovi (Hopi)
May 19 9 a.m. at the Navajo Fairground Window Rock

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