Navajo Nation to consider an extension of lease for NGS

The Navajo Nation and the owners of the Navajo Generating Station (NGS) — one of the largest and most important sources of reliable electricity in the Southwest — have developed a tentative agreement for an amendment to the NGS site lease that could allow its owners to operate the plant until 2044 and would provide the grants of rights of way and easements for the plant, railroad, transmission and water lines.

NGS lease background

NGS is located on a site that is leased from the Navajo Nation. The initial term of the lease expires on Dec. 23, 2019. In addition to the lease, several rights-of-way are issued by federal agencies for additional facilities (i.e., railroad, transmission, ash disposal area, etc.). These expire at around the same time. All agreements need to be extended if the plant is to continue to operate until 2044.

The existing lease includes provisions for an extension subject to changes in certain economic considerations. On behalf of the NGS participants, SRP has initiated negotiations with the Navajo Nation on lease terms for the plant site, associated facilities, and transmission. The negotiations were initiated well in advance of 2019 in recognition that they would most likely require a significant amount of time and effort, and that the negotiated lease amendments would need to be included in the review that is required under the National Environmental Policy Act (NEPA) and Endangered Species Act (ESA) compliance processes.

The first lease negotiating meeting was held on Aug. 24, 2010. Since that time, over 20 additional meetings have been held. Once an agreement is reached between SRP and the Navajo Nation negotiating team, approval must be obtained from all the NGS participants, as well as the Navajo Nation Council and President. The lease then needs to be approved by the Secretary of Interior, which cannot be done until the NEPA and ESA compliance processes are complete.