The Navajo Council of Arizona has approved the extension of the lease for the 2,250 MW Navajo Generating Station (NGS) coal-fired power plant from 2019 till 2054, in exchange of cash and other concessions.
The three 750 MW units of the coal-fired power plants, commissioned between 1974 and 1976, were expected to shut down by the end of 2017, to allow decommissioning and site restoration operations estimated at two years, before the end of the lease on 23 December 2019. Competition from cheap gas-fired power generation had prompted the plant's owners - Salt River Project (SRP) with 42.9%, the US Bureau of Reclamation (24.3%), the Arizona Public Service CO. (14%), NV Energy (11.3%) and Tucson Electric Power (7.5%) - to stop the plant operations.
The 35-year lease extension will enable the power plant to continue operations until the end of the current lease (December 2019), will keep the option open for a new entity to take over the plant and will give more time for decommissioning. Under the terms of the agreement, SRP will pay US$110m in lease payments to the Navajo Council, a minimum of US$39m in coal royalties over 2018 and 2019 and US$18.1m over 3 years starting from 2020.
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