NTEC buys portion of Four Corners Power Plant
FARMINGTON — The Navajo Transitional Energy Co. has acquired a 7 percent stake in units 4 and 5 of the Four Corners Power Plant in a purchase from 4C Acquisition LLC, an affiliate of Arizona Public Service Co., the power plant's majority owner.
NTEC made the announcement in a press release today.
The release stated the agreement was executed last week and the transaction closed on July 2.
Financial website 4-traders.com reported NTEC made the purchase for $70 million and will pay the purchase price over four years.
Completion of the purchase is subject to approval by the Federal Energy Regulatory Commission, the website reported.
The 7 percent interest in units 4 and 5 had been held by El Paso Electric Co., which sold the share to APS in 2016.
El Paso Electric made the decision to divest its energy production due to concerns about the environmental impact of coal-produced energy.
This is the first time a tribal enterprise has become an owner of a coal-fired power plant, which receives coal solely from NTEC-owned Navajo Mine.
NTEC spokesman Erny Zah said no financial resources were taken from the Navajo Nation for the purchase.
"One of our primary goals has been to manage the assets of NTEC responsibly to allow for growth and prosperity as a Navajo Nation owned enterprise. This news is great for NTEC and we look forward to maximizing the benefits of this milestone," NTEC CEO Clark Moseley said in the release.
The release stated at the same time as the purchase, the NTEC and APS amended and restated the coal supply agreement.
Zah said details about the amended coal supply agreement are confidential.
In connection to the transaction, NTEC was able to pay off the remaining balance of its $115 million term loan from KeyBank in August 2016.
Zah said the remaining balance is confidential but NTEC paid off the loan before securing finances for the power plant purchase.
NTEC's board of directors approved the tribal enterprise in December 2015 to exercise the option to become a partial owner, an option that was included in the coal sales agreement with APS.
Navajo Nation President Russell Begaye and Speaker LoRenzo Bates commended the purchase and the work executed by NTEC in separate statements to The Farmington Daily Times.
"In the creation of NTEC, the Navajo Nation government created a corporate veil that separated the government from NTEC's operations. This was done to protect the Navajo Nation from any liability by NTEC whether by accident or lawsuit," Begaye said.
"As they increase operations, they are able to generate more royalties and tax dollars that, in turn are used by the Navajo Nation," the president said.
Bates said the tribe is now a player in all facets of the coal industry.
"This purchase represents a broad step forward for the Navajo Nation by ensuring sovereign control of our natural resources, promoting a self-sustaining economic future for our people, diversifying our overall energy portfolio and strengthening our Navajo job base," Bates said.
One environmental group questioned NTEC's decision to buy.
Lori Goodman, a member of Diné Citizens Against Ruining Our Environment, said APS conned the tribe into the purchase.
"This is a horrible deal for the Navajo Nation," Goodman said adding the power plant faces pending closure due to age and tightened environmental regulations.
Among the concerns is NTEC being stuck with future expenses, such as upgrades, while other companies continue to leave coal for renewable energy.
"The Navajo public deserves to get information about the deal and its cost," Goodman said.
Noel Lyn Smith covers the Navajo Nation for The Daily Times. She can be reached at 505-564-4636 or by email at firstname.lastname@example.org.