Even though the companies do not have to pay more according to the original lease, the increase was in everybody’s best interests, company and tribal officials said.
The coal-fired powerplant lease was set at about $2.6 million a year, about $608,000 for the annual payment and $2 million in taxes paid to the tribe.
The companies may now agree to a deal that would cost them about $42 million a year starting in 2019. Company representatives would not elaborate on the breakdown between the annual payment and the taxes or the reasons for the increase.
The tribe would bring in more than $1 billion total over the period of the proposed 25-year lease.
“It’s one of the largest deals — if not the largest deal — that’s ever come before us,” said Erny Zah, spokesman for the Office of the President and Vice President of the Navajo Nation, on Wednesday.
Navajo Nation President Ben Shelly expressed his support Saturday in a press release, but the Navajo Nation Council has yet to approve the proposal. A majority vote by the council is needed to approve legislation that would OK the proposal.
One of the reasons that Shelly supports the deal is that it would secure jobs for many of the locals, he said in a press release.
The six companies have agreed to the hefty hike despite the fact that a provision in the original 1969 lease does not require it. They need neither the president’s approval nor the council’s approval, officials said.
Scott Harelson, spokesman for Salt River Project, the company that manages plant operations, did not say whether the tribe or the companies proposed the payment amount, only that both parties spent much time deliberating it.
Negotiations on the lease payment have been going on for two-and-a-half years.
He also said that the companies felt it would be counterproductive to exclude tribal officials from the process.
The proposed lease would end in 2044. The companies do not feel that between them they would be hurt by the increase in the annual payment, Harelson said.
“It was time for that lease to be updated to reflect today’s economic reality,” he said Tuesday. “I’ve pretty much explained as much as I can explain.”
Representatives from the companies and an eight-member negotiation team from the tribe came up with the proposal.
Some of the council members were upset that they were excluded from the process. Shelly said he excluded them, as well as himself and the vice president, to keep politics out of the process, according to Erny Zah, spokesman for the Office of the President and Vice President of the Navajo Nation.
The council is expected to review and possibly vote on legislation regarding the proposal this week.
“The details of the contract are still confidential,” Harelson said.
Salt River Project owns 21.7 percent of the plant, second only to the U.S. Bureau of Reclamation, which owns about 24.3 percent.
The plant has four other owners — the Los Angeles Department of Water and Power, Arizona Public Service Company, Nevada Energy and Tucson Electric Power.
The plant began supplying much of the Southwest with power in the 1970s, after the original lease was signed in 1969.
It currently supplies power to customers in Arizona, Nevada and California. The plant is located in Page, Ariz.
The plant and Kayenta Mine — sole coal supplier for the plant — employ about 900 people. Eighty-three percent are Native American, and most are Navajo.
Public comment on the legislation opened late Friday and closed Wednesday. The legislation can be viewed at http://www.navajonationcouncil.org.
Jenny Kane may be contacted at jkane@daily-times.com; 564-4636. Follow her on Twitter @Jenny_Kane.