August 2014

The Navajo Nation’s Energy Landscape

Coal, Oil, Gas plus Some Wind and Solar


Despite coal’s decreasing competitiveness and federal policies that are moving quickly to curb energy-industry pollution, Navajo Nation government leaders have continued to bet on coal, along with oil and natural gas. Coal and the power plants it feeds account for a significant portion of the tribe’s general fund. In a place where 40 percent of households remain without electricity, coal is a cheap, readily available resource that still warms Navajo homes and provides jobs.

Last year, Navajo Transitional Energy Co. LLC, a company owned by the Navajo Nation, finalized a deal to purchase the Navajo Mine near Farmington, New Mexico, from BHP Billiton for $85 million. The Navajos are paying for the mine with profits from the mine. The tribe expects to make $100 million a year in taxes and royalties from the mine and power plant. Coal sales are expected to bring in $1 billion through 2031. The Farmington Daily Times reported that no public meetings were held prior to the deal, which, despite some opposition, included an agreement that all of BHP Billiton’s past, present and future liabilities for Navajo Mine will be waived.

Navajo Mine employs more than 400 people. It is the sole coal supplier to the nearby Four Corners Power Plant, which has retired three of its five units to comply with federal clean-air standards. In 2013, the Navajo Nation Council approved a lease extension and rate hike for the largest coal-fired power plant in the West, the Navajo Generating Station (NGS) near Page, Ariz. The Salt River Project uses the electricity that the NGS generates to deliver water to Arizona’s most populated areas through a series of canals. A final EPA rule announced last month means that the NGS will produce one-third less energy by 2020 and cease operations by 2044. The Navajo Nation will ultimately receive less revenue from the coal that feeds the plant.

Oil and Gas Leases

In February 2014, New Mexico Gov. Susana Martínez announced an agreement between state and federal officials to speed development of an oil- and liquid gas-rich zone in the Mancos Shale, a hard rock layer in the San Juan Basin that will be made productive using fracking and horizontal drilling. The accord authorizes San Juan College to expedite land-lease agreements between energy firms and Navajo families. Navajos in New Mexico had already signed about 280 leases at the time of the announcement. The Bureau of Indian Affairs (BIA) is processing the leases, which will bring jobs and wealth to many poor families.

Renewable Energy

Proposals for coal export terminals in the United States are being canceled as projected demand for imported coal in pollution-choked China decreases. In the past two years, the two largest U.S. coal companies, Peabody and Arch, have reportedly lost more than 75 percent of their value. Over the same period, the price of solar panels has dropped about 60 percent, and utilities around the country are now buying wind power at prices lower than coal or natural gas.

Navajo Transitional Energy is required to invest 10 percent of its net income in research and renewable energy projects. Community groups such as Black Mesa Water Coalition and Diné CARE, as well as many Diné residents, think that, in a region with existing transmission infrastructure, the way to build lasting jobs and revenues that can replace the ebbing coal era is to seize the window of opportunity to develop renewables. Aside from benefiting human health from producing power without air pollution, clean-energy advocates say that large quantities of Colorado River water now used in coal and other fossil fuel production could be redirected to improving Navajo agriculture.

Wind Farms and Solar Projects

Multiple studies have found tremendous potential on the Navajo Nation for both wind and solar. The Navajo Tribal Utility Authority (NTUA) has a deal in place with the Salt River Project—one of Arizona’s largest utilities—to buy energy from the tribe’s wind farm at Big Boquillas Ranch near Seligman, Ariz. The wind farm is projected to generate 200 megawatts (MW) in its second phase. According to the Navajo Times, the project is the first of its kind to be majority-owned by any tribe or tribal enterprise. The Navajos are also planning large-scale wind farms on Gray Mountain and Black Mesa and are developing commercial solar projects sited close to existing transmission corridors and the Navajo Transmission Project, a large transmission line that will stretch 470 miles, from New Mexico to Nevada.

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