FARMINGTON — The Navajo Nation and BHP Billiton, owner of Navajo Mine, are close to a deal that would transfer ownership of the coal mine to the tribe, but both sides are waiting for the operator of Four Corners Power Plant to sign a coal supply agreement with the mine.
That hinges on deregulation discussions that are ongoing in the Arizona Corporation Commission, which regulates electric utilities in that state. Plant operator Arizona Public Service Co., a Phoenix-based utility, said it wants some regulatory certainty from the commission before it enters into a long-term coal deal. The current fuel agreement expires in 2016.
"The commission has not established any kind of timetable for considering deregulation," said Damon Gross, an APS spokesman. "Of course we will not be able to execute a new fuel agreement that commits Four Corners beyond 2016 until clarity is provided for the Arizona energy market long-term."
If that obstacle is cleared, BHP Billiton and Navajo Nation officials said they're on the verge of closing a deal to sell the coal mine to the tribe. That would leave the tribe itself operating the coal mine through a wholly owned tribal business entity.
"We have made great progress with these agreements and have them in nearly final form," Pat Risner, asset president of BHP Billiton's New Mexico Coal division, said Monday. "I don't see any problem completing those if we get the right outcome from the ACC."
Representatives of the Arizona regulator could not be reached for comment Monday.
Navajo Mine, located about 19 miles southwest of Farmington in Fruitland, is the sole coal supplier of Four Corners, one of the West's largest coal-fired plants. The mine produces 8 million to 8.5 million tons of coal per year. Demand is expected to drop to 5.75 million to 6 million tons per year after Arizona Public Service Co. shuts down the three oldest stacks as part of an agreement with the U.S. Environmental Protection Agency.
Erny Zah, spokesman for Navajo Nation President Ben Shelly, said the tribe and BHP Billiton still must come to an agreement on the financial terms.
"We're still trying to finalize the last step, which is getting the purchase price negotiated," Zah said.
BHP Billiton, based in Australia, operates both Navajo Mine and nearby San Juan Mine.
Backers of the deal were encouraged by the Navajo Council's vote in April that created a tribal company -- the Navajo Transitional Energy Co. -- to operate the mine.
Zah said the Navajo president's office wants to make sure the deal is ready to go before sending it to the Navajo Council for approval.
"This is what we don't want to happen: We don't want the contract agreement to go to Navajo Council and have them scrutinize it and hold it up longer," he said.
Some question whether the council has enough information to make an informed decision. Lori Goodman, with the Navajo environmental group Diné Care, said council delegates have been told little by the team investigating the purchase.
"Ben Shelly really needs to let his people in on what the due diligence team has come up with," she said.
Goodman described Shelly as "hell-bent on buying" Navajo Mine.
"Apparently he believes it's a good investment," she said. "That's not a good buy ... there are just too many liabilities."
Backers of the deal point to jobs. The mine employs 430 workers in generally high-paying positions, and 86 percent of employees are Native American, predominantly Navajo.