NTEC's plant/mine acquisition plan puts Navajo Nation at serious financial risk
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Key Findings
While NTEC has given a slide-show presentation to the Navajo Nation Council on its proposal to acquire Navajo Generating Station and Kayenta Mine, it has yet to actually publish a detailed and comprehensive business plan for this venture.
Regardless of whether NTEC can sell power into the market, it is unlikely that it can produce reliable power at NGS at low enough prices to sell that power into the market at a profit—and not a loss.
NTEC’s proposal focuses on the reductions it claims it could achieve from the SRP 2017 Forecast while ignoring actual plant generation costs and TEP’s 2018 forecast of NGS’s total cost of operations, both of which suggest that future NGS generation costs will be significantly higher than NTEC assumes it can achieve. This is a critical flaw in the NTEC proposal.
Executive Summary
The Navajo Transitional Energy Company (NTEC) is proposing to acquire the coalfired Navajo Generating Station (NGS) and its fuel source Kayenta Mine and to continue to operate them after December 2019.
While NTEC has done public presentations roughly outlining its plan for acquisition and subsequent operation of the plant and mine, it has offered little in the way of substantial detail on how it would make the venture profitable.
The plan, such as it is, is rooted largely in speculation and unsupported claims.
The main public information that NTEC has offered on its proposal is a 14-page slide show, “NTEC Strategy for the Acquisition & Operation of Navajo Generating Station and the Kayenta Mine,” presented to the Navajo Nation Council on Feb. 13.
An IEEFA analysis of NTEC’s presentation finds the plan inherently flawed and concludes that it represents an extremely risky gamble.
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Press release: IEEFA report: Business case for acquiring failing plant and Kayenta mine poses ‘serious financial risk’ to Navajo Nation
