Utilities make payment and agree to modifications to supply agreement.
A group of large public utilities has paid $45 million to settle an arbitration brought by Navajo Transitional Energy Company (NTEC), a company owned by the Navajo Nation. The settlement resolves a contract dispute over coal supplied by the Navajo-owned mine for use at the Four Corners Power Plant located on tribal land in New Mexico and operated by Arizona Public Service Company.
NTEC claimed in the arbitration that the utilities improperly relied on an uncontrollable-forces, or force majeure, provision to excuse their failure to take or pay for the minimum coal tonnage as required by the parties’ coal supply agreement. In addition to resolving the amount due for the shortfall in coal purchased in the initial year of the parties’ 15-year agreement, the settlement includes payments by the utilities for minimum tonnage requirements for the second contract year and modifies the parties’ agreement going forward to the benefit of all parties. NTEC also acquired an ownership interest in the Four Corners Power Plant as part of the settlement.
“This settlement ensures that NTEC receives the payments it is entitled to receive under the coal supply agreement,” said attorney Craig Simon of Dallas-based Loewinsohn Flegle Deary Simon LLP, who represented NTEC. “It also eliminates uncertainties for the remainder of the term of the agreement, thus helping to ensure the economic benefits of the Navajo Mine to NTEC and the Navajo Nation.”
Navajo Mine employs approximately 350 predominantly Navajo Nation workers, and its operation generates significant revenue to the Navajo Nation.
The case is Navajo Transitional Energy Company v. Arizona Public Service Company et al., No. 01-17-0034505, before the American Arbitration Association.