DPA seeks $2 million in funds

Copyright © 2009
Gallup Independent
By Kathy Helms
Diné Bureau

WINDOW ROCK — Diné Power Authority is seeking a supplemental appropriation of $2 million to fund continued development of the Navajo Transmission Project and other energy projects, as well as for operating costs.

The resolution was not considered Tuesday by the Budget and Finance Committee due to lack of a sponsor, but squeaked by the Economic Development Committee, 3-2, on Feb. 2.

Though the heading on the resolution does not specify a funding source, the body of the resolution calls for the $2 million to come from the Unreserved, Undesignated Fund Balance, which currently has a zero balance.

Martin Ashley of the Office of the Controller reviewed the resolution and noted in his Nov. 26, 2008, memorandum that the resolution does not specify a funding source. He pointed out that the Undesignated Reserve had no money in it available for appropriations when it should contain 10 percent of the previous Fiscal Year appropriation to protect against emergencies such as revenue shortfalls.

Ashley said the Office of the Controller concurred with comments made by the Office of Management and Budget, which noted that attendance of about 52 meetings as justification for spending the $2 million did not adequately justify the expenditure.

Dominic Beyal of OMB said the resolution states that funds would be used to advance the remaining tasks associated with the completion and development of the Navajo Transmission Project and the Desert Rock Energy Project and to initiate wind, solar and other viable energy projects. Beyal questioned what those tasks would be, other than meetings, and suggested that $200,000 might be a more appropriate number.

“DPA should do better than to simply report that they will be attending numerous meetings worth $2 million,” he said.

As of November 2008, DPA had received more than $18.2 million from the general fund since Fiscal Year 1990.

“Further, for the past three years, DPA has stated in each of those last three years that the funding would be the last time that it will need funds from the Navajo Nation for its activities. DPA should become fiscally solvent or the purpose of DPA should be revisited,” Beyal said.

In an Oct. 16, 2008, letter to Navajo Nation Council Speaker Lawrence T. Morgan, DPA General Manager Steven Begay said DPA is working to take advantage of an investment opportunity for the Navajo Nation but needs to set up an administrative procedure, financial policy and appropriate legislation in order for DPA and the Navajo Nation to be able to purchase an equity ownership interest in the coal-fired plant and transmission projects.

“Equity ownership will provide dividend revenue to the Nation in addition to the tax, royalty and other revenues,” Begay said, adding that DPA believes the funding is paramount to complete the energy projects and not lose the investment that has already been made by the Nation.

By some estimates, an equity ownership in the $3 billion Desert Rock project would cost the Nation approximately $1 billion.

Begay said Desert Rock and the transmission project will provide the Nation more than $50 million per year in the form of taxes, water fees, land rental, right-of-way fees, and mining-related revenues once Desert Rock is fully operational.

“Those revenues will occur only if we build the Desert Rock energy facility to produce electricity, and build the first segment of the NTP to deliver the power to the electricity wholesale market and to help improve the quality of life on Navajo lands,” Begay said.

U.S. Environmental Protection Agency issued a Prevention of Significant Deterioration permit for Desert Rock on July 31, 2008, which is currently under appeal.

The final Environmental Impact Statement for Desert Rock is under review by the Bureau of Indian Affairs and other federal agencies and is expected to be completed this spring. If challenged, it would go through a similar appeal process under BIA.