Good Afternoon Honorable Speaker Morgan, Honorable Vice ...

NTUA General Manager Walter W. Haase ‐ Report to Navajo Nation Council ‐ Summer Session 2010

Good

Afternoon

Honorable

Speaker

Morgan,

Honorable

Vice

President

Shelly,

distinguished Navajo Nation Council, staff, and visitors, my name is Walter Haase and I am the General Manager of the Navajo Tribal Utility Authority.

I am honored to meet with you today to provide an update of NTUA operations. Today’s report will highlight our recent achievements.

I am proud to report that in the past 12 months, NTUA has been awarded federal grants and secured loan approval totaling close to $195 Million dollars. This is quite an achievement and we would not have accomplished this without the support of the Navajo Nation leadership.

In grant funding, we were awarded $32.2 Million for the Broadband Initiative, $6.1 Million for Energy Efficiency, $4.9 Million for the Smart Grid project, and just over $700 thousand in training funds.

In federal appropriations, we received $3.8 Million for two Navajo Electrification Demonstration Projects, with an additional $1.7 Million when the new budget year begins in October. We were also given $13.3 Million from the 2010 Community Development Block Grant program.

In Loan approval, NTUA is eligible to receive up to $103 million from the Rural Utility Service. We are also eligible for $25 Million under Tribal Economic Development Bond program.

In addition, we have secured $4.1 Million in outside dollars under the New Market Tax Credit program.

In total, we have secured $195 Million for multi-utility expansion and improvements. With these funds, we are helping to build the Navajo Nation. 1


At this time, I would like to express a sincere thank you to this honorable legislative body and the President of the great Navajo Nation.

As leaders of the Navajo Nation, you granted the NTUA Management Board the authority to borrow up to $500 million dollars in bonding capacity. You also permitted the NTUA Management Board the authority to waive sovereign immunity on a case-by-case basis.

Because of the support of the NTUA legislation during the last session, we have been able to save the Navajo Nation and the Navajo people millions of dollars. Here’s what we have been able to do since the legislation was passed and signed.

We have introduced to the Navajo Nation - the New Market Tax Credit program, which helps revitalization efforts for low-income and impoverished communities across the country.

This program has allowed NTUA to bring in new outside dollars help to fund capital improvement projects. This is money that the NTUA does not have to pay back as long as it meets the construction obligation and maintains these projects as designed.

For example, we were able to construct two new electric substations in the Shiprock area. The construction cost $6.1 Million. As a result of this program, NTUA netted out approximately $900 thousand dollars from outside investors that we will never have to pay back.

The new substations significantly increased and reliable electric power capacity for the region – which was needed, especially for the proposed northern Navajo casino.

I would point out that before the limited wavier of sovereign immunity legislation, NTUA was required to reserve $1.5 Million in collateral. After the legislation was approved and signed – we are now in the process of getting $1.5 Million released. 2


Not long after the Shiprock project, we set the course to use the same funding method for the new Chinle District office and the Window Rock Waste Water Treatment Plant. By using the New Market Tax Credit program for these projects, NTUA expects to net out $4.1 Million, including saving $1.3 Million for the Chinle building and $1.9 Million for the waste water treatment plant.

Without the approved legislation, these projects would have cost NTUA an additional $4.1 Million and we would have had to delay them by several years.

Therefore, with the waiver, we can now expedite utility development so that our people can receive utility services faster, more efficiently and more economically.

These are a few examples of what we have been able to achieve with the passage of the limited waiver of sovereign immunity legislation. The New Markets Tax Credit program is a success and has saved millions and will continue to do so – directly benefitting the Navajo Nation and our people.

In the area of grant funding, I am proud to report NTUA was awarded approximately $62.4 Million dollars. This is a huge achievement, because this is the first time NTUA has ever been awarded these large multi-million dollar grants in one year.

I’ve mentioned we were awarded $32.2 Million for the Broadband Initiative and $6.1 Million for energy efficiency and $4.9 Million for Smart Grid projects.

In federal appropriations, we received $5.5 Million for three Navajo Electrification Demonstration Projects and $13.3 Million from the C-D-B-G program. We are currently in various stages of implementation to meet the requirements of the grants and appropriations.

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For our $103 Million RUS loan program, we have put together a four-year capital work plan. This is the first time in ten years NTUA has been awarded this funding source.

We are finalizing the contract and once that it is in place, we will apply the funding to improve and expand our electric infrastructure in areas throughout the Navajo Nation. The work will include upgrading our electric lines which date back to the 1960s and 70s.

For the first time, NTUA is eligible to receive close to $25 million of the $30 million dollar allocation for Tribal Economic Development Bonds that the Navajo Nation entities received. This funding source will allow us build additional electric and water lines, extend natural gas pipelines, and provide money for renewable energy projects.

With the federal grant and appropriations dollars, the RUS Loan, and the New Market Tax Credit program, NTUA has about $195 Million dollars work of work to do.

We are also trying to secure additional funding from the Bureau of Indian Affairs under its Loan Guarantee program. I have met with top BIA officials and the indication is that there is money is available. NTUA may be able to receive up to $50 Million. Once we hear official word, we will share the news.

Mr. Speaker and distinguished Navajo Nation Council members – NTUA has never in its 51 year history been able to secure grant and loan funding of this magnitude, especially in one year.

When I accepted the job as General Manager, I began exploring funding opportunities for NTUA. I will continue to make this my goal to help improve and build the Navajo Nation’s utility infrastructure. We work hard to fulfill the NTUA mission. When people turn on their utilities for the very first and express simple gratitude, we know that we have done our job. We know we still have a long journey ahead of us – as there are thousands of people still without basic utility services. With your continued support, we will do our best to meet and exceed expectations. As your partner, we are helping to build the Navajo Nation. 4


Now I would like to highlight – the current progress on some of our larger projects. Last Middle Mile – Wireless Broadband Project - $32.2 Million for a $46 Million Project We received $32.2 Million from the US Dept. of Commerce, which is the largest grant awarded in the nation. Currently, our electric line crews are preparing for installation. Electric lines are being upgraded for the 96 strand-fiber optic cable, featuring a 4G – LTE network.

There are several hurdles to cross before we begin actual construction. The first hurdle is complete, which required us to receive certification for our computer system. It was approved by the Department of Commerce.

The second hurdle we are tackling right now. We have a September First deadline to complete Environmental Assessments for the entire project. We have finished the EA’s for 500 miles of 550 miles. They have submitted, reviewed and approved by the Dept. of Commerce.

The EA’s for 53 of the 59 microwave towers associated with the project have been completed, submitted and approved. The EA for the proposed Data Center to be located in the Shiprock area has also been submitted, reviewed and approved.

Work on the entire EA process should be complete by mid-August and ready for Dept. of Commerce review and approval. They have given us a September First deadline, and we are well ahead of schedule.

The next major hurdle before construction is the Rights of Way acquisition for the entire project. We have submitted some Right of Way documents to the Navajo Nation. I cannot emphasize enough that we need the help of Navajo Nation departments to advance this process. The faster we finish the Right of Way portion, the sooner we can start building this project.

Once complete, this system will bring unlimited opportunities to children, help health care providers, and pave the way for Enhanced 911, which currently does not exist on the Navajo Nation.

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Energy Efficiency Grant - $6.1 Million NTUA, in conjunction with Navajo Nation’s Department of Telecommunications and Utilities, has selected vendors to perform energy audit and weatherization services on Navajo Nation-owned facilities, and other governmental facilities.

Work on Navajo Nation facilities is pending the results of a comprehensive asbestos audit and approval by Navajo Nation Department of Historical Preservation.

In another area, we have selected SunCarrier to design and build a two solar generation plants in conjunction with new NTUA buildings at Chinle and Crownpoint. Construction of the new - Energy Efficient - NTUA Chinle District office will be underway in mid-August. Completion is set for spring 2011.

NTUA has approved the purchase of 65 new Solar & Wind power systems, which for the first time will feature refrigeration. We will also be purchasing 200 refrigerators which will be compatible with our current solar & wind hybrid units. Deployment for both programs will begin next month.

We are also replacing standard home appliances with Energy Star appliances in tribal-owned buildings. We have already provided partial funding to Sandstone Housing to replace 41 refrigerators with the new Energy Star units.

NTUA is developing a new team to provide energy audit and weatherization services as an offering for its residential and commercial customers.

A Consumer Relations Specialist has been hired and assigned to the Navajo Nation Telecommunications and Utilities department to develop an information basic awareness campaign about Energy Efficiency and Conservation.

And finally, two contractors are working with the Navajo Nation Division of Natural Resources to develop a comprehensive Navajo Nation Energy Efficiency and Conservation Strategy and formation of a Navajo Nation Energy Office. 6


Smart Grid (ARRA Project) -- $4.9 Million. Total budget – $20.9 Million (all utilities) The contract with the Department of Energy is in place for our Smart Grid project. A meter and software vendor has been selected. A kick off meeting with internal staff will be held this week. The first installation will begin in the Fort Defiance district to change out electric, natural gas, and water meters. The change out will include installing equipment to transmit meter readings to Headquarters. Overall, the meter change-out for all of NTUA is expected to take a two and a half years complete as we go district by district.

In relation to the Smart Grid Initiative, NTUA has received a $700 training grant, which will allow NTUA to provide training and re-training for NTUA personnel who are being displaced by this initiative.

The training grant also allows us begin preparing for a renewable energy operation and maintenance work force needed to support our wind and solar generation initiatives.

NTUA is also partnering with Navajo Technical College to develop an electrical lineman school, which offers the Navajo Nation an opportunity to provide a long-term and sustainable training school for the NTUA and other regional utility organizations.

The electric construction charts for the Navajo Electrification Demonstration Project and Community Development Block Grant program have been handed to you.

In the NEDP 5, we have targeted 340 homes, and construction has been completed on 335. We may be adding 35 more projects depending on distance and cost. In NEDP 6, we have targeted 284 homes, and 76 have been completed. Currently there are 83 projects in construction. Work on NEDP-7 will get underway in October.

In the Community Development Block Grant for 2010, we have targeted 414 families and 240 miles of new electric line. The total budget is $13.3 Million with $631,000 from NTUA contribution. We have 40 projects, with 16 complete, serving 121 families. Currently there are five projects in construction. Again, the detailed maps are before you. We have also attached maps of current water and natural gas line construction projects. 7


RUS Loan – Four Year Work Plan Summary The four-year capital work plan projects were allocated over the four year time frame in an effort to distribute the expenditures and workload as evenly as possible. TEDB – Tribal Economic Development Bonds The Navajo Nation received $30 Million in Tribal Economic Development Bond allocation. Projects sponsored by NTUA were awarded $24.7 Million of this allocation. We will use a large portion for replacing water and gas “smart meters” to replace existing hand read meters throughout the Navajo Nation. The installation of these meters will allow NTUA to avoid sending a reader to the home each month and will save approximately $2.1 Million per year in operating costs. The employees currently reading these meters will be redeployed into other positions within NTUA. This action will also reduce gas costs, truck expenses and most importantly, will provide NTUA with a more reliable way to tell when a home has lost power, gas or water service. Presently, many homes are without phone service and the home owner has no way to let NTUA know when there is a problem Each of these projects specifically fulfills the mission of NTUA, reduces the operating costs of NTUA which in turn, allows NTUA to keep providing a high quality service at low rates for the members of the Navajo Nation.

Mr. Speaker, Honorable Navajo Nation Council Delegates, this is my update.

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