UPDATE 1-Nikola eyes power-supply deal to produce hydrogen in Arizona

(Adds deal details, shares)

Dec 16 (Reuters) - Nikola Corp said it was working on a contract to buy electricity at a lower price in Arizona for producing hydrogen to power its fuel cell vehicles.

The electric and hydrogen fuel cell vehicle company and Arizona Public Service will submit a joint proposal to the Arizona Corporation Commission for approval, Nikola said.

Nikola has repeatedly said that it remained confident of signing a deal by year end with an energy partner to build hydrogen-refueling stations.

Shares of Nikola rose nearly 3% in afternoon trading.

The company had come under investor scrutiny after short-seller Hindenburg Research released a scathing report in September, calling Nikola a “fraud” and saying its founder and former executive chairman, Trevor Milton, had made false claims about the company’s proprietary technology.

Nikola has denied those allegations.

Reporting by Munsif Vengattil and Eva Mathews in Bengaluru; Editing by Anil D’Silva