National Pollution Prevention Roundtable
Tribal Workgroup Conference Call
Tuesday October 21, 2008 at 2 pm EDT, 1 pm CDT, Noon MDT, 11am PDT
- Introductions - 26 participants on the call (partial list)
- Sara Johnson: NH Dept of Environmental Services/NPPR Board Liaison
- Shamieka Ross: Delaware Nation
- Dena Hartzell: Iowa Tribe of Oklahoma
- Tod LeGarde: Grand Portage Reservation
- Lizana Pierce: Dept. of Energy's Tribal Energy Program
- Myla Kelly: Peaks to Prairies
- Dana DeVries: Morongo Reservation
- Kevin Greenleaf: Kootenai Tribe of Idaho
- Char Beesley: Keweenaw Bay Indian Community
- Katie Kruse: Keweenaw Bay Indian Community
- Joshua Simmons: Santa Ynez Band of Chumash Indians
- Michelle Baker: EPA Region IX
- Charles RedDoor: EPA HQ
- Patricia Young: Tetlin Village Council
- Kermit Snow: Ft. Belknap Indian Community
- Scott Hansen: Mille Lacs Band of Ojibwe Indians
- Andy Boyd: Mille Lacs Band of Ojibwe Indians
- Dolly Tong: EPA Region V
- Bill Patton: EPA Region IV
- David Jaber: Indigenous Permaculture
Guest Speaker
Michael Connolly, Campo Kumeyaay Nation. Mike is the former Treasurer for Campo, was the first Director of the Campo EPA, and is President of Laguna Resource Services, Inc., an environmental consulting firm.Mike Connolly's contact info: tipaay@aol.com ; phone 619-478-2177
Campo Kumeyaay Nation is located in SE San Diego County. The Kumeyaay Wind Farm is a joint economic development project between General Electric and Babcock and Brown. The wind farm annually produces power sufficient for about 30,000 homes and saves approximately 110,000 tons a year in greenhouse gas emissions, compared with equivalent fossil fuel generation. The 25 power-generating turbines located on Campo tribal lands are maintained under contract with Enxco, Inc. Kennetec Wind Power wanted to put this up decades ago.
History
There are many different aspects to wind energy projects. In this case there are the technical and economic aspects of the 50 MW project, upcoming possibilities with carbon trading, and environmental justice issues.The U.S. has gone through 3 pushes for renewable energies – in the 70s after the OPEC embargo, in the early 90s, and the present push. In the early 90s there was a jump in grant opportunities, new research opportunities, and tax incentives, however as gas prices started dropping the push for renewables dropped, and many companies collapsed in the mid-'90s. We're in the midst of the latest surge in renewable energy technologies –- lots of tax incentives currently available, but it is hard to say how long this surge will last, particularly in light of the current economic crisis.
It was in the early 90s that Kenetec Wind Power approached Campo about the potential for a wind energy facility. Kenetec went under in the mid-90s and sold Campo's wind map data to Enron. Enron then sold their data to GE as a part of their backruptcy. Later the data made its way into the California Energy Commission wind maps.
Current Wind Farm Project
This third big surge in renewables brought a new company (Superior Renewables), and monitors were put up to assess wind potential. To sell the project, they had to understand the future potential- 50 MW was 1/6 of the estimated wind potential on the reservation. The tribe wanted ownership options and be investors themselves, but they ultimately agreed to a straight lease (for 5% of the revenue) based on the production of energy. At $15-16,000 of revenue per turbine, and at $4,000 per turbine they were getting a good return, based on the national averages in the year 2005.Key issue: How can the Tribes have ownership without pushing aside the tax benefits? If you partner with government entities (Tribes included)–you lose those benefits which makes you completely uncompetitive. A tool for Firefox/IE shows you the returns you get on accelerated tax depreciation -- which is 50-60% of return of the wind projects. Basically, without these you cannot make a profit on the project or be competitive.
Key issue: The potential pool of tax investor companies has shrunk, many have gone out of business in this economy and are also experiencing the current credit crunch. As a result, the choice of companies is fewer (less than five companies active in these investments), their terms are changing and rates are higher (there's been a 2% rise in the returns that potential investors are asking for). So there's two big issues: 1) the shrinking pool of credit from tax investors and 2) governments cannot use the tax depreciation or production tax credits.
Campo is working on getting transferability of the tax credit with ICOUP, CERT, NCAI, NTEC and other tribal organizations. Transferability was proposed language for the bail-out bill - the general wind credit was extended, but tribal provisions were not kept. This is a hindrance to tribes in taking advantage of their resources.
Campo is moving ahead, and they will be submitting a project for approval by end of the year. They believe that the current opportunities make it essential that they strike now, even though the transferability issue has not been resolved.
Key issue: Many people don't realize that property tax comes off tribal lands – non Indians owning property or lease on Indian land. This is different in different states but in California, Campo gets nothing back (even though they're providing governmental services), and the county takes property tax from their project. Both of these taxes are assessed on the Campo projects-should this be changed for an increase in equity. Tribal tax offsets state taxes. Let's debunk the myth that Indians don't pay taxes - at Campo they're paying more.
Future
This is a $75 million dollar project, 12% is going to taxes to other governments. A potential project expansion is expected to cost $750 million.- Getting into the queue to put electricity into the grid takes work. How can tribes get in a better position within this system? Campo is pushing for the Dept. of Defense to set up an open purchase order from DoD to get energy from tribes. They're under California ISO jurisdiction. It would tremendously help to get this "power purchase" agreement and move ahead in the queue.
- NTEC is studying the carbon trading issue to make sure tribes aren't shut out. Are tribes going to be penalized as a result of market trading programs? There needs to be a provision for upfront allocations and a consideration of tribal economy. NTEC/NCAI have been successful on this issue. They were able to negotiate after years it was an unfair impact without allocating tribal participation in market trading.
- We expect a carbon tax and minimum portfolio standards to be passed, which could provide a huge incentive for renewables. The current renewable energy rate of $105/MWh could go above $150/MWh or $200/MWh, which could make what are now marginal projects look really good. There is a real window over the next couple of years where tribes can move into this field. Need two years of wind data to get started, so it's critical to get involved now.
- Wind energy development is a very complicated field of technical and legal aspects. Daily characteristics of wind are required to understand what type of turbines will work best. There are many types of turbines to use with different types of manufacturers. Which to use depends on the specifics of each project.
- Another related issue is distributed energy systems and individual home usage - includes wind as well as solar, generators, etc. Although over 1/2 of the cost for implementing alternative energy systems into individual homes is covered through state incentives and fed tax credits, the real beneficiaries of project are upper-middle class that can make the upfront investment ($15-20,000). What about those folks that can't afford the cash outlay? There should be mechanisms to realize benefits on tribal reservations. Campo is looking into establishing a revolving fund to help individuals pay upfront costs and use some of their energy savings to repay the fund. Most counties don't reassess property, so there's not additional revenue to counties (e.g. schools)
Q&A and Discussion
- What if they have the windspeed data, how much windspeed is needed to make the project viable? It depends if you need connection with the grid and if a substation is required…how much will it cost to build turbines and what will be your return. Campo did not have to build a substation and had a 500 kV line running nearby. Their turbines run at an efficiency level of 38%, on the Plains, some places, it's above 50%. It will also depend on how many people are in front of you in the queue. Having data puts you in a good position to start doing pro formas. If you can't get access onto the grid it is difficult to do the project.
- Any calculations on the return on investment (ROI calculations)?
Yes, use the wind energy returns tool (which will be sent out to the TribalP2 list-serve), which is a simple calculator to plug in efficiency of turbines and costs and it will give you returns from year 1-5, 5-10 etc. - What was the biggest selling point for the organization to go forward with the project? It is the goal of tribe to diversify revenue opportunities and economic development. That and the money returns from this project were the main factors.
- What was the environmental review process?
Campo did an Environmental Assessment under NEPA which took over a year for BIA to sign off. If you can obtain a Tribal Energy Resource Agreement with BIA, you don't need to clear the project through them later. It lets you control project timing better, but then you do waive a certain bit of tribal sovereignty and it could subject your internal tribal NEPA review to appeal by outside parties.. He does not know any tribes that have enacted an energy agreement.
Next call
Date: Tuesday, November 18, 2008
Time: 2 pm EDT, 1 pm CDT, Noon MDT, 11am PDT
Call in Number: 888-296-6500 Pass code 547845
