Oceti Sakowin Power Authority
Report date
September 2018
What has been most instrumental to your progress?
Operating OSPA Board – Establishing the OSPA Board and starting its operations have been critical to moving the initiative forward. The Board has selected its officers, adopted bylaws and procedures for conducting business, established a regular meeting schedule that rotates across reservations, and started making key decisions to advance the project from establishing development priorities to selecting a long-term co-developer/operator partner – Apex Clean Energy. The functioning Board has provided the initiative with a formality and rigor that has provided a new level of credibility to its efforts to obtain approval from Tribal and General Councils on land lease agreements and collateral pledges for the OSPA development loan, and in discussions with developers, power purchasers and other industry players.
The structured environment has also increased the cohesiveness of the group and the commitment to the initiative. Board decisions are being made more easily, and coordination on representation at key meetings and events has improved. And the effect has spread beyond the Board, as the recent Tribal Council approvals have all been unanimous or super majorities.
The structured environment has also increased the cohesiveness of the group and the commitment to the initiative. Board decisions are being made more easily, and coordination on representation at key meetings and events has improved. And the effect has spread beyond the Board, as the recent Tribal Council approvals have all been unanimous or super majorities.
Regular Communications and In-Person Meetings – The initiative involves six Tribes whose reservations are scattered throughout the Dakotas making it difficult to stay in sync and up to date. To overcome the proximity challenge, the OSPA team has maintained bi-weekly conference calls to stay up-to-date, follow up on action items, and make informed, timely decisions on the projects. This is supplemented by quarterly Board meetings that rotate across reservations. Tribal leadership, elders and other interested members have been encouraged to participate in the on-reservation meetings. In addition, OSPA Tribal leads and consultants have made regular presentations to the Tribal Councils and programs of OSPA Tribes, and held a day-long summit with Tribal leaders and OSPA’s development partner Apex to kick-off project work and discuss Tribal goals and policies related to local hiring, training and traditional values for the projects. These collective communications have helped maintain support, and allowed OSPA to move forward on key incremental steps in a project with a long-term horizon whose full benefits will not be realized until several years out.
Key lessons learned
Maintain Engagement – In July 2016, the OSPA Board set criteria for prioritizing development across multiple wind farm sites. Prioritization was necessary to keep the size of the initial development phase manageable and the scope of work within budget, as well as ensure that the first phase had the highest technical probability of success. That decision, however, meant that tangible work was not going to take place on every OSPA Tribe’s reservation in the first phase. Thus, while prioritization was a necessary and rationale decision the OSPA Board had to make, it also had an impact on how engaged individual OSPA Tribes have been since the decision was made. Looking back, more time should have been spent on considering what the decision would mean to Member Tribes not selected to develop first, and seeking ways to mitigate its unintended effects with meaningful activities that would demonstrate some progress for those Tribes to keep them engaged. After selecting a development partner, OSPA was able to involve all its member Tribes in discussions about Tribal traditional values and goals for the projects and begin some technical analyses and planning for future phases.
Maintain Relationships – The Clinton Global Initiative (CGI) was an early supporter of the Tribes pursuit of the Oceti Sakowin Power Project, and helped to build momentum by publicly announcing the multi-Tribal commitment at its 2013 meeting. They were also instrumental in making introductions to key industry leaders and opening doors with policy makers and government officials. Even though the formal commitment period expired after a couple of years, we have continued to stay in touch with CGI and provide updates on progress. In return, CGI has continued to offer support. Most recently, they have helped in two key ways – 1) they introduced OSPA to an innovative, world-class developer that is interested in developing and operating the wind farms with OSPA in a true partnership fashion of joint decision-making, revenue sharing and ownership; and 2) they have leveraged their extensive network of Fortune 500 companies to gauge interest in purchasing power from OSPA, a purchase that would meet both their corporate sustainability and supplier diversity goals.
Reflections on the community innovation process
Collaboration has been the most important element for continued progress. The OSPA Board, with representation from each of the OSPA Tribes, is engaging in meaningful discussions, voting on often complex issues and making critical decisions to move the development activities forward. Key decisions include a phased and prioritized development plan, funding the development work, and selecting a co-developer partner.
The OSPA Tribes have also been collaborating beyond participation on the Board. OSPA determined that a short-term loan would allow the maximum Tribal ownership and control of the wind farm projects. Such a loan, however, requires a collateral pledge which the OSPA on its own could not make. The OSPA Tribes were canvassed and three considered making the collateral pledge on OSPA’s behalf. Because the Tribes are cash poor and cannot pledge land, OSPA and Native American Bank developed an alternative – the promise of future grazing revenues as collateral, in lieu of actual cash held in escrow. This enables the Tribe full use of its lease rents in the year collected, while still protecting the bank’s security interest. Two of the Tribes committed to such a pledge.
The OSPA Tribes have also been collaborating beyond participation on the Board. OSPA determined that a short-term loan would allow the maximum Tribal ownership and control of the wind farm projects. Such a loan, however, requires a collateral pledge which the OSPA on its own could not make. The OSPA Tribes were canvassed and three considered making the collateral pledge on OSPA’s behalf. Because the Tribes are cash poor and cannot pledge land, OSPA and Native American Bank developed an alternative – the promise of future grazing revenues as collateral, in lieu of actual cash held in escrow. This enables the Tribe full use of its lease rents in the year collected, while still protecting the bank’s security interest. Two of the Tribes committed to such a pledge.
Progress toward an innovation
The Tribes have been trying to develop wind power for decades but have been stymied by Tribal politics, ineffective or harmful federal agency involvement, and an inability to attract first-rate developers and power buyers. OSPA has created a business structure that combines the collective resources and clout of the Tribes, while fostering stable, efficient and non-political decision-making needed on a large development project. This has led to federal agencies taking a regional, streamlined approach to regulating the project. It enticed an industry leading developer to work with OSPA, and opened doors for talks with large corporate power buyers.
OSPA has negotiated more favorable economic terms with a developer than had been achieved by Tribes going it alone in the past. Working with Apex and CGI, OSPA has seen the power of a joint Tribal message of bringing socially-responsible economic development and jobs to the reservations. It has led to more positive, far-reaching media coverage and meetings with large corporations and financial institutions to support the project through investment or purchasing power, factors critical to the long-term success of the projects.
OSPA has negotiated more favorable economic terms with a developer than had been achieved by Tribes going it alone in the past. Working with Apex and CGI, OSPA has seen the power of a joint Tribal message of bringing socially-responsible economic development and jobs to the reservations. It has led to more positive, far-reaching media coverage and meetings with large corporations and financial institutions to support the project through investment or purchasing power, factors critical to the long-term success of the projects.
What it will take to reach an innovation?
While major breakthroughs have been achieved, OSPA recognizes the need to remain vigilant and focused on completing the project development work and marketing the power, developing and implementing a workforce development plan to achieve local hiring and sourcing goals, and planning for additional utility- and community-scale projects on other OSPA Tribes’ reservations.
During the collateral pledge deliberations, Tribal Councils raised growing concerns about federal funds drying up, creating a need to find other revenue sources and become more self-sufficient. The Tribal Councils see their support of OSPA wind farm projects as an investment and a model for other initiatives they should consider to bolster their long-term finances. It has added a greater sense of urgency for OSPA to get the work done and a sharper focus on looking for opportunities to grow the scope of what the OSPA does (e.g., creating a revenue-generating wind turbine maintenance subsidiary that can service other regional facilities) or pitching larger projects to strategic corporate power purchasers (e.g., selling power to a technology company while encouraging them to build a data center on-reservation).
During the collateral pledge deliberations, Tribal Councils raised growing concerns about federal funds drying up, creating a need to find other revenue sources and become more self-sufficient. The Tribal Councils see their support of OSPA wind farm projects as an investment and a model for other initiatives they should consider to bolster their long-term finances. It has added a greater sense of urgency for OSPA to get the work done and a sharper focus on looking for opportunities to grow the scope of what the OSPA does (e.g., creating a revenue-generating wind turbine maintenance subsidiary that can service other regional facilities) or pitching larger projects to strategic corporate power purchasers (e.g., selling power to a technology company while encouraging them to build a data center on-reservation).
What's next?
OSPA is working on closing on full development financing by the end of 2018, and will continue initial development work with partnership support. OSPA will also apply for grant funding to support activities not considered traditional, financeable development activities including OSPA Board operations, monitoring and responding to Tribal-specific concerns that may arise during development (e.g., jurisdictional disputes with state agencies), planning for future phases, and regular Tribal outreach to share OSPA’s learnings.
OSPA will also work on fulfilling its goal to maximize Tribal member employment and sourcing from Tribally-owned businesses. OSPA will engage TEROs to identify workforce skills gaps and other obstacles to being hired, determine best practices in working with prime contractors, and ensure effective outreach to and tracking of available Tribal workers and businesses. OSPA will collaborate with the TEROs and Tribal colleges to define requisite skills and curriculum and identify resources for new and enhanced programs, including partnering with Apex and prime contractors on developing curriculum, providing expert instructors and equipping the training facilities.
OSPA will also work on fulfilling its goal to maximize Tribal member employment and sourcing from Tribally-owned businesses. OSPA will engage TEROs to identify workforce skills gaps and other obstacles to being hired, determine best practices in working with prime contractors, and ensure effective outreach to and tracking of available Tribal workers and businesses. OSPA will collaborate with the TEROs and Tribal colleges to define requisite skills and curriculum and identify resources for new and enhanced programs, including partnering with Apex and prime contractors on developing curriculum, providing expert instructors and equipping the training facilities.
If you could do it all over again...
When the OSPA was being set up, we consulted with the American Public Power Association on the desired qualifications for Board Directors and methods for appointing or electing such officials. This information, along with guidance on restrictions related to conflicts of interest, criminal history and outside employment, was passed on to the Member Tribes who were otherwise given full discretion to nominate their representatives to the Board. We did not restrict Tribal elected officials from serving on the OSPA Board because it is common for public utilities to have local elected officials from their service area serve on the Board. Three Tribes appointed Tribal Council members, two of which were current Chairmen. We initially saw this as a positive sign that conveyed commitment to and credibility with outside entities. Over the grant period, however, we have found that the appointed Tribal Chairmen are often too busy to attend Board meetings. The Tribal Chairman also becomes the only contact the OSPA has with the Tribe because of their political stature. If s/he is too busy or interest wanes, OSPA has difficulty maintaining contact and momentum with that Tribe as a whole.