March 01, 2018

Tribal Renewable Energy Service Companies, Part 2

Dean B. Suagee

In June 2017, not long after President Trump announced the decision to withdraw from the Paris Agreement, the National Congress of American Indians (NCAI) adopted a resolution declaring “continued support of the Paris Climate Agreement in furtherance of the sacred responsibility of American Indians and Alaska Natives to protect our resources and ways of life for generations to come.” Res. No. MOH-17-053. In this resolution, the policy of NCAI on climate change is aligned with the states, cities, educational institutions, nongovernmental organizations, and others in the We Are Still In movement. The NCAI resolution recognizes that climate change impacts require action by all levels of government, including tribes, and expresses support for “initiatives intended to reduce greenhouse gas [GHG] emissions and promote climate resiliency.”

The GHG that is the major cause of global warming is carbon dioxide (CO2), and reducing CO2 emissions requires displacing reliance on fossil fuels through energy efficiency and renewable energy technologies. The scale and pace at which the transformation of the global energy economy must take place present major challenges. Climate scientists tell us that most of the known reserves of fossil fuels must stay in the ground if we are to have a 50 percent chance of keeping the increase in annual average global temperature relative to preindustrial times to 2° Celsius (C) (3.6° Fahrenheit (F)) or less. Christopher McGlade & Paul Ekins, The Geographical Distribution of Fossil Fuels Unused when Limiting Global Warming to 2°C, 517 Nature 187 (2015). Market forces are not enough to achieve this. Government action is needed.

In an earlier contribution to this periodical, I suggested that tribes work together and “use their governmental powers in creative ways” to make sure the people of Indian country do not get left out of the renewable energy revolution. Dean B. Suagee, Renewable Energy Service Companies for Indian Country, 31 Nat. Resources & Env’t, no.3, Winter 2017 at 50 (RESCO Part 1). In that article I suggested that tribes create a new kind of institution with renewable energy development as its reason for being. I coined the term “renewable energy service company” or “RESCO” for such an entity and suggested that they could be created by individual tribes or at the intertribal level. This article explores that suggestion in more detail. The idea addressed in this installment is an intertribal utility commission supported by a staff unit so well-qualified that I refer to it as an affiliated think tank.

The We Are Still In movement apparently recognizes that tribal governments can be part of the solution. Its website, www.wearestillin.com, includes a button for “States & Tribes,” though, as of this publication, the initiatives and success stories under this heading are all attributed to states, none to tribes. In a related initiative, the coalition America’s Pledge published Phase 1 Report, States, Cities, and Businesses in the United States Are Stepping Up on Climate Action (Nov. 2017), which includes tribal nations in the list of nonfederal entities that must “carry the torch of climate leadership”: “States, tribal nations, cities, businesses, and others” at 14. That report, however, does not provide any detail on what tribal governments are doing.

Several tribes have adopted climate action plans, although the plans that have come to my attention tend to emphasize adaptation and resiliency rather than GHG emissions reduction. See, e.g., University of Arizona, Tribal Adaptation Plans, www.nncap.arizona.edu/resources/tribal-nations-map. Personally, I am more interested in finding ways to help tribes contribute to making the renewable energy revolution happen sooner rather than later. In the United States, as of 2017 there already were more direct jobs in the clean energy industry (3,384,834) than in the fossil-fuel industry (2,989,844), and solar electric power accounted for more direct jobs (373,807) than the entire coal industry (160,119, of which 86,035 direct jobs were attributed to coal-fired electric power). U.S. Dept. of Energy, U.S. Energy and Employment Report (Jan. 2017); see also Environmental and Energy Study Institute, Fact Sheet: Jobs in Renewable Energy and Energy Efficiency (Feb. 2017). I would like to see Indian country get a fair share of those jobs and business opportunities.

My preference for an emphasis on reducing GHG emissions also has something to do with being a citizen of a tribal nation. The NCAI resolution proclaims, “American Indian and Alaska Native tribes are leaders on the protection of ecosystems and the environment since time immemorial and have a sacred responsibility to protect our resources and ways of life for generations to come.” That resonates with me, and I know that there are thousands of tribal citizens out there who are eager to find ways to help deal with the climate crisis.

Moreover, I believe that tribal governments are particularly well-positioned to deal with some of the thorny issues that are holding up the transition to the widespread deployment of renewable energy technologies. One set of issues concerns rooftop solar electric systems and the initiatives in some state legislatures and state utility commissions to assess various kinds of fees and charges on rooftop solar. See generally North Carolina Clean Energy Technology Center & Meister Consultants Group, The 50 States of Solar: 2015 Policy Review and Q4 Quarterly Report (Feb. 2016).

Tribal governments could become a force in contributing to the evolution of the electric power sector. Relatively few tribes have created their own electric utilities. (Counting them is not easy; the U.S. Energy Information Administration does not treat tribal utilities as a distinct category, but rather counts them among the municipals.) More tribes could create such utilities, and, as I suggested in RESCO Part 1, in doing so they should be mindful of the ways the electric power sector is evolving, which has been driven by regulatory policies, technological developments, and market forces. Tribal utilities generally are beyond the direct regulatory reach of state utility commissions; instead, regulation of tribal utilities is within the purview of tribal governments.

Tribal governments could charge tribal utilities with a mission to make distributed generation such as rooftop solar power widespread in Indian country. Tribal utilities could use a variety of investment approaches: loans to residential customers paid off through on-bill financing, leased systems using capital raised from non-Indian investors, or ownership by the tribal utility financed through the sale of tax-exempt bonds.

An intertribal utility commission with an affiliated think tank could develop model rate designs and other policies to support tribal utilities in promoting rooftop solar and other distributed generation technologies. Some tribes might find it convenient and cost-effective to vest such an intertribal commission with real regulatory authority over their electric utilities, which could include matters such as rate schedules and interconnection policies. Other tribes might prefer not to grant regulatory authority to an intertribal commission but still might look to it and the think tank as a source of expertise on utility policy informed by familiarity with Indian law.

Consider some of the projects the think tank could take on. It could develop and disseminate information on options for financing investments in renewable energy and energy efficiency, including how to participate in state programs, such as those funded with revenue raised through cap-and-trade programs like those administered by the California Air Resources Board and the nine Northeast states that are members of the Regional Greenhouse Gas Initiative. See Sheryl Musgrove, RGGI: Continuing to Build on the Successes, 32 Nat. Resources & Env’t. no.2, p.55 (Fall 2017) (noting that between 2009 and 2014, member states invested $1.37 billion from RGGI proceeds in programs to benefit the public). It also could disseminate information on sources of technical assistance, including federal and state agencies, on a wide range of energy issues. It could encourage the growth of Indian-owned small businesses by helping to make connections between customers in Indian country and firms that can provide goods and services, perhaps collaborating with tribal colleges and universities to develop small-business incubators.

The think tank could develop analyses on policy topics such as how to monetize the benefits to be realized by future generations from making the transition to renewable energy happen sooner rather than later and the costs to be imposed on future generations by delay. Such analyses could be useful to tribal government officials in a variety of contexts. For example, the think tank could look into the arguments for imposing stand-by or demand charges on residential customers with solar electric systems, such as the proposition that rooftop solar systems impose costs on utilities that ratepayers without rooftop solar should not be forced to share. The intertribal think tank might consider the costs imposed on future generations by delay and propose different solutions to the problem, such as fashioning ways to help tribal utilities finance investments in batteries for residential solar or developing community-scale backup systems. The think tank might investigate the feasibility of the tribal government investing in a fleet of electric vehicles and plug-in hybrids and using the batteries in those vehicles, when plugged in, to help balance supply and demand on the grid.

The think tank might be called on by tribes to help resist proposed fossil-fuel projects that threaten tribal interests. Consider the alternatives analysis for a completely hypothetical proposed major energy infrastructure project featuring fossil fuel. Assume that the proposal is subject to a federal agency decision that requires compliance with the National Environmental Policy Act (NEPA). Assume that the proposed project would involve a substantial risk of contaminating the water supply for two or three Indian reservations and that construction of the proposed project would threaten several off-reservation historic properties that several tribes regard as sacred places. Now, imagine those tribes participate in the NEPA scoping process and come armed with data and analyses to support an alternative to the proposed project. The tribes acknowledge that the alternative they propose is outside the jurisdiction of the federal agency, but, citing the NEPA regulations, 40 C.F.R. § 1502.14(c), they say that should not be a problem, and they offer to be cooperating agencies and develop their alternative for inclusion in the draft environmental impact statement.

The hypothetical intertribal proposed alternative might be a comprehensive program to generate enough renewable electricity and achieve enough energy savings through investments in efficiency to offset the energy demands that would be met through the fossil-fuel proposal. It is a rather detailed proposal, and the comparison to the fossil fuel project is complicated, but the think tank knows how to do it. The think tank’s analysis would be much more detailed than the ballpark estimate I have previously offered—that if we could somehow meet the need for 200,000 homes for Indian families with net-zero fossil energy homes it would be the equivalent of saving 3.09 million barrels of oil every year. Dean B. Suagee, A Better Buildings Challenge for Indian Country, 29 Nat. Resources & Env’t, no. 2, Fall 2014 at 59.

In conjunction with developing the intertribal alternative, the think tank also could help to design investment vehicles to attract capital for implementation. As the movement to divest from fossil fuels gathers momentum, investments in renewable energy and efficiency can be expected to experience proportionate growth. The establishment of an intertribal utility commission with an affiliated think tank, along the lines suggested in this article, would support the efforts of tribes with RESCOs and those with more traditional electric utilities to capture a fair share of the investment capital that is moving away from fossil fuels. It seems to me that this would be a good way to live up to our sacred responsibility to generations to come.

Dean B. Suagee

Mr. Suagee is of counsel to Hobbs, Straus, Dean & Walker, LLP, in Washington, D.C., and a member of the editorial board of Natural Resources & Environment. He is a citizen of the Cherokee Nation. He may be reached at dsuagee@hobbsstraus.com.