Standing Rock Sioux Tribe - 1995 Project

Project Overview
Tribe/Awardee: Standing Rock Sioux Tribe
Location: Fort Yates, ND
(Includes land in South Dakota)
Project Title: Electric Energy Supply Integrated Resource Plan
Type of Application: Feasibility
DOE Grant Number: DE-FG48-95R810575
Project Amounts:
DOE: $171,617
Awardee: $40,000
Total: $211,617
Project Status: Complete  More
Project Period
of Performance:
Start: September 1995
End: September 1997

Summary

The primary objective of this study is to provide the Standing Rock Sioux Nation with a strategic overview of the electric energy issues and opportunities they will be facing beginning in the year 2001. A secondary objective is to provide Standing Rock with the analysis required for an integrated resource plan (IRP). Western Area Power Administration (WAPA) requires an IRP as a condition for power allotments.

There are three components to this study. They are:

  • An analysis of Standing Rock's electric utility structure and the receipt of WAPA power;
  • An examination of electric energy supply options for Standing Rock; and,
  • An assessment of Standing Rock's electric energy savings potential.

Data Sources

Primary data used in this study came from the following sources:

  • Billing and energy use data from Moreau Grand and Mor-Gran-Sou;
  • 55 Standing Rock residential household surveys;
  • 38 Standing Rock resident value surveys;
  • Informal energy audits of Standing Rock non-residential facilities; and
  • Anecdotal information provided by Standing Rock members.

Recommendation for Receiving WAPA Power

Based on the assessment conducted, the study recommends that Standing Rock contract to take ownership of all available WAPA power and form a retail electric utility to serve tribal loads on the reservation. Standing Rock should own the electric utility and should focus on providing customer services. The services would include all customer interaction, including rate setting, billing, and demand-side management. Power would be purchased by the tribal utility and wheeled through the existing rural electric cooperatives (REC). Under this scenario, the tribe could purchase power from any number of sources, including, but not limited to, WAPA, Basin Electric, the existing RECs, or develop its own renewable resources including wind power. This option would not include purchasing the existing distribution system. The power would be wheeled through the existing transmission and distribution grid.

The Standing Rock electric utility initially should plan only to provide electric power to Standing Rock residences, businesses, and institutions on the reservation. The primary reason to limit those served by the Standing Rock utility is to simplify jurisdictional issues. Research conducted as part of this project by John Fredericks of Fredericks, Peleyger, Hestler & White, attorneys at law, indicates that tribal authority to form a utility and exert jurisdiction is most easily established on tribal land and when only exerting direct control over tribal members. By forming a retail utility without direct control of wires, there will be no direct impact on non-tribal entities on the reservation or "down wire" from tribal electric loads. Lack of direct impact means that non-tribal members will have no legal standing for objecting to the formation of a Standing Rock electric utility.

The second reason for limiting the Standing Rock utility service to Standing Rock members is based on the WAPA allotment. The WAPA allotment will not quite serve the tribal load, and hence, the purchase of additional power will be required. Any WAPA power allocated to Standing Rock that is used for non-tribal load will be at the expense of tribal members.

The third reason for limiting the Standing Rock utility service to Standing Rock members is to avoid unnecessarily provoking the Rural Electric Cooperatives (RECs). Should a Standing Rock electric utility attempt to provide power to non-tribal loads at a more competitive rate than the RECs, an adversarial relationship might result. Any such controversy can only work to Standing Rock's disadvantage. Initially and probably in the future, it will be in Standing Rock's interest to maintain positive working relationships with the cooperatives. Also, under present law, the RECs probably own the rights to serve the non-tribal customers.

Electric Supply

Under the assumption that Standing Rock will form its own electric utility to take advantage of the WAPA power allocation, the study further assumed that the Standing Rock utility will only serve Standing Rock members on the reservation, and that membership is defined as any resident, business, or institution with recognized tribal affiliation. Although the WAPA allotment falls short of Standing Rock's full power needs, it will cover most of the annual energy requirements for the near future. However, should Standing Rock continue to be served by the RECs, the RECs will take care of all supply issues.

Energy Requirements

While conservation can only be expected to reduce electric energy consumption by about 8% of the total energy need, it reduces the need to purchase other non-WAPA energy by 37%. The base growth scenario will require a total purchase of 22 gigawatt-hours (gWh) of non-WAPA energy from the years 2000 through 2005. Over the same period of time, with the demand-side management program, only 8 gWh of non-WAPA energy will need to be purchased.

If the Prairie Knights Casino is not included as part of the Standing Rock load, almost no outside energy will need to be purchased through the year 2005. If there is a decision not to service some portion of the Standing Rock's electric load with a share of the WAPA allocation, the casino is the most logical candidate. The casino's low electric rates, averaging 5.9 cents/kWh, offers minimal benefit from shifting to WAPA power. Excluding the casino's load of about 4 million kWh/year from a Standing Rock electric utility's obligation would eliminate the need to purchase non-WAPA power for the near future. In addition, Standing Rock's overall electric utility costs would be lower if the casino load was not served.

Supply Options

The study provides an analysis of electric supply options for Standing Rock. At the outset of this project, the scope of work outlined a list of technologies to be assessed. This report addresses all of the technologies originally listed plus additional supply options. However, the amount of detail provided about each technology was highly influenced by the technology's viability as an electric supply option. Supply options addressed include the following energy sources:

  • WAPA hydroelectric,
  • Basin coal,
  • Diesel,
  • Photovoltaic,
  • Biomass,
  • Wind energy,
  • Low-head hydroelectric,
  • Geothermal,
  • Cogeneration, and
  • Lignite coal.

The objective of a supply analysis is to identify the resources that will best be able to meet Standing Rock's electricity demand requirements. Rather than a theoretical exercise, this analysis is concerned with practical energy solutions for Standing Rock. The two critical factors when considering supply options are resource cost and resource availability. Other important issues evaluated include the environmental impacts of each potential energy source and how well the energy generating technology's size can be scaled to meet the Standing Rock's electric demand.

The estimated cost of providing Standing Rock with electric energy based on the technology used are as follows (in cents/KWh): WAPA hydro - 1.4; Basin Coal - 2.8; Diesel 7.5-20; Photovoltaic - 50; Wind - 5; and Biomass, Low-head hydro, Geothermal, Cogeneration, and Lignite coal are not considered. These costs do not include transmission and distribution costs. Present transmission and distribution costs for Standing Rock are about 4 cents/kWh. This makes the minimum possible delivered electric cost (assuming only using WAPA Hydroelectric power) about 5.4 cents/kWh. By contrast, all economically achievable demand-side management can be purchased for around 4 cents/kWh.

Additional analysis integrated Standing Rock values and produced the following results:

  • Demand-side management is the most desirable option. Although demand-side management has limited supply capability, all economically achievable demand-side management should be obtained.

  • The next most desirable option is WAPA hydroelectric power. Again, the supply is limited and all available supply should be obtained.

  • The next most desirable options are Basin Coal and wind power. There is a trade-off between cost and dependability, which favors coal vs. the other attributes of tribal control, jobs, and environment that favor wind.

  • Diesel offers good dependability but the price is high.

  • Photovoltaic energy rates are the least preferable of the viable options considered in this analysis due to the high cost.

Demand-Side Management

Standing Rock can reduce present electric consumption by about 2,000 megawatt-hours (mWh) per year by 2005. Most of those savings are attainable within the first year. The following recommendations are expected to save about 800 mWh/year:

  • Continue the conversion from electricity to propane as a heating fuel, and
  • Provide individual meters to the 60 housing units on the master-meter account.

Additionally, Standing Rock can develop a demand-side management program to promote the use of energy-efficient technologies. A properly designed demand-side management program would be expected to save an additional 1,200 mWh/year.

Recommended Guidelines for a DSM Program

The "achievable" energy savings are based on an aggressive demand-side management program design. The program would have three major components:

  1. The first component would be designed to run at a high level for one to two years. This component would be designed to retrofit existing buildings and focus on weatherization and lighting measures. Standing Rock would attempt to replace all non-residential lighting with T8 lamps, electronic ballasts, and reflectors where appropriate. Residential homes would be weatherized and appropriate high-use-area incandescent lamps would be replaced with compact fluorescent lamps (CFL). Standing Rock members would be trained to do the work. Recipients of the services would pay a minimal portion of the cost.

  2. The second component would be designed to run for five - 10 years. This component would be designed to ensure that targeted equipment was replaced with energy-efficient models at the time of original purchase or replacement. Under this program, Standing Rock would subsidize the full incremental cost of higher efficiency equipment. Targeted equipment initially would include refrigerators, freezers, and non-residential air conditioners. The program would change over time to reflect changes in price and efficiency. Technology could be added or removed from the program based on the cost effectiveness of the energy efficiency improvements.

  3. Implement building and energy codes to encourage and enforce energy efficient design for new buildings and retrofit or add-on construction.

Project Description

Photo of Standing Rock Sioux Nation

Electric Energy Supply Integrated Resource Plan

Introduction

This project was funded through the U.S. Department of Energy's (DOE) Program of Financial Assistance for Development of Indian Energy Resources. The initial intent of the project was to explore renewable energy development opportunities on tribal land. During the course of the project, two factors led to a substantial change in scope. First, WAPA announced that its Post - 2000 Resource Pool Power Allocation for the Pick-Sloan Missouri Basin Program would allocate electric power to Native American tribes independent of their affiliation with electric utilities. Second, there has been increased momentum nationally toward the restructuring of electric utilities. In response, the scope has been adapted to include more elements of an integrated resource plan, including the analysis of demand-side management potential. In addition, there has been an examination of how the Standing Rock might adjust electric utility service relationships to better serve tribal needs.

Paramount in this analysis is the overriding principle that an integrated resource plan should support customer-developed goals. Although the general emphasis of an integrated resource plan is to seek the least-cost option, it is also important to employ qualitative methods in the comparison of resources options that identify and address public concerns, including consumer preferences and environmental impacts. To that end, this study employs the use of a multi-attribute-screening model based on Standing Rock's priorities for the comparative analysis of all energy options and utility configuration options.

Goals and Objectives

The primary objective of this study is to provide the Standing Rock Sioux Nation with a strategic overview of the electric energy issues and opportunities they will be facing starting in 2001. A secondary objective is to provide Standing Rock with the analysis required for an integrated resource plan. WAPA requires an integrated resource plan as a condition for power allotments.

Project Actions and Resultant Data

Scope

There are three components to this study. They are:

  • Analysis of Standing Rock's electric utility structure
  • Examination of electric energy supply options for Standing Rock
  • Assessment of Standing Rock's electric energy savings potential.

Analysis of Standing Rock's Electric Utility Structure

In the analysis of Standing Rock's electric utility structure, the study explored how Standing Rock might best take advantage of the upcoming allotment of WAPA power. The analysis was conducted by comparing four scenarios that reflect a range of electric energy independence by integrating the elements of structural analysis, economic analysis, and a value assessment. The analysis started with a disaggregation of present utility costs coupled with savings opportunities from the acquisition of low-cost WAPA power. Each utility structure option was evaluated using five different criteria. Each of the evaluating criteria reflected values expressed by Standing Rock members. Standing Rock members were then surveyed to provide data for weighting the evaluating criteria. Using a multi-attribute assessment model, each component of each option was weighted using tribal values. The results point to a recommended utility structure for Standing Rock.

Examination Of Electric Energy Supply Options for Standing Rock

For the examination of electric supply options, the study takes a realistic approach to meeting Standing Rock's energy supply needs. The study examined 10 electric supply technologies. The amount of focus each technology received was highly influenced by the technology's viability as an electric supply option. The objective of the supply analysis is to identify the resources that will best be able to meet Standing Rock's electricity demand requirements. This analysis is concerned with practical energy solutions for Standing Rock. The two critical factors when considering supply options are resource cost and resource availability. Other important issues evaluated include the environmental impacts of each potential energy source and how well the energy generating technology's size can be scaled to meet the Standing Rock's electric demand.

Assessment of Standing Rock's Electric Energy Savings Potential

The study estimated the feasible energy savings and demand reduction potential for Standing Rock. The intent was to determine the extent to which those energy and demand savings are achievable over the next several years. Three types of demand-side management potentials were examined in this study, both for individual measures independently and for all options combined. Technical potential is defined as the complete penetration of all measures analyzed in applications where they are deemed technically feasible. Economic potential refers to the technical potential of only those measures that are cost effective based on the total resource cost test. Note that the cost-effectiveness results for economic potential address only the incremental measure costs of the energy efficiency improvements and not programmatic costs. Achievable potential is the energy and demand savings that can be realized through measures being adopted and implemented in the market place over time.

Since the impetus for this study was to produce inputs for the integrated resource plan, the complete set of measures considered was pre-screened to include only those measures that are currently available commercially, economical, and realistically implementable. No emerging technologies were included in the analysis. The analysis included 12 representative measures and considered their application in six market segments. Each measure was applied to the appropriate market segment. The result was 27 technology/market segment applications.

Organization of Report

The feasibility report includes the following:

  • The principle results from the study and recommendations for Standing Rock.

  • Baseline information used in the analysis of Standing Rock's electric energy options.

  • Exploration of how Standing Rock should receive WAPA power and, correspondingly, what utility structure would best serve Standing Rock's interest.

  • The results of our assessment of the potential for electric energy efficiency improvements for Standing Rock, and the methodology used to conduct the analysis.

  • An analysis of electric supply options for Standing Rock.

  • Documents of public participation used to develop the study.

The following supplemental information is provided in the full report:

  • Appendix A contains supporting documentation for the methodology used for the demand-side management analysis and the inputs and outputs of the demand-side management ASSYST™ computer model.

  • Appendix B contains a copy of the residential survey and summary results data.

  • Appendix C contains the value system survey, collected data, and analysis weighting calculations.

  • Appendix D contains data to support the analysis of renewable energy options including a copy of the wind resource assessment by Jay Haley.

  • Appendix E contains the report on energy codes including recommendations.

Results, Conclusions, Findings, and Recommendations

The analysis leading to the recommendations incorporated both economic assessments and Standing Rock's values as expressed by Standing Rock members. The recommendations are intended to provide a strategic guidance and are not intended as implementation plans. The recommendations address the following issues:

  • Receiving WAPA power,
  • Acquisition of electric resources, and
  • Implementation of demand-side management.

Receiving WAPA Power

Federal Register/Volume 62, Number 47/Tuesday, March 11, 1997, states that WAPA intends to provide Standing Rock with direct electric power allocations of 3.4 mW in the winter and 4.1 mW in the summer. The WAPA allocation can either be provided to Standing Rock through its present affiliations with the Rural Electric Cooperatives (REC) that currently are serving the reservation or to the tribe directly. To find the optimal solution for Standing Rock, the tribe looked at the following four electric utility configurations and assessed their relative advantages and disadvantages.

  1. Negotiate special arrangement with REC - Standing Rock would remain a member of the REC under the existing structure and use the WAPA allocation to reduce tribal electric bills.

  2. Form retail electric utility - Standing Rock would own the electric utility and would focus on providing customer services. The services would include all customer interaction, including rate setting, billing, and demand-side management. Power would be purchased by the tribal utility and wheeled through the existing cooperatives. Under this scenario, the tribe could purchase power from any number of sources, including, but not limited to, development of its own renewable resources including wind power. This option would not include purchasing the existing distribution. The power would be wheeled through the existing transmission and distribution grid.

  3. Form utility and own wires - Standing Rock would own the electric utility including the wires. Standing Rock would either purchase the distribution grid from the cooperatives or build a parallel grid.

  4. Stand-alone utility - Standing Rock would own the electric utility including the wires and power production. A true stand-alone system would not be grid connected or use WAPA power.

Recommendation for Receiving WAPA Power

Based on the assessment conducted, Option 2 was recommended, i.e., Standing Rock forming a retail electric utility to serve tribal loads on the reservation. The Standing Rock electric utility should contract to take ownership of all WAPA power available. The power can be wheeled through the electric cooperatives presently serving the reservation.

Strategic Approach

Whom to Serve?

The Standing Rock electric utility should initially be established only to provide electric power to Standing Rock residences, businesses, and institutions on the reservation. The primary reason to limit those served by the Standing Rock utility is to simplify jurisdictional issues. Research conducted as part of this project by John Fredericks of Fredericks, Peleyger, Hestler & White, attorneys at law, indicates that tribal authority to form a utility and exert jurisdiction is most easily established on tribal land and when only exerting direct control over tribal members. By forming a retail utility and not controlling wires directly, there will be no direct impact to non-tribal entities on the reservation or "down wire" from tribal electric loads. Lack of direct impact means that non-tribal members will have no legal standing for objecting to the formation of a Standing Rock electric utility.

The second reason for limiting the Standing Rock utility service to Standing Rock members is based on the WAPA allotment. The WAPA allotment will not quite serve the tribal load, and hence, the purchase of additional power will be required. Any WAPA power allocated to Standing Rock that is used for non-tribal load will be at the expense of tribal members.

The third reason for limiting the Standing Rock utility service to Standing Rock members is to avoid unnecessarily provoking the REC. Should a Standing Rock electric utility attempt to provide power to non-tribal loads at a more competitive rate than the REC, an adversarial relationship will result. The controversy can only work to Standing Rock's disadvantage. Initially, and probably in the future, it will be in Standing Rock's interest to maintain positive working relationships with the cooperatives. Also, under present law, the REC probably own the rights to serve the non-tribal customers.

Consideration About the Casino Load

Three factors should be taken into consideration when considering the Prairie Knights Casino, which are:

  • The casino has lower electric rates than any other Standing Rock load,
  • The casino is the single largest electric load, and,
  • The casino has the greatest ability to pay the highest rates.

If there is a decision not to service some portion of the Standing Rock's electric load with a share of the WAPA allocation, the casino is the most logical candidate. The casino's low electric rates, averaging 5.9 cents/kWh, offer minimal benefit from shifting to WAPA power. Excluding the casino's load of about 4 million kWh/year from a Standing Rock electric utility's obligation would eliminate the need to purchase non-WAPA power for the near future. In fact, Standing Rock's overall electric utility costs would be lower if the casino load was not served. As an example, if WAPA power drops the cost of electricity to an average of 7 cents/kWh and that rate is applied to all sectors, then the savings to Standing Rock will be $180,000. If the savings are applied to all sectors except the casino then the savings will be $224,000.

The primary reason to include the casino's electric load would be based on the casino's ability to pay higher rates. The tribe could set high electric rates for the casino and use the revenue to subsidize other rate classes with less ability to pay.

Services Provided

The Standing Rock electric utility should take control of all services that involve direct contact with its customer. These services include rate setting, billing, meter reading, customer information services, and demand-side management programs. Some of these services should be performed by the tribe directly, possibly with technical assistance. For example, a demand-side management program can be run by the tribe, provide jobs on the reservation, and help reduce energy costs for the tribe. Standing Rock also can develop its own electric rate structure that reflects its value system. Electric rates can be used to generate revenue for other social programs, or electric rates can be designed to provide subsidies to older people who use very little electricity.

Some services can be performed most economically by outsourcing. The optimal means of providing billing services will most likely be found only through a competitive bid. Line maintenance can remain the responsibility of the REC, however, it would be reasonable to negotiate positions for Standing Rock members on the line crew. It is also reasonable to negotiate a line repair protocol that does not leave Standing Rock loads last in the repair queue.

Preparation for WAPA Negotiations

tanding Rock should proceed as soon as possible with the formation of an electric utility in preparation for the WAPA power contract. Activities should include the following:

  • Establish utility authority,
  • Develop a method of decision making and governance with appropriate accountability,
  • Define services to be provided and implement filings,
  • Determine operational protocols and procedures,
  • Develop plans for meter reading and billing,
  • Determine the utility revenue requirements,
  • Develop a rate structure that both meets the revenue requirements and addresses tribal values,
  • Prepare for and begin negotiating reasonable wheeling rates with the two RECs currently servicing Standing Rock, Moreau-Grand and Mor-Gran-Sou, and
  • Identify and negotiate for low-cost energy to supplement the WAPA direct supply.
Alternative Strategic Considerations

Should Standing Rock choose to stay with the REC and use the WAPA allocation to reduce members' electric bills (Option 1), special consideration should be given to those whose rates are reduced. The average rate paid by residential customers is much higher than the average rate paid by the commercial customers. The greatest economic advantage to Standing Rock will occur if the highest rates are reduced and the lowest existing rates are not subsidized with the WAPA allocation.

Acquisition of Electric Resources

Acquisition of Electric Resources assumes that Standing Rock will not choose Option 1, and will not remain retail customers of the REC presently serving the reservation. Should Option 1 be chosen, the REC will provide electricity as needed and Standing Rock will not be faced with acquisition issues. Furthermore, this assumes that Standing Rock will not choose Option 4, a true stand-alone system. Should Option 4 be chosen, more analysis would be required. A full stand-alone resource acquisition plan is beyond the scope of this study.

Under the assumption that Standing Rock will form its own electric utility to take advantage of the WAPA power allocation, and that the Standing Rock utility will only serve Standing Rock members on the reservation, membership is defined as any resident, business, or institution with recognized tribal affiliation. Although the WAPA allotment falls short of Standing Rock's full power needs, it will cover most of the annual energy requirements for the near term future.

Energy Requirements

While conservation can only be expected to reduce electric energy consumption by about 8% of the total energy need, it reduces the need to purchase other non-WAPA energy by 37%. The base growth scenario will require a total purchase of 22 gWh of non-WAPA energy from the years 2000 through 2005. Over the same period of time, with the demand-side management program, only 8 gWh of non-WAPA energy will need to be purchased. Without the casinos in the Standing Rock load, almost no outside energy will need to be purchased through the year 2005.

Recommendation

The Standing Rock electric load should be served with as much WAPA power as possible. Electric demand not served by WAPA power should be purchased on the open market. Electric power can either be purchased from Basin Electric directly or from the REC. Attempts should be made to negotiate rates from the RECs that incorporate the WAPA power that is allegedly being provided to Standing Rock indirectly.

The Standing Rock utility should have an aggressive demand-side management program to reduce electric load. This program should encourage fuel switching from electricity to propane or other fuels for space heating, water heating, and cooking. The program should also provide incentives for individuals, businesses, and tribal facilities to use energy efficient technologies.

Standing Rock should continue to explore opportunities to develop wind power. Although it is not cost effective to develop wind resources at this time, the economics, from a Standing Rock perspective, could change if development grants are offered or renewable energy set-aside funds become available in the future.

Demand-Side Management

Standing Rock can reduce present electric consumption by about 2,000 mWh/yr by the year 2005. Most of those savings are attainable within the first year. The following recommendations are expected to save about 800 mWh/year:

  • Continue the conversion from electricity to propane as a heating fuel; and
  • Provide individual meters to the 60 housing units on the master-meter account.

Additionally, Standing Rock can develop a demand-side management program to promote the use of energy efficient technologies. A properly designed demand-side management program would be expected to save and additional 1,200 mWh/year. Finally, Standing Rock should implement and enforce a building energy code for new construction and renovation. Although the electric energy savings would be minimal, propane savings would be significant. Residents could enjoy lower cost energy and higher levels of comfort far into the future.

Recommended Guidelines for a Demand-Side Management Program

The "achievable" energy savings are based on an aggressive demand-side management program design. The program would have three major components:

  1. The first component would be designed to run at a high level for one to two years. This component would be designed to retrofit existing building and focus on weatherization and lighting measures. Standing Rock would attempt to replace all non-residential lighting with T8 lamps, electronic ballasts, and reflectors where appropriate. Residential homes would be weatherized and appropriate high-use-area incandescent lamps would be replaced with compact fluorescent lamps (CFLs). Standing Rock members would be trained to do the work. Recipients of the services would pay a minimal portion of the cost, approximately 5% to 10%.

  2. The second component would be designed to run for five to 10 years. This component would be designed to ensure that targeted equipment was replaced with energy efficient models at the time of original purchase or replacement. Under this program, Standing Rock would subsidize the full incremental cost of higher efficiency equipment. Targeted equipment initially would include refrigerators, freezers, and non-residential air conditioners. The program would change over time to reflect changes in price and efficiency. Technology could be added or removed from the program based on the cost effectiveness of the energy efficiency improvements.

  3. Implement building and energy codes to encourage and enforce energy efficient design for new buildings and retrofit or add-on construction.

Project Status

For current project status or additional information, contact the project contacts.

Project Contact

Standing Rock Sioux Tribe
PO Box D
Fort Yates, ND 58538
Telephone: (701) 854-7201