Oceti Sakowin Power Authority CI Report – Interim

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 an upcoming decision on selecting a long-term co-developer/operator partner. 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 Councils on land lease agreements and collateral pledges for the OSPA development loan, and in discussions with potential development partners, 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 been unanimous or super majorities.

Regular Communications and In-Person Meetings – The initiative involves seven Tribes whose reservations are scattered throughout the states of South Dakota and North Dakota making it difficult to stay in sync and up to date. To overcome the proximity challenge, Board, Council of Elders and other Tribal representatives have maintained bi-weekly conference calls to stay up-to-date, follow up on action items, and make informed, timely decisions on the Project. This is supplemented by at least quarterly Board meetings that rotate across the reservations. Tribal leadership, elders and other interested members have been encouraged to attend and participate in the on-reservation meetings. In addition, OSPA Tribal leads and consultants have made regular presentations to the Tribal Councils of OSPA Member Tribes. These collective communications have helped maintain support, and allowed the Member Tribes 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 – Last year the OSPA Board set criteria for prioritizing development across multiple wind farm sites. Prioritization was necessary for a variety of reasons – keeping the size of the initial development phase manageable and the scope of work within budget, as well as ensuring that the first phase had the highest technical probability of success. That decision, however, meant that tangible work was not necessarily going to take place on every Member Tribe’s reservation in the first phase. Thus, while prioritization was a necessary and rationale decision the OSPA Board had to make, it has also had an impact on how engaged individual Member 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 negative effect with meaningful, economical activities that would demonstrate some level of progress for those Tribes and keep them engaged. The team is currently exploring options now to achieve this goal.

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 have leveraged their extensive network of Fortune 500 companies to gauge interest in purchasing power from the OSPA, a purchase that would meet both their sustainability and supplier diversity goals, and 2) they have 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.

Reflections on inclusive, collaborative or resourceful problem-solving

At this stage of the initiative, collaboration has been the most important element for continued progress. The OSPA Board, with representation from each of the Member 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 Member Tribes have also been collaborating beyond participation on the Board. After determining that grants could not adequately fund the development activities, OSPA reviewed its options. Given that the Member Tribes wanted to maintain as much ownership and control of the wind farm projects as possible, OSPA had to find a way to finance the initial work without relying on an equity investor or a co-developer partner. The decision was to obtain a short-term loan. The loan, however, required a collateral pledge which the OSPA on its own could not make. The Member Tribes were canvassed and three of them have committed to, or are in process of reviewing, making the collateral pledge on behalf of the OSPA so that work can begin.

Other key elements of Community Innovation

Flexibility, exercised in a deliberative fashion, has been enormously helpful to moving forward. Per above, the OSPA had to reassess and set a new direction for funding its work. Similar flexibility may prove to be critical in the co-developer decision. The Board had been considering and evaluating three potential co-developers. The Board had originally set June as the date for their final decision. In late May, CGI asked OSPA to consider talking to another developer interested in working with OSPA based on conversations with President Bill Clinton. The Board agreed, but also reiterated that they would be selecting their co-developer shortly to start the site work. The early discussions with the developer went very well, and they agreed to expedite working on a proposal. At their June meeting, the Board narrowed the co-developer options down to two, including the company introduced by CGI, and approved delaying their selection by up to two months to flesh out a proposal. The Board is now vetting two different proposals from qualified developers that support OSPA goals. Since then, the Board declined to reopen the process for other developers with a less promising fit.

Understanding the problem

During the discussions with the Member Tribes about providing the collateral pledge for the development loan, the Tribal Councils raised their growing concerns about federal government funding decreasing over time and the need to find alternative revenue sources and cultivate more self-sufficiency. The Tribal Councils see their support of the OSPA wind farm projects as an investment in their future and a model for the types of initiatives they should be focusing to shore up their finances in a federal budget cutting era. It has added a greater sense of urgency in getting the work done and a sharper focus on looking for opportunities to grow the scope of what the OSPA does (e.g., creating a wind turbine maintenance subsidiary that can provide service to other facilities in the region and bring in more revenues) and/or pitching larger projects to corporate power purchasers (e.g., selling power to a technology company while encouraging them to build a data server facility on-reservation).

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 past year, 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.