Indians play power game
One tribe cashes in on the energy boom
FORT MOJAVE INDIAN RESERVATION, Ariz. - The barren landscape of the Fort Mojave reservation south of Hoover Dam receives less than seven inches of rain a year. It's a tough place to eke out a living, and one that encourages economic inventiveness. The Fort Mojave Tribe has managed to lure tourists to its plush golf courses and upscale casino resort on the Colorado River outside of Laughlin, Nev. But tourism and gambling are fickle and highly competitive: The area where Arizona, California and Nevada converge along the river has become saturated with slot machines and posh resort destinations.
In an effort to diversify its economy, the Fort Mojave tribe has turned to a far less glitzy - but potentially more important - economic development tool: a power plant. Last May, the $300 million South Point Energy Center came on-line. Sandwiched between swaths of emerald green irrigated fields along the river and the rugged Black Mountains to the east, the 555-megawatt natural gas-fired plant produces enough juice for a half million homes.
South Point is the first "merchant plant" ever built by an independent power company on tribal land. Every kilowatt it generates is sold on the open market in energy-sucking megalopolises like Phoenix, Las Vegas and Southern California. It's a lucrative endeavor: The tribe will cash in on several million a year from San Jose, Calif.-based energy giant Calpine Corp., the plant's operator. Two other tribes are already moving forward with plans for power plants on their own reservation.
The potential for a minor boom in Indian power is a promising change in Indian Country where, as David Lester, executive director of the Denver-based Council of Energy Resource Tribes (CERT), says, "Most tribes are end-of-the-line customers." But while power plants offer the promise of a financial jackpot, energy self-sufficiency advocates like Lester are urging tribes to develop a clearer vision of how such plants might bring more than just cash to the reservations.
Engines of development
South Point Energy Center stands a muted beige against the surrounding low-slung sand hills, humming quietly on a warm April morning. In the control room, plant manager Bob Holsinger points to computer schematics of the plant's two gas-combustion turbines, huge derivatives of jet engines.
Ten years ago, the heat byproduct of the natural gas-combustion would have escaped into the atmosphere. South Point and other so-called combined cycle plants capture that heat, inject it into a steam turbine, and generate a second phase of electricity. That makes the plant 40 percent more efficient than older-generation natural gas plants. The South Point plant is also comparatively clean. According to the U.S. Environmental Protection Agency, South Point produces 98 percent less nitrous oxide and 60 percent less carbon dioxide than an outdated coal-burning behemoth like the Mohave Generating Station, 10 miles up the river in Laughlin, Nev.
Fort Mojave Chairwoman Nora Helton says the plant's environmental performance made it palatable. "Our tribe is very, very conservative when it comes to looking at any kind of project that would affect our land, water or our people," she explains.
The plant also provides limited employment opportunities for the tribe; four of the plant's 25 employees are Fort Mojave Indians. The bottom line, however, is money. Fort Mojave is not a particularly poor reservation: Its two casinos have helped make the tribe a significant regional player and job creator. But, says Fort Mojave Tribal Administrator Gary Goforth, "We're trying to make sure we're not just a one-horse operation."
South Point will back up the existing economy with $4 million per year in taxes and lease payments. The Tribal Council negotiated a fixed 50-year lease with Calpine - both for the land on which the plant sits and for water the plant uses to cool the plant and produce steam.
Power companies have strong incentives to partner with tribes. Calpine will save an estimated $20 million on South Point alone from a federal tax incentive that allows for accelerated depreciation on a company's reservation-based assets. "That's significant when you're talking about an investment upwards of a quarter of a billion dollars," says Calpine Corp. spokesman Kent Robertson.
Indian country power projects also bypass labyrinthine county and state approval processes. Instead, they go through a comparatively streamlined review by the local tribal council and Bureau of Indian Affairs. "Having a process in which the tribe is interested in moving the project along, as opposed to using the process to stall, is of great benefit to a developer," says CERT's Lester.
Talk like that raises questions about whether power developers and tribes are giving short shrift to the environment. "There is a history of some fairly dirty industries locating in Indian country," says Doug McDaniel, a tribal team leader in the EPA's Pacific Southwest office. "But that's not true anymore." McDaniel points out that power plants on reservations must meet national air-quality standards and operate under federal permits.
Since the South Point plant went on-line last summer, the Fort Mojave Tribe has fielded dozens of calls from other tribes interested in partnering with energy companies. But Calpine's Robertson says that the only really promising sites are ones which are close to natural-gas pipelines, high-capacity transmission lines - and good markets. "It goes back to the clichZ about real estate," he says. "It's all about location, location, location."
Calpin has two other reservation projects in the works - one northeast of Las Vegas on the Moapa-Paiute reservation, and the other on the Torres-Martinez reservation 80 miles outside of San Diego. Power plants are especially attractive tenants for these tiny, remote reservations. For the Cahuilla Mission Indians, who lost half of their 60-square-mile Torres-Martinez reservation in the early 1900s when the Colorado River breached a canal and created the Salton Sea, it's literally the first economic development project they've ever had.
But the infant Indian power boom is taking place in the midst of a long-standing inequity. The development and wealth of the urban Southwest has largely been powered by Indian coal, water, uranium, natural gas and methane: The coal for the Mohave Generating Station, for example, comes from Hopi and Navajo lands. But according to the Department of Energy, a Native American family living on an Indian reservation is 10 times less likely to have regular electricity service than other Americans. On Arizona's Navajo reservation, nearly 40 percent of households live without electricity.
At Fort Mojave, access to electricity is not a pressing issue. The tribally run utility enjoys access to a large amount of federal hydropower from nearby Parker Dam. But Lester believes other tribes considering power plant agreements need to make sure the projects can help them meet their own energy needs, present and future.
One solution, says Lester, is for tribes to own equity positions in power plants, rather than just playing host to them. He points to the gambling industry as a model for substantial Indian control. Reservation casinos began to sprout in the 1970s, but tribes didn't begin to take active ownership and management roles for 20 years, he says. There have been "dramatic improvements in Indian gaming as tribes took stronger and stronger management and equity positions, not just acting as the regulatory body," says Lester. "The same evolution in tribal capabilities is going to happen (with regard to energy)."
Daniel Kraker, a correspondent for Arizona Public Radio, lives in Keams Canyon, Arizona, on the Hopi Reservation.
YOU CAN CONTACT ...
- Gary Goforth, Fort Mojave Tribe, 760/629-4591;
- Kent Robertson, Calpine Corporation, 925/479-6600, www.calpine.com;
- David Lester, Council of Energy Resource Tribes, 303/282-7576, www.certredearth.com.
Copyright © 2002 HCN and Daniel Kraker