Interconnection of a Tribal Utility

Formation of a tribal utility can include the take-over of existing utility facilities, or construction of all new facilities for interconnection into an existing grid. In either case, close discussion with neighboring utilities is important. Almost no utilities stand alone, unless they are literally on islands, peninsulas, or otherwise geographically distinct. Utilities are almost all directly interconnected with their neighboring utilities.

The utility community has a long-standing history and culture of cooperation, at least once facilities are operational and rulings have been made regarding policy issues. This history and culture of cooperation comes from the interconnected nature of the systems and the knowledge that the weakest links harm everyone. In times of emergencies, all utilities must communicate and coordinate and cooperate to keep the whole system stable. In the event of an emergency that takes loads or generators out of service, all entities must cooperate to bring system components back into operation and to watch the grid so that these changes in service are properly managed to avoid other damages on other systems. For this reason, new tribal utilities should expect that they will have daily and sometimes hourly discussions with their neighbors. Many utility organizations have formed to address the need to cooperate, and new utilities are wise to consider joining these groups and actively participating in the policy, legal, and practical conversations carried in these organizations.

In the event of the take-over of existing facilities on the reservation, the first step may be determination of the tribe's jurisdiction over existing facilities. If jurisdiction is found, such as if all facilities are on tribal lands, or if state commissions disclaim jurisdiction over reservation facilities, discussions with the owning utility to assess their interest in selling and the valuation of the facilities is important. If a utility is not interested in selling, a tribe may assert its regulatory authority over the utility, or may consider condemnation of the assets. Condemnation can be with the assistance of the U.S. Department of Justice, if real property is involved, or may be done through the tribal court under tribal law if only personal property (such as poles and wires) is involved. A full inventory of facilities and any real property interests is needed. Then a valuation of the facilities can be done using appraisals, and negotiations. Once a price is negotiated, or a price is determined through court action in the case of condemnations, a date of transfer is set.

Prior to the transfer of facilities, all matters of interconnection and design and construction of any new or improved facilities is done. Often existing utility neighbors may be willing to provide design and construction services for a negotiated fee. Otherwise, many engineering design and electrical construction firms are available for these tasks. Certainly, an inspection of the new facilities that will be interconnected will be needed in order to assure a safe and successful interconnection.

Metering is also important to consider at this time. Meters will keep track of all energy flow into and out of various systems and are the basis for billing and accounting of power and energy. Standard metering devices are placed at all points of interconnection. These meters can be quite basic, however, most utilities are now going to more sophisticated meters that can relay information by telephone or fiber optics for immediate control and information purposes.

The interconnection agreements, the transmission agreements, and power agreements must all be negotiated and signed by all parties prior to interconnection. Once interconnection is achieved, proper operation of the system and system maintenance is necessary. Coordination of any maintenance activities with neighboring utilities is always needed to assure safety, and grid security. Some utilities may utilize neighboring utilities as contractors to perform operations and maintenance functions. Billing and accounting systems must be in place to take information from meters and properly bill customers, and a system must be in place for the collection of funds. It is also important to establish the jurisdiction of a tribal court or other court to hear disputes over collection matters.

The utility business is a 24-hour-a-day, 7-days-a-week operation that requires skilled and able professional action. It also requires good customer service and the ability to work with utility neighbors.

For more information on tribal utilities, see Organizational Development in this Guide, and see the Case Studies section for examples of tribal utilities.