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Umatilla Tribe negotiates with potential power plant partners

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PENDLETON, Ore. - The Confederated Tribes of the Umatilla Indian Reservation recently entered talks with the city of Hermiston and the Eugene Water and Electric Board over a potential joint partnership to build a $300 million power generating plant near Umatilla.

Each party has something to contribute. The tribe has a 195-acre site near the Columbia River and a desire to get into the utility business. Hermiston needs a local power source, plus water rights to an estimated 3.25 million gallons of water per day needed to run the natural gas-fired steam plant. The Eugene Water and Electric Board, better known as E-Web, is the biggest publicly owned developer of energy facilities in the state and brings its development and marketing expertise to the table.

If talks go well, the group will look for a fourth partner, a deep-pocket investor to help back construction and necessary additional transmission lines. Although the utility business is traditionally high risk, Dave Tovey, executive director of the tribe, says he doesn't think getting a backer will be too difficult.

"I think it's fair to say that we've had at least a dozen major companies calling us since the story broke," says Tovey.

The opportunity couldn't come at a better time for Hermiston which is in the process of condemning its current power distribution system with Pacific Power Corp. and switching to Bonneville Power Administration. The city is eager to develop a private power source so its population of 10,000 will be less subject to fluctuations in power rates.

"We look at it as another opportunity to work cooperatively with the tribe on a local developmental effort that benefits both the tribes and the local community economically," says City Manager Ed Brookshier. "And also, in this particular case, with the presence of the tribe and E-Web, to really establish a benchmark in terms of the environmental quality and the mitigative aspects associated with the project."

Although tribal headquarters in Pendleton is more than 40 miles from the proposed plant site in Umatilla and approximately 25 miles from Hermiston, the tribe may eventually supply its administrative offices and perhaps the tribe's casino in Pendleton with power generated at the plant.

But that is a way down the road.

Because the tribal property is held in trust, the tribe has to follow National Environmental Policy Act guidelines and submit a full Environmental Impact Statement. The EIS should take at least 18 months to complete. With detailed contract negotiations and locating investors, Tovey estimates the entire project will take from four to five years to complete.

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But he says the tribe is in no hurry.

More than five years ago, the tribe was approached by several major companies which recognized that natural gas pipeline easements across the reservation equated potential savings in the development of a private power generating facility.

But the tribe wanted to produce power in the most environmentally friendly way possible, and the enormous water requirements for a steam generation plant could not be met by the tribe on a land-locked reservation. A potential joint water project with the city of Pendleton, interested in a private power source, was put on hold before anything concrete could happen because power rates were relatively stable at the time. The whole project idea faded away.

In the meantime, in 1992 the tribe acquired a 2,500-acre parcel of land called the Conforth Ranch near Umatilla with funds Bonneville Power Administration paid in mitigation for damage to wildlife habitats on the Columbia River. The tribe converted the ranch into the Wanaket Wildlife Refuge. That land acquisition just happened to include a nearby 195 acres that was industrially zoned.

"Folks wanted us to trade that out for more wildlife land and ... though EPA and the feds were saying, 'We'll give you OMM money (operational management money) forever to take care of the refuge,' I was nervous about taking on a white elephant," Tovey says. "As long as we had some means to take care of it in the long-term, I might feel a little bit more comfortable.

"Somehow everyone agreed. And so we got this industrial tract with this property."

It was, as Tovey puts it, a "political challenge," getting land more than 40 miles off-reservation converted into trust. Even BIA officials were somewhat hesitant to pursue transfer status. And placing an industrial facility so close to a wildlife habitat seemed a bit of a contradiction. But in the long run, the tribe's perseverance paid off.

Much of the political flack the BIA and the tribe expected, converting the land into trust, never materialized. Since that hurdle was passed, everyone concerned with the project is focused on proceeding in an environmentally sound fashion.

"It sounds real promising," says Bill Quaempts, board member for the tribe. "This is the cleanest way to make electricity. ... It's good on the environment."

If the tribe, the Eugene Water and Electric Board and Hermiston find solid financial backing, it may be good for everyone's pocketbooks as well. But the economic potential remains something the tribe and the other parties are just beginning to investigate. More than anything at this point, Tovey says the tribe is excited about potential partnerships developing around the project, and all of the opportunities that are coming the tribe's way.