Energy Policy Act Section 1813 Comments: Report of the Ute Indian Tribe of the Uintah and Ouray Reservation for Submission to the US Departments of Energy and Interior
The Northern Ute Indian Tribe of Utah retained Analysis Group to conduct a study about whether Indian tribes were demanding excessive compensation for natural gas pipeline and electric transmission line "rights of way" (ROW) across their reservation lands. The study was prompted by a provision in the Energy Policy Act that called for review of energy company ROWs on Indian land. In many cases, energy companies had expiring leases on ROWs that were more than 50 years old. The energy companies had sought to maintain legacy pricing for their rights of way, arguing that new, higher pricing would have had a damaging effect on utility customers in the form of higher rates. The Northern Utes asked Analysis Group to analyze historic rates of compensation for energy ROWs on tribal lands, examine economic theories for setting appropriate compensation, and analyze how compensation for use of tribal lands affected energy transportation costs and consumer prices.
An Analysis Group team of Senior Advisor Susan Tierney and Vice President Todd Schatzki calculated the impact of ROW fees on overall rates charged to consumers for electricity and gas; determined that any increase in ROW pricing would not have a material impact on utility rates for end users; and detailed these and other findings in their report to the US Departments of Energy and Interior.
In part reflecting these analyses, the Departments of Energy and Interior reported to the US Congress that "(a) total energy transportation costs are a small component of overall consumer energy costs; (b) in general, a relatively small percentage of the energy transportation infrastructure is on tribal lands; and (c) as of [the time of the report], no difficulties associated with ROW negotiations have led to security or reliability impacts that affect consumer cost."
The Departments recommended that "[t]he valuation of energy ROWs on tribal lands should continue to be based on terms negotiated between the parties" (Energy Policy Act of 2005, Section 1813 Indian Land Rights-of-Way Study Report to Congress, May 2007 (pages xi, 42)).