CSK Tribes to Acquire Kerr Dam in Montana

Posted on May 5, 2014 by Irma S. Russell

Last month, after 30 years of negotiations between the parties, an arbitration decision set the price to be paid by the Confederated Salish Kootenai Tribes (CSK) to PPL Montana to acquire the Kerr Dam.  The tribes expect the dam -- the first major hydroelectric facility owned by a tribal entity -- will serve as a driver for economic development for tribal members, residents of the Flathead Reservation, and the surrounding area.  The dam will operate under the same licensing requirements applicable to PPL Montana and will sell energy generated by the dam on the open market.  The dam has the generating capacity of 194 megawatts, standing at 205 feet high and 541 feet long.

After considering arguments by the tribes and PPL Montana, a panel of the American Arbitration Association set $18,289,798 as the price to be paid by the CSK to acquire the dam.  This price includes $16.5 million for the existing plant and $1.7 million for required environmental mitigation and was the original price agreed to by the parties in a negotiated deal in 1985.  The tribes had argued to the panel that $14.7 million would be a fair price while PPL Montana maintained the tribes should pay close to $50 million for the dam. 

The arbitration decision is a culmination of a long history of the construction and operation of the dam.  Negotiation for purchase has been going on since 1984 when the 50-year lease terminated.  Understanding the debates surrounding the dam requires some explanation.  In 1934 a subsidiary of the Montana Power Company began construction on the Kerr Dam on tribal lands on the Flathead River despite opposition from members of the Flathead Indian Reservation.  In 1938 the construction was completed and named after the then CEO of Montana Power Co., Frank Kerr.  The construction financing for the project included a 50-year term lease that provided for lease payments to the tribes for the dam, which is located on tribal lands and uses tribal resources.  

The arbitration decision indicated that the purchase can occur after September 5, 2015.  Energy Keepers, a federally chartered corporation owned by the tribes is expected to tender the purchase money early in September 2015.  The CSK Tribes hopes to develop the dam as a self-sustaining energy source for the tribes as well as a revenue source.  The Tribal Council is expected to choose a new name for the dam after the transfer.  

In 2011 the tribes competed for and received a federal grant, which was available for energy projects. The grant money funded a feasibility study to assess energy efficiency improvement projects and to implement energy conservation measures in existing tribal facilities.  The grant funding also supported the development of an organizational structure to acquire the dam. 

Not all tribal members supported acquisition of the dam.  The arbitration process ran from February 3 to March 3, and some tribal members have objected that lack of notice means that public comment should be allowed at this time.  Additionally, some tribal members have noted in the media the need for caution in going forward.  For example, some have emphasized that, after the purchase, the dam will no longer be a taxable asset and tax support for schools in the area will be lost or will need to be funded from other sources.  Preparation for the transition to tribal ownership has begun, and the tribes are working with current employees at the dam who are tribal members and searching for engineers and information technology employees.