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Metlakatla Indian Community keeps the lights on and replenishes resources by restructuring their utility

Sept. 23, 2019

The Metlakatla Indian Community (MIC) is located in southeastern Alaska on the Annette Islands Reserve and is the only Indian reserve in the State of Alaska. The MIC has been living on the island for more than 100 years and their economy has historically been tied to fishing, seafood processing and forest products.

Over the last decade, climate change has put a significant strain on natural resources, such as their mountain lake reservoirs. These reservoirs are the primary source of power for Metlakatla Power and Light Utility (MP&L), which is an isolated island utility off the grid. In addition, forestry regulations led MIC to experience a major loss of their logging industry leading to high unemployment rates. These challenges created financial strain on MP&L’s management, which had not properly adapted to these changes.

In 2019, the MP&L had “no money in the bank, no fuel in the tanks and no water in the lakes.” The MIC needed to find a way to replenish their resources, including their diesel fuel supply and hydro supply, and restructure the utility. The MIC sought Baker Tilly’s tribal energy consultants for development of a resilient and updated management plan.

Baker Tilly solution

Working closely with the MIC, Baker Tilly’s tribal services team members found a way to manage the immediate emergency, develop a management plan for the future and navigate the tribal management grant program.

Initially, the team sent accounting specialists to initiate financial controls to stop revenue loss and decrease spending. Next, Baker Tilly helped put together two grant applications to the Bureau of Indian Affairs. The first would procure an infusion of cash to purchase diesel fuel and the second Department of Energy and Mineral Development (DEMD) grant, under a tribal economic capacity grant, would assist in the reorganization of the utility. Finally, the team institutionalized financial controls, reviewed and rewrote the policies and bylaws and designed new rate structures to build a stronger utility.

In addition, MIC’s leadership held town hall meetings offering transparency into the emergency situation while educating the people on the steps being taken to restructure for a more efficient and responsive utility to combat the changing climate and financial challenges ahead.

Outcome

The Metlakatla people and tribal council responded in a resilient and courageous manner. In only one year, MIC has overcome the energy crisis by replenishing the fuel in the tanks and water in the lakes. Through disciplined fiscal management and strong oversight from tribal council, they have developed a surplus of funds and transitioned to a preventative maintenance schedule on their equipment.

Key projects included:

• Rewrote policies and reorganized charter and bylaws of MP&L
• Reconstituted the board and trained new board of directors in policy governance and utility financial controls
• Initiated and completed a rate study to determine actual cost of service to provide appropriate allocation of costs
• Developed updated rate structures to encourage conservation while providing adequate revenue for operations and debt service

Eyeing to the future, the community is looking to invest in wind and solar energy generation in addition to an intertie cable project that will connect MIC to the southeast Alaska grid. These initiatives tie directly to the mission of the MIC to provide energy in a sustainable fashion which will address a changing climate and conserve precious natural resources. Continuing to adapt will better equip future generations with the resources needed on Alaska’s only reserve.

For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.