Know what you are signing for wind and solar contracts

A Farmer’s Advocate meeting provided information on wind and solar projects and an opportunity for questions by the 112 attendees on Mon. Feb. 5 at the Castor Community Hall.
Energy Utility and Policy Specialist with the Farmer’s Advocate Office (FAO), Michele Del Colle clarified many points for landowners, including once a contract is signed, “there is no backing out”.
She then went on to explain the role of the Alberta Utilities Commission (AUC)which has final say on any wind and solar projects, the role of the Farmer’s Advocate in protecting farmers, and working on getting “gaps” that have been identified through legislation.
In the three-hour meeting, Del Colle set out recommendations for landowners who were being approached for signing contracts for wind and solar farms.
• Don’t sign anything until you’ve had a lawyer who has wind and solar contract experience, review the contract.
The Law Society of Alberta can help you by providing three names of lawyers with that experience and the lawyer must provide you with a 1/2 hour consultation at no cost before making a decision if that is the lawyer you wish to hire.
• The agent coming around asking you to sign the contract is NOT working for you. He is ONLY working for the developer and does not belong to any organizations such as the Land Agents Licensing Act, and therefore is not accountable to the Standard of Conduct under the Act. The Standard of Conduct requires land agents to act professionally, negotiate in good faith and follow all laws and statutes.
• Contracts: There are no standard contracts which can be from 20 pages to 60 pages.
“It’s shocking how they vary from one to another,” said Del Colle.
• Reclamation & Decommissioning must be negotiated in the contract before signing because these generators have a lifespan averaging 20 years.
Negotiate maintenance, fencing, access roads, weed control, as once signed none of that can be re-addressed unless, as a landowner, you take it to civil court.
• Liability and Indemnity clauses need to be addressed in the contracts.
• Confidentiality Clauses: Companies like to pit neighbour against neighbour. Del Colle encouraged attendees to “see if you can negotiate around it.
“Everything your neighbour is getting, so should you.”
Landowner, John Forrest agreed stating at the meeting that he had interest in their area, but he had told the company to call a coffee shop meeting with all neighbours affected. He never heard back from anyone.
• Watch out for ‘opt out’ and termination clauses that may preclude you from other companies coming in.
Should the company not follow through with the project, you want to maintain the ability to negotiate with other companies.
Before companies even approach a landowner, they have done all the environmental, water assessments, etc. required by Alberta Environment, so should they not proceed with the project, you should try and negotiate access to all these reports.
• Tax & Land Sale implications: Have your accountant look at the tax implications and a property assessor look at future sale of the land, or transferring to future generations.
Property Easement: When asked about easements on the entire quarter of land, Del Colle confirmed, “What they like to do is take an option on the entire section but the placement of it [wind generators] can be determined.”
She went on to say, “Alberta Utililites Commission (AUC) who have the final say, is, in some applications doing a two phase approval at the hearings, first for the project itself and that is when landowners need to get involved if you have concerns where future placement might be.”
“You need to put forward your concerns and objections [to the AUC] at that point,” she said.
“Work with the company so you can figure out exactly where the placement will be but they can take that whole easement, so that’s what I’m saying, you’re really entering into a relationship with a company that’s going to last 20-30-40-60 years and there’s no getting out of it, so you’re now going to be asking them permission for what you are going to be doing on your land”.
Make sure clauses are in the contract “to protect yourself so the company can’t use your land for their collateral”.
“They’ll put a caveat on your land title like the oil and gas companies but they shouldn’t be using it to finance their project.
“Find out your borrowing rights using this property for collateral with the easements by renewable energy companies,” said Del Colle.
“Your land is now tied up,” said Del Colle, “you have to ask them permission, ‘Can I do this?’ ”
The renewable energy developer will examine other encumbrances on the title, such as leases or rights-of-way for pipelines or well sites.
Each licensed development has associated setbacks that will need to be observed.
“As a landowner, you should be aware of any other caveats on your land title and ensure that the developer has an understanding of the other infractures on the land.
“Be careful that you are not giving the operator the right to remove obstructions, unless you intend to do so.”
• Rates: Three options most often, are Fixed, Variable and Fixed Plus Variable, which the latter FAO recommends.
Fixed is set for the lifetime of the contract whether producing electricity or not but Variable is paid according to power produced and could initially result in higher revenue. However, if the turbines are not producing power, then there is no revenue.
If, at end of life especially, the turbines are not operating, on Variable you get nothing, so that is why FAO suggests a combined Fixed Plus Variable rate.
• Insolvency: One resident in attendance expressed concern that the biggest problem with these projects was insolvency of companies.
“Potentially they could make all the money and then walk away by just saying they can’t afford to take them down. They take the easy way out from the expense of reclamation, restructuring or re-fitting by declaring bankruptcy and not being responsible for the unsightly things.”
Unlike oil and gas companies who contribute under an Orphan Well Act, there is nothing in place if these companies declare insolvency.
Del Colle agreed landowners must be prepared that they could become insolvent stating, although the government vets the companies of the initial projects, there is no vetting for buy-outs from other companies which is a concern.
“There are a lot of foreign entities coming into Alberta so it is really necessary to do your due diligence”.
“Look to the proven successful companies, look to see whose backing them,” said Del Colle.
Expropriation: Although the land can not be expropriated for the wind or solar farms or for the power lines going to the substation, expropriation can occur for transmission lines going from the substation to the grid.
“Participation is 100 per cent voluntary but neighbours could be affected by those lines even if they do not have wind generators or solar on their land.
Del Colle urged landowners to take into consideration, that “if you decline interest, the developer may find an alternative location, and the new spot may be located nearby, in which case you would experience the impacts without any offsetting revenue”.
Community:
Don’t allow these companies to pit neighbour against neighbour, she urged.
“This is a community decision, you have to talk to your community, know what’s there because you might be saying yes to the power plant but your neighbour could be affected. Hold them [companies] to a higher standard, she said.
“Assure yourself and neighbours that there is a pooling compensation built into the contract for adjacent landowners,” said Del Colle.
Work with the company to figure out placement of the wind generators away from neighbouring property lines who aren’t part of the project, and ensure it’s in the contract.
• Gaps in policy:
There are lots of gaps in the policies, but the government needs to weigh the right of the landowner who wants them and the landowner who doesn’t, stated Del Colle. “It’s respecting the people who do want that resource, it’s a balance. “
“It seems strange,” said one resident, “that they [government] have allowed to start without a reclamation plan, no accountability.”
The gap has been identified and they are working on regulations and many other legal issues, said Del Colle.
When asked why the government doesn’t allow wind turbines on crown land, Del Colle replied, the government is looking at it.
Del Colle sits on several advisory communities as an entity for the Minister of Agriculture however, the renewable energy falls under the Ministery of Alberta Environment and Parks.
Del Colle advises landowners to get a copy of the Second Edition of the Negotiating Renewable Energy Leases and sign up for the emails at www.farmersadvocate@gov.ab.ca.
She also noted that landowners need to push their MLA’s and the Premier to close the many gaps that exist for renewable energy companies as new legislation is very slow moving.
Solar and wind leases provide an opportunity to earn extra income for the landowner.
“You have the right to say “no” and if you say “yes”, get a lawyer,” reiterated Michele Del Colle.

County of Paintearth resident Terry Vockeroth spoke up during the question and answer period at the Farmer’s Advocate meeting on Feb. 5 at the Castor Community Hall regarding contracts for renewable energy wind and solar farms. Michele Del Colle, an Energy Utility and Policy Specialist with the Farmer’s Advovate Office, confirming that there are no standard contracts stating, “it’s shocking how they vary from one to another”. Over 110 interested parties were in attendance.

 

 

Wind farm in Palm Springs, CA went weeks without generating power during a very calm December, 2017. ECA Review/J. Webster

 

 

Wind generator blade broken off at wind farms in Palm Springs, CA. and a structure in the background with no blades. ECA Review/J.Webster

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