Decommissioning Agreement Questioned
Several concerned landowners were available to pose questions to the Palo Alto County Board of Supervisors regarding the decommissioning agreement concerning wind turbines during their regular meeting Tuesday, September 12.
“Have you come to a final conclusion on that [the decomissioning agreement]?” Dean Gunderson Zoning Chairman and landowner began.
“We’ve gone over it several times,” Palo Alto County Attorney, Peter Hart, stated.
“Why is that between the County and Invenergy and not the landowners?” Supervisor Roger Faulstick questioned.
“We are looking at the unforeseen and hopefully it doesn’t happen,” Hart said. “If something should happen, we can draw on the secured money the developer has guaranteed for decommissioning.”
“So the first step is between the landowner and the company, and if that doesn’t work then the county is covered. Is that what you are saying?” Faulstick asked.
“Yes, we [ the county] do not want to get stuck if a turbine is abandoned,” Hart replied. “That’s what the decommissioning agreement is for.”
“Where does the landowner have skin in the game for decommissioning?” Faulstick questioned. “It’s their property- they are getting paid for it. Don’t they have any liability in the deal?”
“Not in the way it is set up, no,” Hart said. “The decommissioning is for abandoned or destroyed turbines.”
According to a representative from Invenergy, the lease agreement has a section for decommissioning between the landowner and the developer.
“It is always the responsibility of the developer or owner for decommissioning,” Mark Zaccone, Project Developer for Invenergy stated. “The history here, Roger, when the ordinance was developed, the county felt they wanted to make sure that if something went wrong between the landowner and the company, that the county doesn’t take responsibility. They are still holding the entity financially responsible and there is a financial vehicle set aside to cover decommissioning.”
“How much?” Ritchie Berkland, Palo Alto resident, asked.
“There is an estimated cost which is reviewed every two to three years to make sure the amount to take out the turbines is set aside,” Zaccone replied.
“Why should the county and taxpayers be involved in this contingent liability when the agreement is between the landowner and the controlling company?” Gunderson asked. “To me the decommissioning needs to stay with the land. Why do you make this so difficult? You guys won’t even be on the board then. The county had nothing to do with the easements so why would the county have anything to do with decommissioning?”
“My answer to that is, it is just to make sure we don’t get left holding the bag,” Supervisor Chairman Keith Wirtz stated.
In the decommissioning agreement, the money does not come from the county or taxpayers in anyway. The money comes from the developer and then from the owner.
“This is just an additional enforcement mechanism for the county,” David Kirk, Mayor of Ruthven stated.
“This decommissioning agreement, there is no money required from the county or from taxpayers,” Zaccone said.
“I understand that,’ Gunderson said. “I just don’t know why the county wants to be involved in that.”
“So, you are wanting this to fall back on the landowner?” Supervisor Craig Merrill questioned. “Normally you would have a blanket ordinance for something like this and that is what we are trying to do. It is not our objective to make the people of Palo Alto County pay for this, it is to make the wind energy people pay for it.”
“There’s a lot of difference in what they say it costs to tear down a turbine and what it really costs to tear one down,” Berkland stated. “By having it fall back onto the landowner makes a difference to the rest of us because then they will have to cover it and put some teeth into if they do have to cover it.”
The decommissioning cost is determined by taking the cost to put up a turbine minus the salvage value and what is left is the cost of decommissioning. The salvage cost may go up or down and this is why an independent engineer will review the decommissioning cost to ensure that there is enough money in a bank account by the developer/owner in the event decommissioning must occur.
“I want it set down right out there in front that it is the responsibility of the landowners to take them down,” Tom Stillman, landowner said.
“In an ideal world that is how it should go but I don’t know if a landlord in California, Florida or someplace else is going to care,” Hart said.
“Then you attach it to his tax bill,” Stillman said.
There was further discussion on decommissioning by the county. A decision will be made in the future regarding the ordinance on Wind Energy.