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No wind-energy windfall for District 88

NEW ULM – District 88 will not join the business of wind energy development – even though the decision to refrain was made on a close 4-3 vote Thursday night.

The wind energy project, discussed during two previous board meetings, is being developed by Johnson Controls, Inc.

Johnson Controls is currently managing the first phase of it. It includes 14 school districts.

The company is discussing a second phase with another 40 school districts, including New Ulm.

In essence, Johnson Controls would act as a fee-based project manager, setting up wind farms. The school districts each would own shares in the farms.

The schools’ involvement is a result of legislation that enables school districts, being public entities, to borrow Clean Renewable Energy Bonds (CREBs). That’s interest-free federal money.

These funds would help pay for the wind farms. There’d be no other financial outlay for the school districts.

The bonds would be repaid with proceeds from selling the energy, typically over 16 years. The wind farms would be set up on land expected to be leased, initially, for 20 years.

Each district can own up to 3.3 MW of generating capacity and sell the energy generated. At this time, districts are looking at owning half that capacity, according to Johnson Controls.

In return, each district would get revenue from the sale of electricity. The project manager estimates each district’s take at about $30,000 a year until the bonds are repaid; then, potentially more.

Johnson Controls’ fees have been quoted at 7-8 percent.

The majority of the local school board that prevailed in the decision not to join quoted several concerns – in particular, concerns having to do with liability.

The agreement sponsored by Johnson Controls would have stated that, if the project is deemed financially viable and a school district decides to pull out of it, that district would owe the project manager compensation of up to $100,000.

Local board members would have liked to see a provision that would free the local district of this liability if another district took its place, thus unequivocally eliminating the potential for “double-dipping.”

Board members would have also liked a provision giving the district 10 days after the approval of CREB financing – to pull out without penalty. Johnson Controls agreed to two days, citing the need for consistency in all agreements signed with schools.

Another factor that played into the local decision had to do with who exactly would determine the project’s viability – and the seeming lack of specific provisions in the agreement that this be done by an independent third party.

Yet another factor was just the novelty of the idea – as school board chair Sue Ullery pointed out, since the project is at a very early stage, some of the local concerns simply cannot be addressed.

“It’s a chicken and egg situation – Johnson Controls cannot do the work unless people sign on; and, unless they do the work, we don’t know what exactly it is we are agreeing to,” she said.

The minority in favor of joining emphasized some aspects that even those opposing involvement did not question – that the risks appear minimal when weighed versus the benefits; that the project manager is reputable; that it’s a novel way of supplementing school funding; and that response from people in the energy industry is positive.

Voting against joining were Susan Nierengarten, Sue Ullery, Sheldon Rieke and Carol Ackerson.

Voting in favor were Mark Burkhart, Bill Day and Duane Winter.

After the special meeting on wind energy, the board held the first installment of a retreat with the principals.

The expanded panel discussed several matters:

* Issues of the 7-12 transition

* Enrollment projections for the next several years

* How enrollment projections, the successful school referendum last fall and available space would interplay to impact class sizes and minimum section size guidelines for next year

* Space needs, including the need for more science labs at the high school and a potential move of grade 3 from Jefferson to Washington school or some other reconfiguration to free up room at Jefferson

The discussion was limited to an initial exploration of possibilities and their implications. No decisions were made, and no consensus was sought. The discussion will continue in future meetings.

By Kremena Spengler

The Journal

30 November 2007