KEYSER – Mineral County resident Kolin Jan has voiced many concerns in recent weeks in regard to the proposed escrow agreement to be inked soon between the Mineral County Commission and U.S. Wind Force, the developers of the Pinnacle Wind Farm on Green Mountain.
On Dec. 14, he presented many of those comments to the commissioners, and on Dec. 28, he was back to see if they were prepared to reply.
The commissioners told Jan the proposed agreement was being reviewed by attorneys at Steptoe & Johnson, and they were not at liberty to comment on the process.
Both outgoing Commission President Wayne Spiggle and Commissioner Janice LaRue agreed, however, that the agreement, when it was fine-tuned, should be made public.
In his earlier comments, Jan urged the commissioners to go over the proposed document carefully, saying “thoroughness is the priority, not expediency.
“There is another wind project under consideration in Mineral County and there will be more to come, so what you do now will provide precedent and set the course in the county for years in the future,” he said.
“If done improperly, this will occupy a lot of time in the courts.”
Jan also questioned whether the commissioners even have the authority to enter into the agreement with the wind farm.
“Signing an escrow agreement for turbine decommissioning is not something the commission should do; that’s the state’s responsibility since they granted the construction permit,” he said.
“The escrow requirement is something the PSC placed on the developer….not on the county, and the PSC should sign the contract instead of placing the county at risk. The Mineral County taxpayers must not be obligated for something that the industry and state government should resolve.
“When it’s time to decommission, will the sitting commissioners be able to manage it? Put yourselves in their position – 5 to 25 years in the future. Is this something you would want to handle? How would you do it? Perhaps the courts, the WV AG office and the PSC legal team could assist in determining a resolution.
“However, should you decide to proceed with an agreement regarding escrow, the current version heavily favors the developer. That’s expected, since they drafted it. Several parts of the contract place the Mineral County taxpayers at a significant disadvantage and need to be radically revised. Since the PSC did not provide definitions for any of the terms used in their permitting directive, you should have provided your own; now is the time to do that and use them to change the document to be significantly more favorable to Mineral County.
“After all, since most of the development money (industry average) comes from taxpayers. It is only fair that the taxpayers get some of their own money returned to them.”
He also urged the elected officials to make sure the amount of money set aside for decomissioning is sufficient for the task.
“What happens when the escrow amount isn’t enough to cover decommissioning?” he asked. “ Do the turbines sit on the ridge tops forever? Is the landowner expected to remove them? If so, how can the county legally force that to happen?
“The escrow amount needs to be enough to guarantee covering the cost of hiring a company to manage the decommissioning, removing the turbines and reclaiming the land.
“Consider: when (not if) the wind farm becomes obsolete and the operating company (most likely an LLC) can no longer make a profit, the LLC will dissolve, leaving behind all its unmet obligations and unpaid bills. The county won’t be able to sue the LLC for decommissioning costs, as the LLC will no longer exist. The County can’t sue the LLC owners and principals, as that is prohibited by federal and state laws.
“So what happens to the defunct wind farm(s)? Without escrow, they sit. Hundreds of turbines in the Western US have been abandoned, still there as eyesores. Again, this is something the state should handle, not the county.
“It was irresponsible of the Mineral County Commission to accept a company the developer recommended to complete the decommissioning study. No doubt the results will favor the developer in determining how much money should be placed into the escrow account. Look at it this way: you go to a used car lot, select the vehicle you want and notify the dealer you want to take it down the road so your mechanic can look it over. The dealer says “Why don’t you use the mechanic next door to me?”
He’s reliable and you won’t have to waste your time.” Which mechanic would you use? The PSC order says that a qualified independent third party will conduct the study. All appearance of independence vanished when the Commission caved and agreed to use a company recommended by the developer. You should have taken control right then and selected an appropriate company.
Master the details. Do not sign the agreement until it and the study’s results are fully understood, along with their long-term ramifications. The study’s assumptions are key….and need to be examined in detail. Which turbines will be used? What inflation factor is assigned to the dollar amount? How is the salvage value determined? If the plan relies on a “robust” salvage/recycling market, the details need to be provided. The abandoned turbines mentioned earlier—why haven’t they been recycled? Why is the developer using new models instead of upgraded recycled models? In the future, who is going to want the old technology, especially since the current models are so large? (See the attached photos of an Iowa wind farm scrap yard, right next to new modern turbines. That could easily happen in Mineral County).
– The blades consist primarily of carbon fiber composites; the industry has yet to figure out how to effectively recycle them, so they sit in scrap yards.
– Are the fund amounts identified in current dollars, or in then-year dollars? Who pays for the 5 year reviews?
– In the current draft the burden to manage the decommissioning is placed on County government. Who is going to do this function? How do we pay for it?
– The county should identify the escrow agent and manage the account, not the developer! You should insist that the escrow account be funded prior to construction. Options include an irrevocable letter of credit or performance bond obtained by the developer, as most likely the developer won’t have funds sufficient to meet the escrow requirement until the farm is operational. What are you going to do if the project stops at any time prior to its completion if there are no funds in escrow? Don’t count on using the courts to make the LLC(s) fund and execute the decommissioning and restoration—-they will have dissolved.
Get a second opinion and maintain veto power over the consultants. I strongly urge you to obtain a second estimate regarding escrow, funded by the developer and compare both results with what was presented in Allegany County. Without the power to overrule findings that are clearly not in favor of the public interest, you cannot claim to be in control. The Commissioners should identify an escrow amount that will most likely be more than needed in order to minimize risk. If you cannot do that, then you should walk away from the project. The developer can address the issue with State government.
Request. Prior to signing an agreement I request: (1) the draft with remarks from Steptoe & Johnson be provided to the public for study and public comment; (2) a public question and answer period with the studies’ authors and the developers; (3) make immediately available to the public copies of any agreements already executed between the County and any entity involved with this project. Without full transparency you will be subject to accusations of favoritism and back-room “deals.”
I urge you to do what is right for Mineral County; it will take a concerted effort to get it right and I’m sure there are people willing to help. Please contact me if you have any questions or if I can be of assistance in reaching a conclusion.
Kolin Jan, December 17, 2010
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