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Experts say be careful on wind deals
Credit: By MARY GOLEM, SUN TIMES CORRESPONDENT, The Sun Times, www.owensoundsuntimes.com 14 January 2011 ~~
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Translate: FROM English | TO English
Farmers at a wind energy information session in Elmwood this week went home with a clear message: Make sure you know what you are signing if asked to lease land for wind turbines.
Both Ted Cowan, an Ontario Federation of Agriculture energy and taxation specialist and Paisley lawyer Patrick Kelly told about 120 farmers at Tuesday’s meeting “there are too many unknowns” surrounding lease agreements for wind energy projects.
Elmwood-area farmer Byron Monk, and others in the Elmwood area, have been approached in recent weeks by wind energy companies to sign leases.
Monk, who told those at the meeting he’s not against wind energy projects, said he’s interested in the compensation such projects offer farmers but “needs to know a whole lot more information” before proceeding.
Before addressing the crowd, Cowan handed out a two-page list of more than 30 items he said they “must consider” before signing anything.
“Ontario needs power,” he said. “The OFA backs green energy where generators do not harm things important to farms or the community. But before signing a lease, be sure it fits your plan for your farm.”
Speaking from what Cowan called “a business, not legal perspective,” he discussed each of the 30 items in detail. Concerns he raised ranged from rent and insurance to building restrictions and lease terms.
Good legal advice is a must, he said.
“You need to know how to get in (to an agreement), but more importantly, you need to know how to get out.”
Each tower costs $5 million to construct and in a good location can generate revenue of more than $700,000 per year, Cowan said. Farmers are paid anywhere from $13,000 to $19,000 a year rent. Most leases are for 17 years, but the wording in some agreement may tie up the property for 40 or 45 years.
“The wind company is never obligated to build on your land, yet it still ties up the property,” he said.
Cowan cautioned that “if the property may be valuable for other development in the next 30 years, do not sign. You will be giving the wind company your future profits or capital gains. Some leases have clauses that appropriate your development rights for aggregates, groundwater, topsoil, sale outside of the family and even your right to speak in public on wind power questions. Any such clause should be removed from the agreement.”
Like Cowan, Patrick Kelly warned farmers of what he called “the dangers involved” and said signing a lease “could make you lose control of your property.”
When asked what companies are better than others, Cowan responded “they are all the same . . . all the leases are the same. Some of these considerations have been put into the lease agreements, but in the wrong way. The considerations are not to the farmers’ benefit.
“Wait until you know your choices,” Cowan concluded. “The government has a Feed-In Tariff program. You can have your own wind project or you can find other firms or partners. You may do better than you might as a landlord. Don’t sign a lease until you have considered the choices and determined what is best for your farm operation for the next 20 plus years.”
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