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City signs PILOT agreement for Jericho Power
Credit: Written by Barbara Tetreault | The Berlin Daily Sun | Published Date Wednesday, 03 December 2014 | www.berlindailysun.com ~~
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Translate: FROM English | TO English
BERLIN – The city council has approved a 30-year Payment in Lieu of Taxes (PILOT) agreement with Jericho Power, LLC that calls for the city to receive a minimum of $5.18 million for the five wind turbines over the life of the agreement. At its meeting Monday night, the council also approved a decommissioning agreement with Jericho Power that calls for the utility to make annual payments over 50 years to cover the cost of removing the structures.
Jericho Power is in the process of constructing the wind farm and recently the state Executive Council approved $4.1 million in federal energy bonds through the N.H. Business Finance Authority. The cost of constructing the wind project, including the five 2.85-megawatt wind turbines, is estimated at about $35 million.
The PILOT agreement provides for smaller payments in the initial years with the payments increasing over the term of the agreement. In 2017, Jericho Power will pay the city $150,000. In 2036, the final year of the PILOT, the city will receive $725,000.
In addition to the base PILOT payments, the agreement calls for the city to receive additional payments if Jericho Power’s net revenues average over .08 cents per kilowatt hour in any calendar year.
Jericho Power will pay the city $100,000 upon closing of the financing of the project or by Dec. 31, 2014. The city will receive another $150,000 within six months of the wind farm beginning commercial operations.
The PILOT stipulates that if Jericho Power increases the capacity of the wind farm by ten percent or more, the parties will amend the agreement to cover the added generation.
The decommissioning agreement requires Jericho Power, starting in 2016, to make annual payments to a trust fund that will be held by the city and managed by trustees appointed by the city. Jericho Power would make yearly payments of $18,575, except for year 15, when the payment would be $812,118. Mayor Paul Grenier said a third party investment company will aggressively manage the trust fund with Jericho Power paying the management fee as well as a management fee to the city. A schedule included with the agreement estimates that at an interest rate of 5.19 percent, the fund would generate $8.78 million by 2064.
In a public hearing held before the council vote, Grenier said the city spent a lot of time negotiating the agreements. He said the wind farm will significantly add to the city’s tax base. Grenier noted the wind turbines are not visible from 70 percent of the city.
Jericho Power, is a subsidiary of Palmer Management Corporation of Cohasset, Mass. Jericho Power has agreements to sell 70 percent of the power generated to New Hampshire Electric Co-operative and the remaining 30 percent to the Reading Municipal Light Department in Reading, Mass.
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