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Contract with wind farm developer calls for millions in escrow  

Credit:  Will Brumleve | Ford County Record | 03/23/2016 | www.paxtonrecord.net ~~

PAXTON – The co-developer of a wind farm planned for northern Ford County and southern Kankakee County said that an escrow agreement approved by the Ford County Board last week calls for the developers to provide several million dollars in financial security to Ford County to cover repairs and improvements to public roads used to build the wind farm.

Jon Baker, project developer for San Diego-based EDF Renewable Energy, said construction of the Kelly Creek Wind Farm – an expansion of the recently built Pilot Hill Wind Farm – is expected to begin this spring.

The 184-megawatt wind farm is expected to feature 92 2-megawatt wind turbines, with about 60 to 65 of those turbines being located in Ford County and the remainder in Kankakee County, Baker said.

The escrow agreement with Ford County, signed on March 14 by county board Chairman Randy Berger of Gibson City, sets up a letter of credit and escrow account to cover improvements and repair costs for roads that may be damaged within Ford County through the wind farm’s construction.

Baker said the escrow account and letter of credit are required through a road-use agreement that was executed around the same time a special-use permit was originally issued for the wind farm. Baker said the road-use agreement calls for a “bond for the road improvements equal to approximately 125 percent of a third party’s estimate of the road upgrades.” There is also “another 50 percent cash security” required, Baker said, meaning “the road improvements are securitized in some form or fashion to about 175 percent of the estimated cost of the upgrades.”

Baker was unable to provide a total dollar amount for the financial security, but he said the amount will “meet or exceed” the “approximately $7 million or $8 million” that was provided for the Pilot Hill Wind Farm.

EDF Renewable Energy is developing the Kelly Creek Wind Farm with Oakland, Calif.-based Orion Energy Group LLC and Cincinnati, Ohio-based Vision Energy LLC. The wind farm will be in Rogers Township in the Kempton area in northern Ford County and in Norton Township in neighboring Kankakee County. It will be Phase II of the 175-megawatt Pilot Hill Wind Farm, which features 61 turbines in Kankakee County and 42 in Iroquois County.

The developers of the Kelly Creek Wind Farm still need to obtain building permits – and pay Ford County a building-permit fee of $5,000 per wind turbine – and finalize a road-use agreement with Rogers Township and Ford County before construction can begin.

“We’re currently working with Ford County staff to provide all the information that’s outlined in the conditional-use permit to allow them to release the building permits,” Baker said. “(Ford County staff members) are checking for safety design and any setback requirements and similar items of that nature to make sure that our current plans meet all of the requirements that were laid out in the wind ordinance.

“While the (wind farm’s) layout has been set about 95 percent, there are still some small adjustments we’re making to access roads and the collection line, just to make sure that we’re optimizing everything as best we can and limiting impacts to landowners and impacts to public facilities, as well.”

Baker said his firm is also “still finalizing some of the things related to the road-use agreement.”

“At this point, we are having some ongoing conversations with the county engineer (Greg Perkinson) to finalize some of the conditions of the road-use agreement, making sure all the design components are in place so that Mr. Perkinson, along with all the other county engineers and local road commissioners, have all the information they need to feel comfortable signing off on the road-use agreement,” Baker said.

Also still being negotiated between EDF and Ford County officials are various items in a so-called “decommissioning plan” that will spell out the conditions required of the developers if they abandon the project and the turbines end up needing to be removed.

The decommissioning plan, which is part of the road-use agreement, calls for financial assurances, Baker said. However, Baker said he has been in discussions with Ford County’s zoning enforcement officer, Matt Rock, and other county officials in recent weeks about the possibility of changing the financial security provided for decommissioning of turbines.

“As part of the requirements for the special-use permit, it required for us to post a decommissioning security for the entire life of the project for the net decommissioning costs,” Baker told the county board. “In speaking with Matt Rock, we may request that for the first 10 years of the project – (when production tax credits are expected to be available from the federal government) – the form of financial assurance would be some lesser form, maybe a parent guarantee, to allow us to avoid paying for the bond during that initial period.”

Baker noted that during the initial 10-year period that the PTC is available, it would be “very unlikely that the project would not continue operating” during that timeframe.

“At that point, you’d have EDF and another tax equity investor, another Triple A-rated company, or typically A or above, investing in the project, certainly for the first 10 or 12 years,” Baker said. “During those 10 years when you have such strong players who are so strongly incentivized to continue operating the project, if the form of financial assurance could take a different form during that initial period, there may be an opportunity to share some of those cost savings with the county.”

In exchange for a “lesser form” of financial security, Baker said, the developers may consider paying “higher permit fees” to the county.

“We think it would help out us and help out the county, and perhaps only the bond companies would prefer that not to move forward,” Baker said. “So that’s something I would be happy to discuss and have been discussing with Matt (Rock).”

While Baker said that the road-use agreement and building permits will not require county board approval, there is one “other item” that may need the board’s approval. Baker said the issue is that there are two transmission poles with concrete foundations planned for within the proposed wind farm’s footprint that will not meet the setback requirements in Ford County’s wind ordinance. Baker said his firm may seek a variance from the county board authorizing developers to deviate from the setback rules for those two poles.

“In discussing with landowners, they prefer to have those poles as close to the right-of-way edge (as possible), and we typically design them to be as close as possible to the right-of-way without actually going into the right-of-way,” Baker said. “Again, it’s only two locations in the county and we’re still trying to determine what the best course of action is – but, of course, if we desire to keep them where they are … we may come to the board for a variance on those two pole locations.”

Once the road-use agreement is finalized and building permits are issued, some “initial activities” related to the wind farm’s construction would begin, likely sometime in April, Baker said.

“Initial activities would be installing culverts at the field entrances where we would be installing the turbines and possibly adding a second set of wires to the existing (power) poles that have already been installed as part of Pilot Hill,” Baker said. “Activities like that could take place as soon as April, and then we really would look for when the weather turns and when the road (weight-limit restriction) postings are lifted to do the major earth work, which includes cutting the permitted access roads and excavating the foundations (for the turbines). … Then, sometime in mid- to late July is when we’d expect turbines to be arriving.”

Developers have a deadline of Nov. 11, 2016, to start building the wind farm, as required by the project’s special-use permit. In September 2014, the Ford County Zoning Board of Appeals granted a two-year extension of the special-use permit for the Ford County portion of the project. It was the second permit extension granted in Ford County for the project, formerly known as the K4 Wind Farm. In 2011, Ford County extended the permit it initially granted in 2008 for another three years, through November 2014.

The Kankakee County Board last year approved a special-use permit for the Kankakee County portion of the wind farm.

Source:  Will Brumleve | Ford County Record | 03/23/2016 | www.paxtonrecord.net

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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