WORTHINGTON – Two recent actions taken by the Minnesota Public Utilities Commission are poised to sharpen a focus on the hiring of local labor for wind energy projects.
On Dec. 6, the Minnesota Public Utilities Commission set a new precedent for wind energy by postponing a vote on the Bitter Root Wind Farm due to concerns about local hiring. Two weeks later, at a Dec. 20 hearing, the PUC approved the Nobles 2 Wind Project in Nobles County – one of the seven projects currently being planned in the state – under the written condition that Tenaska, the project’s developer, provide quarterly reports on its local hiring projects.
As renewable wind energy sweeps across western and southern Minnesota, state and county committees must review and approve site permits and certificates of need for each project. Part of that process includes cost/benefit analysis for the local communities – whether or not the long-term financial benefits for the area justify the expense of the project.
Some of the long-term benefits include tax revenue and lease payments. For example, Bitter Root developers estimate $700,000 annually in taxes paid to local government and over $1 million in lease payments to local landowners.
However, one important factor the PUC has not considered in approving previous projects is the economic effect of hiring local vs. non-local laborers.
According to a North Star Policy Institute report, “Catching the Wind,” construction on wind turbines requires a range of skill sets, as construction laborers, operating engineers, iron workers and electricians all have roles in each project. While it’s understable for developers to keep select highly-skilled people on for all of their projects, the majority of the labor can be done by local workers in each location.
Developers sometimes argue there is not enough local labor to staff their projects, the report adds, but it has been done successfully in the past. For example, Prairie Rose Wind Farm in Luverne used a majority of local labor during construction.
The report explains research regarding how local vs. non-local hiring on construction projects affects communities. North Star found it’s in the best interest of southern Minnesota to insist that developers hire mostly (at least 50 to 70 percent) local laborers for a few reasons.
“Unlike local workers, who typically pay local property taxes, send children to local schools, spend their earnings at local establishments, and donate to local churches and non-profits, non-local workers on wind projects take the wages earned and the skills developed on wind projects back home when they leave,” the report states.
Combined, the seven wind projects now in development statewide could earn local communities tens of millions of dollars more in revenue by hiring local labor.
Considering all forms of income workers would receive – wages, per diem and fringe benefits – over the course of all seven wind projects, the total local spending from a 70 percent local workforce would be about $18.3 million more than from a 30 percent local workforce, “Catching the Wind” reports.
Additionally, money contributed to local economies re-circulates and creates additional income for the community. A study by economists in 2006 found that in addition to the revenue from direct spending, each dollar spent during new construction projects will lead to another 73.77 percent of income for the community. Considering this multiplier effect, the difference between hiring 70 percent local labor and 30 percent local labor on Minnesota wind projects is even more staggering – about $31.7 million, that study says.
As a result of their research, the writers of “Catching the Wind” recommend the following long-term adjustments in the approval process for new wind energy projects:
Require developers to commit to a specific percentage of local hiring during the planning stage of the project.
Collect regular reports from developers on their actual local hiring practices during construction.
Encourage developers to work with trade and apprenticeship programs to train workers in each local area.
During the Dec. 6 hearing, the PUC listened to concerns about local hiring practices. The developer was invited to present data that refuted the research presented, but didn’t produce any such evidence.
Commissioners decided to postpone voting on the Bitter Root Wind Farm site permit and certificate of need. Instead, on recommendation from the Department of Commerce, the PUC voted 5-0 to label the project a “contested case,” meaning a state-appointed judge will review the case and examine evidence on both sides about the socio-economic benefits of the project.
Soon afterward, on Dec. 20, the PUC approved the Nobles 2 Wind Project with the following language:
“The Permittee shall file quarterly reports with the Commission within 45 days of the end of the quarter regarding construction workers that participated in construction of the project. The Reports shall provide an account of 1) the gross number of hours worked by or full-time equivalent workers who are Minnesota residents, as defined in Minn. Stat. 290.01, Subd. 7; 2) the gross number of hours worked by or full-time equivalent workers who are residents of other states, but maintain a permanent residence within 150 miles of the project; and 3) the total gross hours worked or total full-time equivalent workers. Permittee shall work with its contractor to determine the suitable reporting metric. The Report may not include personally identifiable data.”
This language does not reflect all of the recommendations made by North Star Policy Institute, but it’s a considerable difference from previous standards.
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