Wind Farm Landowner, Huron County, Michigan

If landowners accept revenue sharing as compensation for hosting turbines then the Power Purchase Agreement between the turbine owner and the utility company becomes relevent. A request was make to the Michigan Public Service Comission (MPSC) on 5/14/08 for copies of the agreements between Heritage Renewable Energy LLC and Detroit Edison, and between Harvest Wind Farm and Wolverine Electric Company. The MPSC wrote back that they reviewed the contracts and returned them to the companies without retaining copies. There is the appearance that the MPSC is doing this to give the land leasing companies a competitive advantage over landowners. If the power purchase agreements are confidential then revenue sharing means less.

In 1977 something with a similar appearance happened involving Detroit Edison, the MPSC and Huron County landowners.

Thirty years ago a consortium of government and industry groups including Detroit Edison and the MPSC formed the Michigan Energy and Resource Research Association (MERRA) to research power production options in Michigan. Their first project was a study called "A Preliminary Survey on Some Major Factors Bearing on the Feasibility of Energy Centers in Michigan" paid for by a grant from the Federal Energy Administration.

One provision of the FEA contract was that public hearings would be held to discuss the report. When it was time to release the study and have the public hearings Edison decided they needed to buy more land in Rubicon Township where they intended to build a coal fired power plant, and where the Energy Center study proposed to put a mega energy center. With the agreement of the FEA the terms of the contract were not fulfilled, the study was not officially released, the public hearings did not take place, and Edison was, shortly after, negotiating to buy land in Rubicon Township. There is the appearance that the terms of the contract were not fulfilled to give Edison a competitive advantage over landowners in Rubicon Township.

Nuisance lawsuits over wind farms is a risk. All the lease and easement agreements seem to avoid indemnifying the landowner against this. Farm liability insurance does not cover this. It's probably wise to take an inventory of neighbors who will be hurt, weigh the odds of a lawsuit, and determine whether the minimum windmill payments will be enough to cover attorney fees. A high percentage of wind farm projects end up in litigation.

The wind lease market is disorderly and that works in favor of the leasing agents. There could be State laws similar to mineral leasing laws to protect landowners. Typical contracts circulating in Huron County have 10 pages of provisions. Contracts from other areas of the U.S. can run 30 pages.

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If Detroit Edison retains ownership of their wind farms there is no power purchase agreement that obligates Edison to run the turbines when the wind is blowing. If it's inconvenient or too costly to run the windmills compared to other Edison capacity they might let the windmills sit unused and the landowner share of revenue is reduced.

If a contract does not specify the denisty of turbines in a wind farm unit estimating revenue sharing payments is guesswork. The industry standard seems to be 60 acres per MW (the Harvest windfarm has 32 1.6MW turbines on 3200 acres). If 120 acres per MW is used (to reduce noise impacts by increasing setbacks from residences) the payments to landowners would be half of what they otherwise might be.

Land agents suggest the windmills will produce 30% of name plate capacity. Estimating revenue sharing payments without the evidence of wind studies (and without knowing the particulars of the Purchase Power Agreement) is pure guesswork. If the the turbine owners can make money at a lower percent they may put up windmills they know will produce at substantially less than 30% and the landowner ends up getting less than he estimates.

One of the better discussions of leases.
http://www.redorbit.com/news/business/912103/lawyer_gives_tips_for_getting_best_wind_deal/index.html

"What have I done." Comments by a farmer who regrets signing up.
Fox news video of windmill controversy in Wisconsin.

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Email from a local insurance agent regarding liability coverage related to nuisance lawsuists and windmills in general.

From: Skinner, Marcy [mailto:Skinner.Marcy]
Sent: Monday, April 14, 2008 8:09 AM
To: Kristine E. Johnson
Subject: RE: Policy #07410...

Kristine, we would not be able to add Detroit Edison on the policy as additional insured. Our additional named insured endorsement provides personal liability. We can't provide coverage to Detroit Edison for personal liability. Nor would be able to add them as an additional interest. We do not want to accept the assigned liability for the windmill.

Marcy Skinner
Auto-Owners Insurance
Special Lines Underwriting

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