Ganje Opinion: The legislature’s failing grade on wind farms
Ganje Law Offices
A wind farm’s end-of-life decommissioning occurs when a project is abandoned, at the end of a project’s useful life, or upon a bankruptcy or shutdown of an operation. Decommissioning is a material issue which should be settled at the time of a project’s permit application. As an illustration, a wind farm in Wisconsin was decommissioned this past November after only 20 years of service because it was no longer cost effective. Five wind farms in the U S have decommissioned in the last 5 years. South Dakota law and rules do not require good exit planning for permitted projects. This is particularly true in the matter of the PUC and wind farms.
The legislature is aware of the problem of decommissioning wind farms. A rather minor decommissioning bill is pending before the 2019 legislative session. Awareness of a problem does not necessarily translate to fixing a problem. A liberal teacher, of whom I had very few, would give the legislature an incomplete grade on its oversight for decommissioning wind farms. A conservative teacher would flunk the legislature on this subject. Taxpayers, land owners as well as local communities and counties are the parties to pay the price for failure to establish adequate decommissioning standards. One credible estimate of the expense for decommissioning a single wind turbine put the dollar cost at $200,000. Montana-Dakota Utilities estimates it would cost from $260,000 to $275,000 per turbine on North Dakota wind farms.
SB16 now before the legislature proposes that financial security deposits for decommissioning should be controlled by the Public Utilities Commission. That is good as far as it goes. But it goes a very short distance. SB16 discusses a small part of the decommissioning issue. SB16 is akin to members of an audience on the sidelines watching a boxing match and when it’s over claiming themselves the victor.
Wind farm deconstruction and related land restoration usually require the reconstruction or removal of utility roads as well as the complete removal of turbines, concrete, substations and below ground circuitry. One legislator with whom I recently communicated assumed any scrap value received on deconstruction would take care of decommissioning costs. His opinion did not consider the expense of transporting scrap to market, the price of scrapped steel and other scrap material, labor costs, and the lengthy distances from a turbine’s location in South Dakota to a distant scrap market. A landowner upon whose land a wind farm infrastructure sits does not own the wind farm infrastructure. And more to my point, the legislator’s thoughts placed no financial responsibility on the wind farm operator who we will assume received revenues during the operation of the wind farm.
Should the wind farm applicant disclose its decommissioning plan at the time of the application? If a company knows its development plan, has done the economic tests to determine feasibility, completes a cost-benefit analysis, and takes the advice of engineers and experts who have reviewed and approved a proposed project, then that developer also has enough information and technical knowledge to —at the time of a permit application—publish and disclose how the company would decommission a project. How does the state calculate the amount of financial security to assure complete decommissioning? What formula or rules does the state use to calculate the amount of financial security? When does the state require the deposit of any decommissioning security? What are the penalties for failure to timely decommission? Are the decommissioning plans to be certified by licensed engineers? What are the minimum requirements for the process of decommissioning? What are the operator’s deadlines for completing the decommissioning work? Is a landowner to do his own tear-down after an orphaned wind turbine has been sitting on his property unattended and inactive for two years? South Dakota does not address these matters in law or regulations. And SB16 does nothing to address these matters. If I were a ‘judge’ on this matter, I would sentence the 2019 legislature for gross negligence. And I would advise the governor to not commute the sentence.
Financial decommissioning safeguards, if in place, would have a considerable effect on the interest of local landowners, farmers, ranchers and neighbors in proposed wind farms. It is a common response to a proposed wind farm for a landowner to say, ‘Oh yes they will be here today – but gone tomorrow.’ If ‘tomorrow’ comes don’t landowners, farmers, ranchers and the neighbors of a wind farm have a right to the proper and complete process of decommissioning?
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