Farmers get some answers on green energy contracts

By Tim Kalinowski

A panel of government experts from the Farmers’ Advocate Office and Alberta Utilities Commission met with about 40 farmers, landowners and Cypress County municipal officials on Thursday night to discuss the pros and cons of negotiating leases with renewable energy companies. Southeast Alberta landowners are being heavily lobbied by wind and solar energy companies hoping to take advantage of the provincial government’s commitment to have 30 per cent of Alberta’s energy grid supplied by renewable energy by the year 2030.
FAO energy, utilities and policy specialist Michele Del Colle and AUC director of external affair Jim Law fielded questions on everything from contract negotiations, right-of-entry and end-of-life reclamation at the public session on Thursday.
Del Colle said the big thing for landowners to keep in mind is they are not playing under the same rules as oil and gas with renewable energy companies.
“I can tell you it is a totally different playing field. It has nothing to do with oil and gas,” she said while pointing out several key differences.
Some of those differences include:
The rules, protections and guarantees of the Surface Rights Act do not apply to renewable energy companies, and the Surface Rights board has no jurisdiction if a company fails to live up to its obligations, leaving legal action as the landowner’s only recourse. Renewable energy companies do have to employ licenced land agents to hold contract negotiations with landowners. There is no equivalent to the Orphan Wells Fund for renewables that you would have with oil and gas if a company goes bust. And the Alberta Energy Regulator’s Licencing Liability Ratio which ensure an oil and gas companies are fiscally sound before granting licences also do not apply.
On the pro side, said Del Colle, is there is no standard contract, leaving landowners with a lot of leeway in their negotiations, all renewable energy projects are 100 per cent voluntary and there is an undeniable, financial benefit to making these agreements if a landowner does there homework and get proper legal advice to craft a strong agreement in their favour.
“One of the key messages we really want tot talk to you about is when you are approached as a landowner to put in a power plant, either a wind farm or solar farm, it’s a voluntary participation. There is no Surface Rights Act, that actually has a right-of-entry process or any expropriation, you can actually say no. We are not telling you to say no, what we are saying is this is something where you have to collect information and ask questions, and make an informed decision as to what is going to suit you best.”
“A word of caution on that point,” she added, “if they have deemed you area is somewhere they want to be. If you don’t accept the project it might show up adjacent to you, or somewhere else in your community. So you might end up having the impact, but not the financial rewards.”
AUC rep. Jim Law explained further.
“The power plant includes the actual turbine, some the wires that go under the ground, and a substation. But it has to connect with something,” stressed Law. “It has to connect either to the distribution system or it has to connect to a transmission line… You don’t have the same right of refusal there… You have the absolute right to refuse to put the power plant on your land, but, assuming the power plant would be approved, the connection for that is different.”
He went on to explain the AUC would, in the end, decide which lands those lines would cross, and they would be under the jurisdiction of the Surface Rights Act when it comes to compensation claims.
Del Colle said that’s why it was crucial to contact your neighbours before you agree to a project to discuss it with them. She pointed out there were no do-overs once an agreement is signed with a renewable energy company.
“When you are having these conversations, you are going to be dealing with the entire life cycle of this project… Those are the negotiations you are going to have to have. This is not covered by the Surface Rights Act. You only get on negotiation. One negotiation for the next 30-60 years; so you have to do it right.”

Q & A from Session

Q: Is a contract signed today binding on a future owner if the property is eventually sold?
A: It depends on how the contract was written. It depends how they have assigned successors in there, and each contract would have to be looked at individually.
Q: Many gas companies today have cut back on their revenues returned to farmers because prices are down, despite signed agreements, what’s to say they can’t do that with solar panels or wind turbines?
A: The difference is with wind and solar you have a set contract. The Surface Rights Act doesn’t apply so if they were to breech that contract, you would have recourse through the courts.
Q: Is the landowner on the hook for taxes on a site if a renewable energy company goes bankrupt?
A: It depends on local municipal bylaws to some extent, but in Cypress County, for example, any plant over one megawatt would not be assessed to the landowner, but any plant under one megawatt, which is considered in a realm similar to personal usage, would. The landowner would be responsible for paying the taxes on that. Check your local county’s bylaws for further clarification.
Q: Will I have to worry about expropriation and right-of-entry issues if I refuse to sign on for a project?
A: No, because we are not dealing with mineral rights here. Oil and gas companies have the right to come onto a property if they already hold the licences for it. With these kinds of renewable energy projects, whether a landowner decides to allow one on their land or not is a completely voluntary decision.
Q: In the case of a bankruptcy of a renewable energy company, what happens to the equipment that get left on my land? Can I have it taken out or sell it if they haven’t paid me?
A: No.  It’s not your equipment to take. The Bankruptcy and Insolvency Act would supercede any private contract signed with landowners.
Q: What happens in the case of abandonment?
A: There is no fund like that currently in place, and no regulations on abandonment for renewable energy companies. The provincial government may eventually define those kind of regulations, but as a landowner, it is important to define abandonment expectations clearly in your contract negotiations with the companies before you sign any agreement.