Recently, at the direction of the WV Public Service Commission, the Mineral County (WV) Commissioners approved a Decommissioning Fund and Escrow Agreement for the purpose of protecting county residents against potential financial harm. It is my opinion that the agreement, as approved, is seriously flawed, and subjects the Citizens of Mineral County to a future obligation of several hundred thousand dollars.
What follows is the text of an email sent to the Leaders of the West Virginia Senate and House requesting their review of this failed process which, if not remedied, could pose serious financial risk for other WV counties as well.
For your convenience, following the email text, I’ve included the Decommission Study and the Escrow Agreement resulting from the Study. I’ve also included my initial cautionary letter to the Mineral County Commissioners which was, for some unknown reason, apparently ignored.
February 25, 2011
To: (Via Email)
Senate President & Acting Governor Earl Ray Tomblin
Speaker of the House of Delegates Richard Thompson
Subject: WV Counties placed in financial jeopardy due to flawed industrial wind decommission/escrow procedure.
Based on the outcome of the Escrow Agreement to fund decommissioning of the Pinnacle wind project in Mineral County, I respectfully request that you review the current process that has, in my opinion, placed my fellow Mineral County residents in financial jeopardy and which, unless remedied, will place counties throughout the state in jeopardy of severe financial losses.
As part of the approval process for the Pinnacle wind plant, the WV Public Service Commission assigned responsibility to the Mineral County Commission to:
- jointly approve, with US WindForce – the Developer, a consulting firm to prepare the Decommissioning Plan to determine potential risk to the Citizens of Mineral County (Attachment 1)
- negotiate and approve, based on the Plan, an Escrow Agreement with the Developer to set aside adequate funding to protect the Citizens of Mineral County against financial losses. (Attachment 2)
It is my opinion that, in carrying out the PSC directive which assigned authority to the County Commission, the propriety of such assignment reasonable citizens have questioned, the Mineral County Commission failed to adequately protect the financial well being of the Citizens of Mineral County.
The failure began when the Mineral County Commission, on a 2 to 1 vote, ignored requests from citizens and a standing Commissioner to even seriously consider other qualified consultants beyond G. L. Garrad Hassan, the consultants recommended by US WindForce. As a result, Hassan was selected to prepare the decommission study.
Not surprising to the skeptics among us, the conclusion of the Hassan study resulted in confirming the claim made by the Developer, that the value of scrap would exceed the cost of dismantling and removing the turbines, thus not requiring funding of the escrow account. The rather hastily prepared Hassan assessment, which seemed to not even require a visit the area, actually estimated that the party undertaking decommission in 20 years or so, would make a “profit” of some $35,000.
With many years experience in domestic and international project logistics (power equipment, large manufactured assemblies), I reviewed the transportation estimate for the major components listed in the Hassan study, on which the Escrow Agreement was based. With no specific weights and dimensions to study, but being quite knowledgeable of comparable cargoes, it was obvious to me that the Hassan study estimates were seriously flawed, to the benefit of US WindForce.
My concerns (Attachment 3) for a potentially large (easily a factor of 5 or more) negative variance to the Hassan study were submitted to the County Clerk (receipt acknowledged) for inclusion in the public record prior to the public meeting to consider such findings and advised by the Clerk that my letter would be included in the public record. Additionally, unable to attend the meeting, I asked a friend to read my letter at the meeting. County President Commissioner Pyle did not allow my concerns to be read to the public.
Further, it appears my concerns were ignored and the Escrow Agreement, based on what I feel is a seriously flawed Decommission Study, was signed by the County Commissioners with no requirement for funding reserves. I was not contacted by anyone to discuss or confirm my concerns and, as apparent by the Commission acceptance of the Decommission Study and subsequent “Zero-Down” Escrow Agreement without adjustment to the major component transportation estimate, no challenge was made to US WindForce or Hassan to confirm or counter my claim.
As stated in my letter to the County Commissioners, the concerns I raised could have been easily verified or discounted in a week’s time with minimal effort and no cost. The County Commissioners apparently had no interest in doing so.
Whatever their reason, the decisions of the Commissioners have potentially left the citizens of Mineral County liable for hundreds of thousands of dollars, all to the benefit of US WindForce.
There is no indication that the Public Service Commission has or will conduct oversight to the financial agreement. Lacking that, the very serious consequence of this mishandled duty becomes a serious liability for the future Citizens of Mineral County.
While it is true that a reassessment is required in five years, I suggest it will be extremely difficult to persuade the new owners, presumably bound, but not signatory to the agreement, having all turbines in place and operational, to agree, without a fight, to adjust the agreement by several hundred thousand dollars.
Further, what is the likelihood the owners at the time of decommission will accept that role, knowing that decommissioning and removal of the obsolete units will cost them several hundred thousand dollars? I suggest that the LLCs established to run this business will disappear.
Unless remedial action to require truly adequate funding for the decommissioning of these projects is held at state level and enforcement for failure to perform is insured, West Virginia Counties will face severe economic stress many years from now, and our children, who must bear the brunt of our failures, will wonder why their leaders failed to protect them.
The State of West Virginia must take control of the issues related to decommission and removal of wind turbines and insure that adequate funds are set aside to remove them, long after the income from power generation ends and the owners depart. The Pinnacle Wind Project Escrow Agreement, as currently structured, places no true burden on the Developer or future Owners to perform. In reality, if it is cheaper to walk from a project than to restore the area to its original condition, they will walk. You and I will be long gone. The mess will be left to our heirs.
The WV PSC delegation of this most critical portion of the project to local politicians must be considered failed policy and must not be repeated. The WV PSC must require adequate financial protections for the Citizens of West Virginia and direct industrial wind developers to fully fund future costs. If the PSC is not empowered to do so, the Legislature must act to create such authority, either with the PSC or an agency qualified to make sound judgments concerning decommission funding.
In considering any remedy, the Legislature must insure all information, pro and con, be given equal review. The Legislature must insure that construction of agreements of such significance and potential financial impact will not be delegated to local/state agencies/commissions unqualified to make the proper decision to protect their citizens.
Thank you for your time,
Keyser, WV 26726
Attachment 1: Decommission Study
Attachment 2 Escrow Agreement
Attachment 3 Concerns expressed to the Mineral County Commission
AT Note: We will keep you apprised of developments.
Comment received from Jon Boone: “The basic question to ask anyone involved with this, from the PSC to the MC commissioners, from the legislature to the governor, from the local and state media to the wind developer himself, is: What is the remedy if Hassan’s assessment, which, as you point out, has been lowballed by exponential factors, doesn’t begin to cover the decommissioning costs. The scrap metal argument is utter nonsense, since, if it made sense, the wind LLC wouldn’t be abandoning its equipment.
Without a good answer to this question of remedy, the legislature has failed utterly in its responsibility to protect its constituent polities from the ravages of exploitative development. This is especially egregious in a state where only state government controls local land use decisions.
Does the legislative leadership–and the governor–wish to enhance the reputation of the state as a Banana Republic by trafficking with such carpetbagging riffraff?”