Grassroots community wind associations

Many years ago I worked with Massachusetts dairy farmers on a strategy to help them break away from the federal system that regulated the price of milk. The goal was ensure that the price they received for the milk they produced took into account their actual costs 0f production. One of the most difficult tasks associated with that effort was organizing the state's very independent dairy farmers so they could do battle against the dairy processors who were almost unanimously opposed to paying farmers one penny more for their milk.

Today the explosive growth of wind energy in the United States has attracted developers of all stripes. Many that I have dealt with are honest and reputable. However, the ranks are definitely being populated by less-than-scrupulous characters out to make the fastest buck possible by exploiting unsuspecting ranchers and farmers.

Landowners interested in benefiting from wind energy development are discovering that one of the best strategies to protect themselves is to organize and use their collective strength to prevent exploitation and provide themselves with greater negotiating leverage. (GW)

A Land Rush in Wyoming Spurred by Wind Power

By Felicity Barringer
New York Times
November 28, 2008

WHEATLAND, Wyo. — The man who came to Elsie Bacon’s ranch house door in July asked the 71-year-old widow to grant access to a right of way across the dry hills and short grasses of her land here. Ms. Bacon remembered his insistence on a quick, secret deal.

The man, a representative of the Little Rose Wind Farm of Boulder, Colo., sought an easement for a transmission line to carry his company’s wind-generated electricity to market. His offer: a fraction of the value of similar deals in the area. As Ms. Bacon, 71, recalled it: “He said, ‘You sure I can’t write you out a check?’ He was really pushy.”

A quiet land rush is under way among the buttes of southeastern Wyoming, and it is changing the local rancher culture. The whipping winds cursed by descendants of the original homesteaders now have real value for out-of-state developers who dream of wind farms or of selling the rights to bigger companies.

But as developers descend upon the area, drawing comparisons to the oil patch “land men” in the movie “There Will Be Blood,” the ranchers of Albany, Converse and Platte Counties are rewriting the old script.

Ms. Bacon did not agree to the deal from the Little Rose representative, Ed Ahlstrand Jr. Instead, she joined her neighbors in forming the Bordeaux Wind Energy Association — among the new cooperative associations whose members, in a departure from the local culture of privacy and self-reliance, are pooling their wind-rich land.

This allows them to bargain collectively for a better price and ensures that as few as possible succumb to high-pressure tactics or accept low offers. Ranchers share information about the potential value of their wind.

The development of eight Wyoming wind associations (with three more waiting in the wings) and similar groups in Colorado, Montana and New Mexico has not always been a simple matter. While ranchers have always been ready to help their neighbors, they have been less willing to discuss their financial affairs.

That has made it easier for wind developers to make individual deals and insist that the terms be kept secret. The developers’ cause has not been hurt by a 10-year drought’s impact on agricultural families’ finances.

Gregor Goertz heads the Slater Wind Energy Association, one of the oldest although less than two years old, formed by dozens of independent-minded men and women. “Maybe they wouldn’t talk to each other often about other issues,” he said, “but here they could see a common goal.”

Mr. Goertz added that, of the 45 or more landowners who came to his first meeting, just one declined to join. The group’s land holdings, which total about 30,000 acres, are centered on a row of buttes where the wind routinely blows at 25 miles per hour.

Mr. Goertz said that because of the changes a forest of turbines would make in the serrated, far-flung vistas here, “everybody in the community is going to be affected.” The association, he said, would “assure that everybody will have some income whether they have a turbine placed on their property or not.”

The developers hope to supply Wyoming wind power to markets like California, which intends to have one-third of its power from renewable sources by 2020.

“This is the best wind in North America, we think,” said Ronald Lehr, a representative of the American Wind Energy Association, the developers’ trade group.

Of course, the decline in oil prices and the constraints on the capital markets are most likely to slow the development of wind energy. But for ranchers, the calculations remain the same about whether to deal with developers individually or as a group.

Bob Grant, 82, a rancher who sleeps in the bed his Scottish grandfather brought across the ocean and the prairie a century ago, has never liked the wind here. Mr. Grant has seen it hurl gravel off ridges and into a friend’s face like shrapnel.

He said he warmed to the idea of wind associations after long, individual negotiations with enXco, a French-owned developer.

In early 2007, the centerpiece of the price discussed was a per-acre payment of about $2.50, Mr. Grant and an enXco representative said. Discussions broke off, then resumed a year later; the suggested price per acre has nearly doubled.

The doubling of the offer made Mr. Grant and his sons wonder how they could assess, and trust, any offer, they said.

Greg Probst, a representative of enXco, said the first offer had not been an effort to drive a hard bargain. It was, Mr. Probst said, a realistic appraisal, given the difficulties of transporting wind power to market when there was little transmission capacity to spare.

From early 2007 to late 2008, he said, the potential marketability of wind power in southeastern Wyoming was enhanced as plans for construction of the Wyoming-Colorado Intertie, a privately financed transmission line, became firmer and Xcel Energy showed an interest in buying the renewable energy.

“There’s a better chance that there’s a market for the power, and a way to get the power to market, than there was 18 months or two years ago,” Mr. Probst said. “So we’re definitely willing to pay more at this point.”

But the experience made the Grant family look harder at the possibility of joining their lands with those of their neighbors in a new group, the Bordeaux Wind Energy Association, which sent its incorporation papers to the state just before Thanksgiving.

The godfather of such associations is a federal official, Grant Stumbough, whose work for the Resource Conservation and Development office of the Agriculture Department was focused on ways to keep ranchers on the land. Revenue from wind farms, he believed, could mean the difference between success and failure for some ranchers.

Mr. Stumbough felt the ranchers were at a disadvantage when dealing individually with wind developers. The developers, in most cases, know more than landowners about the value of the wind and the transmission lines that will carry it.

For instance, the deal that Mr. Ahlstrand offered Elsie Bacon was valued, yard for yard, at as little as a quarter of the amount that the largest local electrical cooperative had paid for a large transmission right of way. And it included a nondisclosure clause to prevent her from comparing notes with neighbors.

(Mr. Ahlstrand did not respond to repeated telephone calls and e-mail messages seeking his version of these events.)

Mr. Stumbough said: “I thought we could use collective bargaining strategies to maybe have a little more leverage in negotiating with wind developers. If we could all get together and work together cooperatively and do some cost sharing and maybe share some of the profits, I think it’s going to be a benefit to everybody.”

The idea has quickly spread. Aside from the promise of economic dividends, which may make it easier to stay on the land, ranchers are finding other less tangible benefits to the groups.

Larry Cundall, a rancher in Glendo who heads the Glendo Wind Energy Association, said the organizational meeting in April attracted 126 people, some from 60 miles away. It had, Mr. Cundall said, “the feeling of an old country dance.”

“Afterward,” he went on, “everyone stood around and visited like we did before we had TV.”

The initial reaction, Mr. Cundall said, had been “90 percent positive,” although he admitted there was skepticism. “Everyone takes everything with a grain of salt around here,” he said.

The associations send out requests to wind developers who may be interested in constructing a wind farm; Mr. Goertz’s Slater Association, the first one formed, gave tours of their lands to at least a dozen different developers, Mr. Goertz said, and are in the final stages of making a deal.

Asked if the terms of the impending deal were better than those offered to some of the ranchers originally, Mr. Goertz said simply, “Yes.”

The financial arrangements of each association are unique, but in the case of the Slater Wind Energy Association, 55 percent of the total annual royalties is to be distributed among the landowners who have turbines on their properties. The rest is to be distributed among all association members, both those with turbines and those without.

Jim Anderson, the state senator whose district covers the windy acres of this region, welcomes the rise of these associations as vehicles to market their wind and as bargainers with the leverage to get ranchers a good deal. “I think the word is kind of out,” Mr. Anderson said, “that Wyoming is probably ahead of the curve in regard to those people who might be opportunist and want to come in and take advantage” of local ranchers.

“I think that we’ve positioned ourselves well to be prudent and intelligent negotiators.”