Watch for the “Catch 22” and other terms in wind power leases, lawyer says
In this week’s edition of Ontario Farmer is an article by retired QC Garth Manning and Wind Concerns Ontario president Jane Wilson, advising landowners to get legal advice before signing any lease or option to lease for wind power projects and associated equipment.
Although Large Renewable Procurement II is “suspended” the government fully intends to bring it back (after the 2018 election), and the FIT 5.0 process is currently accepting applications for wind power projects with equipment less than 500 kW. (See story today about Brant County being approached for support here.)
Here is the article:
Clients need help with complex wind turbine lease documents
In answer to Ontario citizens’ concerns about rising electricity bills and the fact that Ontario now has a surplus of power, the provincial government suspended its process to accept new bids for wind and solar power in 2017.
While the process is on “hold,” wind power developers are still holding open houses and prospecting for willing landowners to sign Options to Lease land for wind turbines and associated equipment, in hope the contract process will resume after the provincial election in 2018.
Landowners should know that these are very complex documents and they need legal advice before signing. Some option/lease agreements contain a box to be checked that means the landowner has read the agreement and waives legal advice. That may not be the smart move. The Ontario Federation of Agriculture, for example, advises members to seek legal advice before signing.
Why? There are many implications to signing an Option to Lease (which converts to a Lease if the company gets a power contract) including rights to use of the property, first right of refusal at time of sale or if the owner wishes to sever property, even the ability to speak out if there are side effects of having turbines on the land.
The fact is, current forms of options/leases are very one-sided in favour of the wind power developer and should be reviewed literally word for word by an independent lawyer. It’s easy to focus on the dollar amount offered by the developer, and ignore other, important aspects of the agreement. For example, some leases contain cancellation options for the power developer, but most do not provide any option for the landowners to terminate the agreement if they change their minds.
Wind power developers always create a separate corporation to own and operate each project. Its assets include, in Ontario, the Renewable Energy Approval, the contract with the government to supply power, the options/leases for the land for turbines and equipment, and any agreements such as for road use with municipalities.
These corporations are usually mortgaged to the hilt. All assets can be sold to another company without consent of the landowners; the buyer could be a dummy company without assets, which is unwilling or unable to perform any obligation of the original company, including, the decommissioning or dismantling of the huge towers.
There are key financial considerations to consider above the lease amount: having a lease on the property may affect the owner’s ability to use the land as collateral for financing; construction liens may also be filed against the project and will appear on the landowner’s title. …
Read the full article here. windfarmcontractscomplexnovember-2016