Today the Center for Rural Affairs released a report entitled Landowner Compensation in Transmission Siting for Renewable Energy Facilities. The report examines a new concept in landowner compensation, the Special Purpose Development Corporation (SPDC), as a tool to address landowner opposition to transmission projects. Also included is a consideration of eminent domain and other procedures that can create conflict in the context of siting electrical transmission lines.

A full copy of the report can be viewed or downloaded at:

http://files.cfra.org/pdf/landowner-compensation-052014.pdf

“Eminent domain must be seen as a last resort. The SPDC concept has real potential to provide a better deal for farmers, ranchers and other rural landowners,” explained Rosalie Winn, Energy Fellow with the Center for Rural Affairs and author of the report. “By helping create a common interest in transmission development through market-based compensation and an emphasis on stakeholder participation, this new concept helps farmers and ranchers become full participants, true partners, with developers in renewable energy transmission projects.”

According to Winn, the SPDC framework allows for the development of large scale transmission projects while avoiding several significant concerns associated with a dependence on eminent domain and the use of ‘fair market value’ as the sole basis for landowner compensation.

Project delays and legal fees can dramatically increase the cost of transmission projects. These charges are ultimately passed on to ratepayers, paid for through inflated electric bills. It is noted that average costs associated with acquiring land and assembling it into corridors can compose 10% of transmission development costs, or up to $400,000 per pole mile.

Winn’s report also demonstrates that the application of the SPDC tool has its own set of challenges – a unique set of questions regarding formation, ownership, governance and transaction costs that must be addressed.

“However, resolving these issues, and others that may arise, represents crucial first steps toward arriving at outcomes that satisfy both developer and landowner as project participants,” added Johnathan Hladik, Senior Policy Advocate for Energy Policy at the Center for Rural Affairs. “And in so doing, help rural and small town America meet the growing demand for renewable energy both now and in the future.”


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