Private ownership of Nebraska’s wind energy resources has some lawmakers worried

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By ALGIS J. LAUKAITIS / Lincoln Journal Star

Nebraska could be on the verge of what some people say is the biggest land grab since the Homestead days, when early settlers staked their claims to 160 acres.

But this time, speculators are after thousand of acres of land, not hundreds. And they don’t want the land for growing crops. They want to use it to harvest wind energy.

“Nebraska has not seen this kind of gold rush mentality,” said John Hansen, president of the Lincoln-based Nebraska Farmers Union. “Nebraska is sitting on a ton of wind capacity.”

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Kimball's wind farm was the first built in the state. It is owned and opportated by the Municipal Energy Agency of Nebraska. (LJS File)

Kimball's wind farm was the first built in the state. It is owned and opportated by the Municipal Energy Agency of Nebraska. (LJS File)

Hansen said he’s heard reports of developers buying up wind rights on land in Custer,  Cherry, Madison, Boone and Antelope counties with an eye for building wind energy farms.

In Boone County,  a firm called Third Planet Wind, LLC, based in Bad Axe, Mich., is talking to landowners about acquiring wind development rights and is in the process of setting up a meteorological tower east of the small town of Petersburg, said Shannon Landauer, assistant director of the county’s economic development agency.

In Cherry County, two private developers who want to build wind farms near Valentine have filed applications to connect with Nebraska Public Power District’s transmission system, said Dave Rich, the utility’s renewable energy development manager. Rich, citing nondisclosure agreements, declined to name the two developers but said the two projects would total 130 megawatts.

Two corporations also have secured wind rights to 11,500 acres in north-central Nebraska. With 48 turbines, the Holt County Wind Farm would be the largest in the state and would generate 100 megawatts, enough to power between 25,000 and 40,000 homes for a year.  Hansen  and others believe it could be the first of many wind farms built by private corporations eager to gain footholds in a public power state.

Dubbed “the Saudi Arabia of wind” by former Gov. Mike Johanns, Nebraska ranks sixth in the nation in terms of  wind energy resources.

Wind speed across the state ranges from 6.4 to 16.8 mph.

NPPD and other electric utilities, including Lincoln Electric System, have built a handful of small wind projects, but experts say Nebraska’s wind energy potential remains untapped and ripe for picking.

“We are extremely alarmed at the prospect of large, out-of-state private-sector developers coming into our state and buying up wind development rights,” Hansen said.

Lawmakers and others fear corporations will buy up land at bargain prices and farmers and communities will lose out on the economic benefits of the coming wind energy boom.

The Bush administration has said it wants the U.S. to generate 20 percent of its energy from wind by 2030. Last year, wind generation became the cheapest method of producing electricity, dipping below the cost of coal production.

“Nebraska must act now to keep wind energy profits within the state,” state Sen. Cap Dierks of Ewing wrote in a recent news release signed by 11 other state senators. “If  you own land, beware of wind energy developer offers that are likely far less than your resources are worth.

“Each windmill is worth about $150,000 annually to its owner — and ownership is the key,”  the state senator wrote.

On Monday, Attorney General Jon Bruning and state Sen. Annette Dubas of Fullerton urged landowners to use caution when approached by wind energy developers.

“As with any contract, once you sign on the dotted line, you’re making a commitment that could affect you for a long time,” Bruning said in a news release. “It’s important to clearly understand the terms of the agreement and consult a legal or financial professional before signing anything over.”

Gerard J. Keating, a former Atkinson resident who has been working with his brother, Matthew J. Keating to build the Holt County Wind Farm, said the project is an economic development opportunity for the area and the state and will help the U.S. to  become energy independent. He said Nebraska is lagging behind neighbor states like Iowa, South Dakota and Kanas in developing its wind energy resources.

Keating disagreed with state senators who believe big corporations are out to take advantage of rural landowners. He said there is room for both public power, individuals and corporations to develop wind farms in Nebraska.

“I think it’s ridiculous that they think we landowners do not know what we are doing,” he said in a phone interview from his office in Geneva, Illinois. “I’m a landowner and I don’t appreciate them telling me how to do my business. I have done the research and I am getting full value.”

Midwest Wind Energy recently revealed its plan for the Holt County Wind Farm before an enthusiastic group of 90 business and government leaders in Atkinson.

“Holt County like many other (counties) are dealing with the failure of the Legislature to appropriate funding for rural schools, Keating said. “They have to take control of their tax destiny.”

 The $160 million project would represent one of the largest private investments ever in rural Nebraska, according to Patty Wood of the state Department of Economic Development.

The economic impact to Holt County would be $6.5 million in personal property taxes paid to local governments over a five- to10-year period.  In addition, about 15 percent of the total project cost, or $24 million would be invested locally for material and services needed to construct the project.

About 120 jobs will be created during the one-year construction period and eight permanent full-time employees would be needed to operate and maintain the facility.

Michael Donahue, executive vice president of Midwest Wind Energy, one of two companies behind the Holt County Wind Farm project, agreed landowners should consider all options before signing over wind rights.

“I think landowners need to make sure that they are not being taken advantage of,” he said. “They need to research what is going on. They need to understand the difference between various alternatives and make sure their interests are protected. We are not looking to take advantage of them ourselves.”

The Legislature is considering several bills that would help farmers and ranchers reap economic benefits of wind energy.  LB629, for example, would create a Community-Based Energy Development, or C-BED, plan that would allow Nebraska communities and landowners to get the maximum value from their wind resources.

LB648 would create a sales tax exemption for C-BED projects, and LB672 would address eminent domain issues.

Senator Dubas said those types of bills allow lawmakers and citizens to participate in the wind energy development process.

“The Legislature should be setting the priority and setting the direction of where we want to go with wind and renewable energy,” Dubas said. 

Representatives from Midwest Wind Energy met with NPPD officials recently to discuss the possibility of NPPD buying the 100 megawatts of electricity from the Holt County Wind Farm project.

“We will have to evaluate the cost of energy from this facility, compared to other energy resources,” said NPPD spokeswoman Beth Boesch. “We’re interested in learning more about it.”

Boesch denied reports NPPD is negotiating with the company but said the utility would like to increase its renewable energy portfolio from less than 1 percent to 5 percent. NPPD is the state’s largest wholesale supplier of electricity.

Midwest Energy and Edison Mission Midwest are the first corporations to knock on NPPD’s doors. Boesch said half a dozen developers have approached the district asking if NPPD would be interested in buying  power from their projects.

Donahue said his company came to Nebraska because of the strong winds.

“You can’t deny that the wind resource is one of the best in the country,” he said. “I think there is opportunity to develop wind here.”

But Hansen is afraid private projects, like the one planned by Midwest Wind Energy, could undermine the long-term integrity of the state’s public power system. All electric utilities are publicly owned and are mandated by law to provide low-cost, reliable power.

The Nebraska Farmers Union has been working for several years to get a C-BED plan for wind energy development here. Such a plan,  Hansen said, closely works with public power to provide the most economic benefit to landowners and the state instead of sending profits elsewhere.

“We think that this project serves as a wake-up call to public power in Nebraska that they can’t wait and continue to sit and watch ... and expect large private-sector players not to come in,” Hansen said.

Donahue disagrees that private-sector wind energy projects undermine public power. He said private projects have to undergo the same scrutiny by the state Power Review Board as public power projects. 

“We fully recognize that Nebraska is a public-power state. We understand that and we respect that, and we realize that the only potential purchasers of the wind we would generate would necessarily be a public utility,” he said.

Donahue said he wants to make it clear Midwest Wind Energy will not sell power generated by the Holt County Wind Farm to buyers outside of Nebraska.

“There is not an intent to go around public power in Nebraska. What we hope to do is negotiate a mutual power purchase agreement with public power (in this case NPPD) and provide them low-cost, renewable energy at or below the cost of which they could generate it themselves,” he said.

Donahue believes C-BED  projects can play a big role in Nebraska, like they have in Iowa and Minnesota, which already have big wind farms.

“Other states with a lesser wind resource than Nebraska have been successful because they have used a three-prong approach: public power, C-BED plans and independent power producers, all working together to develop the renewable resource,” Donahue said.

The Holt County Wind Farm is not a done deal.

NPPD said it will look closely at economic and transmission issues, and right now, it has other priorities, like restoring its storm-damaged power transmission system.

Said Donahue: “I’m hopeful that we can work out a win-win situation that’s going to be good for NPPD, good for local landowners, the local communities and Holt County — that’s the goal.”

Reach Algis J. Laukaitis at 473-7243 or alaukaitis@journalstar.com.