Published on April 18, 2007

MONTPELIER — When it comes to commerical wind, the cost of doing business may far exceed the price of winning hearts and minds in the court of public opinion.

After listening to testimony last week, the Senate Natural Resources Committee is taking up a discussion on a broad-based energy bill that recently passed the House.

One of the most controversial components of the bill is whether the state should give wind farms a break on the taxes they pay into the education fund.

In asking for the break, wind developers have cited the need for a fixed tax rate, in light of the expenses of installing turbines on high mountain ridge lines and the cost of permitting.

As the applicant for a 16-turbine wind farm in Sheffield, UPC is currently awaiting the outcome of its case that recently went before the Public Service Board (PSB). Interest is running high in the case as the outcome could determine if wind will become a viable and a permitted renewable source of energy for the state.

UPC’s Paul Gaynor, who heads the Massachusetts-based company in Newton, said his company spent $3-million in applying for a certificate of public good before the board.

Those costs, he said Tuesday in an telephone interview from his office, include tower installations to measure wind speeds, lawyers’ fees, studies like those required by the board on the project’s effect on bird and bats and aesthetics, along with the costs of bringing forth and putting up expert witnesses to testify during the hearings on the company’s behalf.

No doubt mindful that the board’s decision is still pending, Mr. Gaynor said that the cost of doing business in Vermont is not much different than in other states in New England. Still, he said, the $3-million spent in the permit process was “definitely more than we had budgeted.”

He went on to note that the process before PSB is like a trial where time is spent preparing testimony. “Preparation takes a lot of time,” he said.

At $3-million, the permitting cost comes in at 3 percent of what developers estimate the Sheffield facility will be worth when and if it is up and running. For while the facility will cost $75-million to construct, it will be worth $100-million to the company when finished, according to testimony before the House Ways and Means Committee earlier this month.

But whether the project wins approval or not, the cost of permitting must be paid up front.

“That’s the cost of doing business in this area,” said Rob Ide of the Department of Public Service (DPS).

In a recent interview, Mr. Ide, who is the department’s director of energy efficiency, said he was not surprise by what the permitting process cost UPC. It is likely one of the risks a developer assumes when he takes on a controversial project like a commercial wind farm.

Still, the risk notwithstanding, “it’s a lot of work to get to no,” added Mr. Ide.

Equally expensive on a far different scale, is the cost opponents must pay in presenting their case to the board. In the two wind cases to come before the board this far, roughly $900,000 has been spent to defeat the projects by groups organized in opposition.

Conceptually, the public is supposed to be represented in these hearing by the DPS in its role of public watch dog.

But the public is seldom of a single mind. And commercial wind has scattered public opinion all over the state’s ridge lines. To represent such a body in a courtroom-like setting can be a thankless task.

“How about impossible,” suggested Mr. Ide.

As one of the oldest axioms in American capitalism has it, time is money. And UPC estimates that it is six to 12 months behind schedule with the Sheffield project. How that breaks out in the $3-million expenditure has yet to be determined.

Mr. Gaynor, however, attributed the delay to changes the company made in its original petition rather than the workings of the permit process.

“I think we went into the Vermont process with eyes wide open,” he said. “We knew exactly what we were getting into.”

Only weeks before the hearings were to get under way before the board, UPC amended its petition and scaled back the project from 26 to 16 turbines. By doing so, it eliminated the array of turbines that had been proposed for the neighboring town of Sutton, which did not want to host a wind farm within its limits.

The move helped to mitigate criticism from DPS who had expressed concerns that a wind farm would likely have an adverse impact on a private school in Sutton for students with behavior and emotional problems — to the point of closing a facility that was the largest taypayer in town.

Mr. Gaynor said the company amended its petition to make the project more appealing to the board.

To be flexible, he said, was the “whole point of the process.”

The change also sent local opponents scurrying. There was little choice. More money and time had to be spent with their lawyers.

As the process that determines if any generating power plan is in the public good, the PSB hearing also provides an opportunity for those who oppose a project to be heard; albeit, at a cost.

“I’ve gained a great deal of respect for the Public Service Board,” said Paul Brouha of Sutton, who was an abutting property owner to the project under UPC’s original plan.

Initially, he worried that the opposition would not get a fair shake before the board. But the process made him a convert.

“As expensive as it is,” he said in an interview last week, “it gives you a way to get involved in the process, if you put the money out.”

Cumulatively, groups like the Ridge Protectors and the town of Sutton, and Universal Health Services opposing the UPC project before the board spent roughly $700,000. And, according to Mr. Brouha, they still owe $100,000.

“We’ve got to do a fund-raising to pay for that,” he said.

Though he praised the board for objectively listening to testimony, he believes there has to a better, cheaper way for interested citizens to participate in the process. To that end, he has approached area legislators with a plan to shift the expense of fighting a project back onto the developer.

Essentially, the plan would require wind project applicants to create an escrow account which towns in a ten-mile radius of the project could draw to pay for representation before the board.

Money for the escrow, advised Mr. Brouha, would come from the federal grants and incentive programs that have been created to stimulate wind development.

Mr. Brouha is not confident that his proposal will ever see the light of a State House committee room — one legislator told him that it could have a chilling effect on all new power generating proposals. Still, it underscores his frustration of a small town like Sutton fighting a company that has financial backing from well-known titans of capitalism like JPMorgan Chase and Company and Wells Fargo.

Presently, UPC has three wind farms up and running — one in Hawaii, one in Mars Hill, Maine, and a third that is just starting to come on line in Lackawanna, New York. More are in the works.

According to Mr. Gaynor, four or five, including the Sheffield project, are slated to begin construction this year. And there are plans to build five or six others in 2008.

While the Sheffield project will be sited on leased land, UPC also owns land in Vermont. Mr. Gaynor said although there are no plans to build another wind farm in the state, the company is still waiting for PSB to hand down a decision.