Jonathan Fahey observes that there seems to be little trouble finding Montana property owners willing to have wind turbines built on their property, but property owners usually fight against construction of power lines. Puzzling, right?, since wind turbines are large, moving and obtrusive, while transmission lines are not-as-big and immobile and generally somewhat less imposing.

Fahey explains:

If a developer wants to put a wind turbine on a patch of private land, he offers to pay a per-acre fee and a percentage of the revenues produced by the turbine. Landowners jump at the chance; siting wind is not a problem in Montana or elsewhere across the West. Ranchers and farmers are eager to harvest wind along with wheat and cattle.

But when a developer wants to build a transmission line, he seeks approval from state regulators. In Montana, this is covered by what’s called the Major Facilities Siting Act. If the project is approved, states can condemn land if need be. The landowner is paid a one-time fee for the land under the wires, but the fee can be small—80 to 90 percent of the land’s fair market value. After all, being able to threaten condemnation does a lot for one’s position at the negotiating table.

Predictably, it’s not nearly enough to compensate owners for what the wires do to the value of their land, so they fight against it instead of for it. It’s a case of “not in my backyard”—at least at that price.

Fahey added:

If landowners were paid some fee, even if it were relatively small, for the electricity coursing through those wires, the land could increase in value instead. Paying landowners more for transmission would, of course, just add more to the cost of an already expensive proposition. Yet willing landowners might reduce financing and legal costs if, instead of fighting projects, they advocated for them.

Transmission companies seem to prefer the status quo – modest one-time fees, eminent domain as a backstop to negotiations, and fighting NIMBY land-owners from time to time – to a royalty-style arrangement.

Anyone know of transmission companies that have tried periodic payments rather than upfront lump sum?

SOURCE: PERC Reports, Volume 28, No.3, Fall 2010.