BRYAN ROBERTS OAM LLB

THE proposal for a wind farm on the Dundas Tableland at the Wannon has now proceeded to the stage where Option Agreements and Leases are being circulated.

I raise the following issues:

THE PARTIES:

The stated developer party is EE Australia Pty Ltd-EE being European Energy, a large Danish company; however, EE may assign its rights under the Option (and any subsequent Lease) to any party and at any time it chooses.

The history of wind farms shows farmers find themselves with tenant companies of many and varied ownership-Spanish, Danish, Malaysian and Chinese.

The tenant company is trustee of a trust – the beneficiaries of the trust are unknown. If the trust becomes insolvent, the trustee tenant company is not liable. The tenant can cease operating at any time.

LEGAL ADVICE:

EE kindly recommends a firm of solicitors in Ballarat to advise farmers and also agrees to pay the solicitor’s fees (but it is not clear such fees would be paid if the farmer doesn’t sign the Option)

I query how that solicitor can give fearless and impartial advice in such circumstances.

THE LAND

The company obtains an option to develop turbines over a large portion of each farm – the number and precise location of each turbine is not known – the company has complete discretion within the large prescribed area.

The company can carry out testing, investigations of various types, bring on plant and heavy equipment, make excavations, erect fencing and facilities. It can make roads and bridges and store soil and rocks.

The farmer is required to keep stock clear of these works – all of this for a total fee of $3500 (CPI adjusted) per year.

CAVEAT:

The company may lodge a caveat over the land to protect its interests for up to seven years before the farmer knows if there will be any rent earning turbines on the property.

OPTION PERIOD

The option is for five years with two one-year options – up to seven years.

RESTRICTIONS ON THE LAND

For the length of the option period, the landowner (farmer) cannot “sell, transfer, lease, sub-divide, licence, mortgage, encumber or otherwise deal with or dispose of the leased area” unless the third party to any such transaction also enters into an agreement with the tenant.

THE LEASE

If the Option to lease is exercised the Lease is for 40 years with an option for a further 40 years.

Rental is $40,000 per turbine per year, CPI adjusted.

The tenant has the right to erect turbines plus underground cables, access roads, security systems, wind monitoring structures, construction compound, concrete batching plant or any other necessary works.

It should be noted roads are for access to turbines and not efficient movement of stock.

FARMING OPERATIONS:

The tenant “to the extent reasonably practicable” will “use reasonable endeavours not to unduly interfere” with farming operations.

The farmer cannot claim compensation for interference with operations. Access must be full and free AT ALL TIMES.

Trees and shrubs cannot be planted within one kilometre of a turbine; there can be no spraying, back burning etc., which interferes with the turbines.

The tenant has an unlimited right to cut down trees within the area of operation.

INSURANCE ISSUES

It appears usual farm policies do not cover events eg. fire caused by the wind farm.

What cover does the tenant wind farm insurance provide? There is also a danger the farmer’s insurance may not cover damage to a neighbouring property for fire caused by the wind farm.

VALUATION:

I understand the value of a farm with a small number of turbines will be significantly diminished; with a larger number the valuation effect is neutral.

The purpose of this essay is not to give advice but to say it is most unwise for a farmer to enter into any form of agreement without first obtaining expert and impartial legal, valuation and insurance advice.