April 23, 2002

A Case Study on "Wind Farm" Development and Community Relations
FPL Energyís Proposed "Wind Farm" in the Town of Addison, Wisconsin*

Energy companiesí proposals to build "wind farms" ­ i.e., wind turbines mounted on tall towers ­ to produce electricity involve complex community and public policy issues.  This is particularly true when "wind farm" developers propose to build the large windmills near homes or in other areas where the large, industrial machines are incompatible with current land uses and activities.
This paper illustrates the problems caused by "wind farm" proposals by focusing on the attempts by the nationís largest wind energy developer ­ FPL Energy ­ to obtain a permit to build a "wind farm" in the Town of Addison, Wisconsin.  This proposal is particularly appropriate for a case study because:
* FPL Energyís website claims that "building strong partnerships in the community is criticalÖ"
* FPL Energyís Addison "wind farm" proposal generated significant controversy within the community, and was finally withdrawn on January 29, 2002, after it had been pending on and off for more than two years.
* Some of FPL Energyís actions in Addison seem quite inconsistent with its website claims.

Winners and Losers
Before discussing the Addison "wind farm" proposal, it is important to note that during the past few years, the wind energy industry, certain advocacy groups and some public officials have shown considerable interest in building "wind farms" or in enacting legislation ­ particularly subsidies ­ to encourage "wind farm" construction.
Government actions to encourage "wind farm" construction have been justified based on claims that windmills have environmental advantages compared to the "traditional" means of producing electricity ­ using coal, nuclear energy, natural gas, hydropower or oil ­ that now supply 97% of the electricity used in the U.S.  However, as "wind farm" development has occurred, it has become increasingly clear that wind energy has its own drawbacks, including:
* High costs compared to electricity from "traditional" energy sources.
* Only small amounts of electricity are produced by the very large machines (often 300 ft. tall) and that electricity production is intermittent, unreliable and unpredictable.
* Windmills have other disadvantages including health and safety issues caused by blade throws, ice throws, lightening strikes, noise, shadow flicker and stray voltage in addition to scenic impairment and bird kills.
Government actions to encourage "wind farm" construction include generous federal tax shelters and other subsidies as well as state mandates and subsidies provided by the State of Wisconsin and other states.  Such subsidies and mandates are considered necessary because wind energy is not economically competitive with traditional sources of energy used in producing electricity.  Unfortunately, however, the U.S. Department of Energy, its National Laboratories and other contractors, and various "renewable" energy advocates are misleading the public, elected officials and regulators by underestimating the true costs and emphasizing the claimed advantages of wind energy while failing to provide information on the disadvantages.  Wind energy has clear "winners" and "losers."
* The "Winners" include:
* The "wind farm" developers who, through government subsidies and other requirements, are able to reduce their tax liability and realize significant profits by shifting a large share of their costs to consumers and taxpayers.
* Farmers who receive payments from "wind farm" developers for use of their land for the windmills and associated substations, transmission lines and other necessary facilities.
* Advocacy groups that favor "wind farm" developments, suppliers of wind turbines and other facilities, construction companies that build the facilities, and lawyers and PR groups who represent the developers.
* The "Losers" include:
* Electricity consumers who are forced to bear higher costs of electricity when the use of wind energy and other renewables is mandated by a state-imposed "Renewable Portfolio Standard" or who must pay "public benefits charges" (which is really just another tax added to taxpayer utility bills) imposed on electricity use.
* Taxpayers who end up bearing the burden of taxes escaped by wind energy developers who take advantage of generous tax shelters (including federal production tax credits and accelerated depreciation), similar tax shelters provided by some states, property tax exemptions, and direct subsidies.
* Neighbors of "wind farms" who experience property value losses, the noise often associated with windmills, and other negative consequences.
* Members of the community and the public that are offended by the scenic impairment and other adverse environmental impacts.
* The state economy.  (See Endnote 2, below).

FPL Energyís Proposed Addison "Wind Farm"
In the summer of 1998 and in response to a Wisconsin state mandate imposed on certain Wisconsin public utilities,  FPL Energy and its advocates began their efforts to attempt to site a 25 MW to 30 MW "wind farm" consisting of 28 ­ 33 windmills (900 kW generators atop 230 ft. ­ 263 ft. towers) in the Town of Addison (Washington County), Wisconsin.  On January 29, 2002, after more than three years, FPL Energy finally withdrew its conditional use permit application.   During this time, FPL Energy has submitted three conditional use permit applicationsóthe first two  were almost immediately withdrawnóand three very different proposed projects, each based upon different zoning and land use theories.  FPL Energyís third and final application was submitted on October 11, 2000, and was pending for more than fifteen months before it was finally withdrawn in late-January 2002, notwithstanding the significant and continuous controversy that it had generated.
The magnitude of the controversy is demonstrated by the fact that the West Bend Daily News named the FPL Energy "wind farm" story the top news story for two years in a rowó1999 and 2000óand it was named the no. 2 news story in 2001.  In addition, in August 2001, the Special Prosecutor from the Milwaukee County District Attorneyís office stated:  "To say that the wind project is controversial is an understatement of the highest proportion."
The Public Controversy and FPL Energyís Website Claims
For example, FPL Energyís actions in attempting to obtain permits and approvals for its proposed Addison "wind farm" seem highly inconsistent with the claims appearing on the FPL Energy website.  FPL Energyís website  claims "community dialogue is a vital component in establishing a relationship" and that its goals are to:
* Establish a cooperative relationship with the community
* Listen to our neighbors
* Share information
* Ensure that our proposal fits the interests and priorities of the community

FPL Energyís activities in Addison demonstrate otherwise.  FPL Energyís proposed Addison "wind farm" was controversial as soon as it was first publicly announced, met fierce opposition and divided the community, particularly between the people who would be the "winners" and "losers." This is illustrated by the following examples:
* On October 14, 1999, in a letter to certain landowners that explained FPL Energyís decision to withdraw its first conditional use permit application, an FPL Energy representative stated: "If the situation [public opposition] does not improve, then we will have one last get together and thank you for your efforts and move to another area in Wisconsin that will take the turbines."   Notwithstanding this admission, FPL Energy submitted two (2) additional applications and the controversy continued for more than two years, before FPL Energy finally withdrew its application.

* In an October 22, 1999 commentary that appeared in The Business Journal Serving Greater Milwaukee, a Town of Addison Plan Commissioner stated:
. . .Yet, Addison is now a battleground that pits neighbor against neighbor, farmer against homeowner, old timer against newcomer. . .What happened?  What derailed the FPL Energy express?  To be sure, FPL did a good job in presenting its plans to town officials and to those who own the land on which FPL Energy wants to locate 33 wind turbines.  Unfortunately, that is as far as FPL Energy took the matter.  Simply put, FPL Energy failed to apply a basic tenet of public relationsóbe open, be honest and be loud.  Be openóaddress every aspect of an issue and solicit input.  Be honestónever lie, never even fudge.  Be loudóuse every communication tool at your disposal. . . FPL Energy should have taken its case to these neighbors, addressing each issue openly, honestly and thoroughly.  They should have been completely forthright about any and every concern involving other wind turbine projects.  After all, people would have learned about those problems sooner or later, and it only makes matters worse if folks think there has been an attempt to hide essential facts, which is exactly what happened.

* On October 13, 2000, almost one year lateróand two days after FPL Energy had submitted its 3rd applicationóthe Editorial Staff of the local newspaper, the West Bend Daily News commented under the headline "Uphill battle ­ Credibility may be a problem for wind farm proposal:"
. . .But so far, it appears that FPL has been its own worst enemy.  The company and its supporters now face an uphill battle.  False starts and substantial changes in the project itself are bound to have county residents questioning the viability of the project and the credibility of those proposing it.

* On October 24, 2001, at a New England Wind Energy Siting Workshop, Steve Ugoretz of the Wisconsin Department of Natural Resources summarized "The FPL Fracas in Washington County, Town of Addison," and highlighted the problems as including:
* FPLís early underestimation of the strength of the opposition;
* Presence of an opponent with the resources and sophistication to exploit concerns and divide the community; and
* Significant conflict between older, farm community residents, and newer, urban expats.
* On January 30, 2002, an FPL Energy spokeswoman stated that "The decision to withdraw the application is final. . ."   and offered the following explanation for its decision to "cut its losses"   and leave Addison:
ëIt was a business decision,í spokeswoman Carol Clawson said. ëIt was a very small project in the scope of projects that we do, and it just wasn't viable. There was no point in fighting any further.í  . . .ëWe regret the discord that the project has caused in the community,. . .í

Examples of FPL Energyís Actions that are Inconsistent with FPL Energyís Website Claims
* On August 10, 1999, FPL Energy offered the Town of Addison approximately $2.1 million over 25 years as an "Impact Fee" and an incentive to approve a Conditional Use Permit for the proposed "wind farm."   On December 22, 1999, as public opposition was escalating, FPL Energy increased the offer to approximately $3 million.   In November 2000, FPL Energyís attorney refused to discuss the issue of any payment that the Town might receive if the proposed "wind farm" were to be approved, stating that they "do not want it to look like a bribe."    It appears, however, that Wisconsinís 1993 Act 305 would prohibit any such payment.
* On February 15, 2000, a Special Prosecutor from the Milwaukee County District Attorneyís office summarized his investigation regarding potential violations of Wisconsin Ethics Laws, among others, by FPL Energy and Town officials based on a citizen complaint filed in December 1999.  The investigation focused on a number of private dinners and a chartered airplane trip to Iowa for elected and appointed Addison government officials hosted and paid for by FPL Energy during the period June through October 1999.  The Special Prosecutor concluded that there was sufficient evidence to establish that Wisconsinís Ethics laws had been violated, however, he declined to prosecute.
* On February 17, 2000, the Wisconsin Attorney General concluded that there was sufficient evidence to establish that the Public Service Commission of Wisconsin ("PSCW") had violated Wisconsinís Open Meetings Laws in connection with its refusal to permit citizens to attend a January 24, 2000 meeting sponsored by the PSCW with FPL Energyís attorneys and others that was directed at attempting to develop wind energy siting guidelines.  Based on a citizen complaint filed in January 2000, the Wisconsin Attorney General ordered the PSCW to conduct future meetings in accordance with Wisconsinís Open Meeting Law.
* On December 14, 2000óon the afternoon before the Public HearingóFPL Energyís lawyers from Foley & Lardner filed a complaint with the Wisconsin Ethics Board and the Wisconsin Elections Board alleging that one of the leaders of the group opposing FPL Energyís proposed project in the Town of Addison was "a possible unregistered lobbyist that may be illegally lobbying."   Both Boards dismissed the unfounded complaint immediately for lack of evidence.  The complaint was a conspicuous and "carefully choreographed" but unsuccessful effort to intimidate the opposition and to get a newspaper headline on the day of the Public Hearing.
* On August 8, 2001, FPL Energyís attorney objected to the law firm selected by the Town of Addison to review the application, and contrary to its prior assurances that it would pay all costs, stated that it was unlikely that FPL Energy would reimburse the Town for the cost of the legal review.  On August 16, 2001, FPL Energy was again publicly reminded that it had failed to pay approximately $25,000 in costs that had been invoiced and were due and owing to the Town of Addison in connection with its early-2001 review of FPL Energyís October 11, 2000 Conditional Use Permit application.  Following its January 29, 2002 withdrawal from Addison, FPL Energy publicly stated that it would not pay at least $31,000 in costs associated with the review of its application.
* On August 17, 2001, a Special Prosecutor from the Milwaukee County District Attorneyís office filed charges against FPL Energy in Washington County Circuit Court based on a citizen complaint filed in December 2000.  Five (5) days later on August 23, 2001, FPL Energy pleaded no contest to violating Wisconsinís Election Laws in connection with an FPL Energy consultantís calls to hundreds of Town of Addison households just before the April 2000 election in an effort to illegally influence the Addison Town Board elections by promoting certain candidates that apparently favored its "wind farm" proposal.

When placed in remote areas, "wind farms" may face little, if any, public opposition, despite the higher costs of electricity from wind energy, the environmental disadvantages, and the adverse operational impacts on other electricity generating units and transmission systems.  In remote areas, they are less likely to adversely affect neighborsí health, safety, sensitive environmental areas and property values.
However, when attempts are made to locate "wind farms" in populated areas and/or where the environmental disadvantages are readily apparent and significant, wind projects are likely to be highly controversial.   Wind energy advocates donít dispute this fact.  Steve Ugoretz of the Wisconsin Department of Natural Resources (and a wind energy proponent) stated the following at the October 24, 2001 New England Wind Energy Siting Workshop when he discussed the "Lessons Learned" from "The FPL Fracas in Washington County, Town of Addison:"
Be cautious in picking the communities to develop ­ areas outside metro.; Communities with high population density and growth may be more likely to produce dedicated, well-financed opponents.
In addition, as a result of the controversy surrounding the proposed Addison "wind farm," wind energy and "wind farms" have received greater scrutiny.  The increased scrutiny has revealed that:
* Claims about "wind energy" made by the U.S. Department of Energy, its National Laboratories and other contractors, and various "renewable" energy advocates have proven to be highly misleading.  Those organizations emphasize the claimed advantages of wind energy but fail to provide information on the disadvantages.  For example, these organizations are not sufficiently candid about:
* The high costs of wind energy;
* The added costs of wind energy due to its need for backup generating capacity from traditional energy sources because of the intermittence, variability and unpredictability of wind energy;
* The absence of transmission capacity in remote areas where windmills might otherwise be acceptable;
* The extent to which wind developers' costs are being shifted to taxpayers and electric customers and hidden in their tax and electric bills;
* Scenic impairment and other adverse environmental, health and safety impacts.

* State requirements mandating that certain portions of electricity be provided from wind energy or other renewables have proven to be extremely costly.  These state-mandated requirements:
* impose added costs on consumers, and
* generate a net economic loss to states that results when out of state wind energy developers capitalize on and profit from the stateís requirements at the expense of their own taxpayers.
Other communities considering wind energy development or windmill proposals from FPL Energy or other wind energy developers should pay close attention to what has happened in Addison, Wisconsin.  Communities and citizens should not count on the Officers and Directors of FPL Energy or other wind energy developers, or their state and local government officials to respect the interest and rights of property owners and others that would be adversely affected by "wind farm" development.

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About the Author:  Catharine M. Lawton is a founder and Managing Director of a national independent economic, valuation, and strategy-consulting firm that specializes in technology and intellectual property issues.  She has testified many times as an expert witness on a variety of economic, financial, accounting and market issues involving a wide range of industries.  She has spoken a number of times on intellectual property valuation and other issues.  In addition, she has served as Secretary of the Town of Bartonís (Washington County, Wisc.) Plan Commission for the past 8 years.

Her interest and investigation in wind energy, however, is not on behalf of any client or other interest, but rather arose in 1999 when a major U.S. IPP proposed to locate a 30 MW "wind farm" near her home.  Her initial investigation discovered that the information publicized by the wind industry is highly misleading and incomplete.  Her work in the wind energy area during the past 2 _ years has been dedicated to investigating and researching the claims, and separating the facts from the highly misleading and highly publicized fiction about wind energyówhich is the goal of this self-financed article.

The author welcomes comments and can be contacted at: Catharine M. Lawton, 7039 Mt. Pleasant Dr., West Bend, WI, 53090.  Fax:  (262) 629 ­ 4190, e-mail: CMLawton3@aol.com.