Wind

Insurance

Posted: May 6, 2016 at 11:05 am   /   by   /   comments (0)

County agrees to road users agreement with wind developer

They bought insurance. That’s how most council members rationalized signing an agreement with wpd Canada—the developer of the White Pines industrial wind turbine project around Milford.

Municipal staff and their legal counsel had successfully framed the debated as “protect the County, or leave it exposed.” The Road Users Agreement (RUA) prescribes a set of rules by which the developer repair damage caused by driving thousands of trucks over County roads. The deal details remedies that kick in if the developer fails to follow the rules and assures follow through by requiring it to post $2.5 million in security in the event it reneges on those remedies.

Councillor Treat Hull doesn’t like the White Pines project but said he couldn’t allow his distaste for the project to cloud his judgement on the deal before him. Nor was the deal, in his view, a tacit endorsement of or acquiescence to the project.

“I have an insurance policy on my home to protect me from a fire,” said Hull. “I am not endorsing the burning of my house.”

So there it was. In simple terms, Hull had tabled the compact rationale for holding his nose and making a deal with the developer.

Little else about the council debate was as concise.

The early bits featured lawyers Garth Manning and Alan Whiteley poking holes in the agreement and urging council to refer it to a specialist in such contracts. They argued this agreement might leave the County more greatly exposed than if they didn’t sign anything at all.

For example, Manning criticized the lack of due diligence in scrutinizing the developer’s finances— arguing that its financial strength needed to be understood in order to quantify the County’s exposure.

The County’s lawyer, Wayne Fairbrother, later countered that this wasn’t necessary, as he had irrevocable security from wpd.

“I am not interested in how encumbered they are or what their assets are,” said Fairbrother. “To my knowledge, this is the only RUA that I’ve seen in looking at other precedents, where we have an irrevocable letter of credit in excess of $2.5 million, and that is cash. They can’t revoke it; they can’t even challenge our ability to take the money if there is a default.”

Alan Whiteley suggested council was better off with the protections afforded under the Municipal Act than to be drawn into a deal with this developer.

Fairbrother answered that without the financial bond provided in the agreement, any claim under the Municipal Act would prove fruitless.

“If you don’t sign this agreement and they damage the road,” said Fairbrother, “we have no security to fix it. We have to go after them. And if Mr. Manning is right and they have no assets, we are going after a ghost. We have cash through an irrevocable letter of credit that continues in effect through the term of the agreement. You can’t get any better than that.”

The format of a council meeting isn’t conducive to a debate about contract law. Whiteley and Manning made their assertions within a prescribed timeframe. Fairbrother presented contradicting arguments—but given the circumstances, his arguments went unchallenged.

Some felt the County’s attorney went too far in criticizing the arguments and analysis by Manning and Whiteley—particularly as there was no opportunity for rebuttal.

In any event, council was inclined to sign the deal. Some, like Treat Hull, did so grudgingly. Others saw the issue in more black-and-white terms.

“I don’t think there is any risk [in signing the deal],” said Councillor Kevin Gale. “I trust Mr. Fairbrother. We are mixing up a Road Users Agreement and windmills. We need to respect the opinion of our solicitor,” urged the Sophiasburgh councillor.