A community-owned wind farm in southwest Minnesota is being sold, ending a costly trip through bankruptcy court that its new owners say achieved just one purpose — escaping a hefty, unpayable fine for a lapse in filing paperwork with federal energy regulators.
Under terms of the court sale, four turbines of the Minwind project near Luverne, Minn., have been sold for $622,000 to a group of community investors led by farmer Dean Tofteland in a deal that closed last week. Seven turbines are approved for sale to the wind farm's lender, First Farmers & Merchants National Bank of Luverne, for $1.96 million in a noncash deal expected to close this year.
More than 300 small investors, including many farmers, stand to lose all or most of their investment in Minwind. It was completed in 2004 on two sites 8 miles apart under a state policy to encourage locally owned wind energy. The turbines have continued to operate during the Chapter 11 bankruptcy case, which was filed in January.
Tofteland, who heads a new ownership group called Community Renewables, and Brian Short, president of the First Farmers holding company, blamed the Chapter 11 bankruptcy on the Federal Energy Regulatory Commission (FERC). A year ago the agency imposed a $1.9 million penalty on the wind farm for not filing annual paperwork declaring it was a qualified renewable energy facility.
Minwind officials have admitted they didn't file the paperwork for several years, saying they weren't aware that FERC had changed its rules to require annual reports, rather than a one-time filing. The failure to file the reports didn't affect electricity production or its price, which is governed by long-term agreements with two utilities that buy the power.
Short, whose banking group has been a lender to many wind-power projects, sharply criticized federal regulators' actions in an interview Wednesday.
"This whole thing is kind of silly because Minwind was assessed a fine that it never could have paid and never will be paid, and the only result of all this is a bankruptcy filing, hundreds of thousands of dollars in legal fees and nobody is ahead except a bunch of lawyers who got paid a lot of money," said Short, who formerly served as a federal magistrate in U.S. District Court in Minnesota.
Mary O'Driscoll, director of media relations for FERC, said Wednesday that the agency does not comment as a matter of policy.