Clean line no better the second time

by Blake Hurst, President of Missouri Farm Bureau

Well, they’re back.  The Grain Belt Clean Line project has re-submitted an application to the Public Service Commission of Missouri for certification as a utility, which would give the company the power of eminent domain.  The original application was denied by the PSC because the transmission line to carry power to the eastern U.S. provided no benefits to Missouri consumers while imposing huge costs on the landowners whose farms and homes would be in the path of the transmission line. The line would travel completely across the state, affecting over 500 landowners.

Clean Line comes to the table this time with two things it didn’t have last time: the publicly stated support of Governor Nixon and an agreement with several dozen cities across the state to purchase electricity from the transmission line.  The company has promised that Missouri citizens will benefit, to the tune of 10 million dollars in below market electricity rates per year.

The company has promised a series of steps it says will protect landowners, bragging that landowners will receive 32 million dollars in total compensation.  Sounds like a lot, but considerably short of 10 million dollars per year for the decades the project will be in place.

Why the huge disparity?  Because the landowner compensation anticipated by Clean Line is predicated on the use of eminent domain, which means that individual landowners will have absolutely no bargaining power.   Eminent Domain is important because without it, useful and important projects could not be built.  Imagine a project affecting only one landowner that would provide electricity to thousands of people.  Theoretically, that landowner could hold up the project until he was paid the total value of the project. That’s clearly unfair, and in order to protect citizens as a whole, the state has always had the ability to grant eminent domain to both public agencies and private utility companies.

So, why shouldn’t Clean Line have eminent domain, now that it’s clear Missouri citizens will benefit to the tune of 10 million dollars per year?  Because the precedent here is distasteful, if not downright frightening.  Find a politically powerful group, promise them several million dollars, and you can then trample on the rights of another group.  Secondly, this project lacks a safeguard that is typically present when utilities are granted eminent domain.  Utilities’ rates are regulated by the state.  So, even though utilities use eminent domain to acquire the easements needed to complete a project, thereby paying less for those easements than they would cost if landowners had the ability to freely negotiate, consumers can be assured that utilities will not receive above market returns because utility rates are regulated.  There is no such guarantee here, because rates are not regulated in the wholesale market for power, where the power carried by the Clean Line project will be marketed.  It’s a measure of the profits to be expected from this project that Clean Line has offered a 10 million dollar a year payoff to cities in Missouri.

As it happens, we can estimate what eminent domain is worth to Clean Line.  Clean Line is offering landowners $1,500 per year for the larger structures they will build, and $500 each year for the smaller structures that will be placed all across Missouri.  It’s not clear how many of each structure they will be building, but it’s a safe bet that most of the structures will be the smaller, cheaper one.  Meanwhile, farmers in Missouri are contracting voluntarily to host windmills on their farms.  Farmers receive about $5,000 per year for the windmills, which are very similar to the structures to be built by Clean Line in both size and effects on the landowners.  So, if farmers in the path of the Clean Line project could freely negotiate to host the line, they might well expect to receive 10 times what Clean Line is paying.  That’s a difference of hundreds of millions of dollars over the life of the project, and that’s why the State of Missouri is receiving such a full court press to grant taking authority.

Backers of the project are frustrated with landowners for their reluctance to host the transmission line.  Climate Change!  Renewable Energy!  How can landowners be so stubborn as to hold up what is so clearly progress?  Landowners along the planned route are being drafted into the war on Climate Change without their consent. If the fight against climate change can only be won if Missouri is crossed by this unsightly collection of wires and poles, then the costs should be more widely borne.  The company can negotiate those easements with willing sellers along the route, and they can pass the increased costs along to millions of electricity users in the eastern United States, instead of imposing all of the costs of saving the planet on 500 small landowners in Missouri.