A mention here or there, not a fully fleshed-out idea as much as a thought tossed against the wall to see if it sticks, emerged during a few conversations on Talkline this week.
At the core is a question: If the country is undergoing an energy revolution, perhaps how landowners are compensated for infrastructure sited on their land should experience a paradigm shift as well?
Traditionally, if an electric transmission line owner seeks an easement to site infrastructure, compensation takes the form of a one-time lump-sum payment for a perpetual easement. It’s roughly the same in the world of pipelines.
Washington Times columnist Mike McKenna – like me, Mike’s first career, his first livelihood, centered on the energy industry; that’s how I first met him – made a bold suggestion to the Talkline audience this week: Make them owners (paraphrased).
His idea – using it for transmission projects is my bent so blame me – revolves around offering landowners not only a lump-sum payment, but stock in the company constructing a data center. Equity, like an easement, can be perpetual, offering the potential for capital gains and dividends.
McKenna understands fundamentally how ownership may turn an opponent into a proponent. More simply, it’s just the easiest and fairest way to treat people.
Transmission lines, pipelines, data centers, more transmission lines… you name it. Equity could be the holy grail in finding agreement.
Here’s another model. Transmission line owners recover their costs and generate a return through FERC-approved tariffs. Before someone calls me out, yes, it’s a bit more complex than that, but for illustrative purposes, go with me for a moment.
What if FERC approved an additional return on equity for transmission projects, with that additional revenue dedicated to landowner compensation? Yes, ratepayers would ultimately cover these costs, as they do with other infrastructure costs, but the additional payments wouldn’t go to the transmission owners. They would go to the landowners who now bear the burden of infrastructure on their land.
Now, even an offer this generous would still be unacceptable to some, but a new model – one that gives landowners a “royalty” of sorts, similar to landowners with mineral rights – could go a long way toward increasing acceptance of the modern-day, highly profitable, highly necessary infrastructure that is the lifeblood of prosperity in this country.
As it turns out, some are flirting with the idea already.
The proposed Rock Island Clean Line transmission project, for example, offered annual payments of $500 per monopole or $1,500 per lattice tower located on private property. Wisconsin law provides qualifying agricultural landowners the option of receiving annual compensation for transmission easements, while North Dakota allows qualifying landowners to receive easement compensation in annual installments with interest.
These arrangements demonstrate that one-time payments are not the only way to compensate property owners who provide land for critical energy infrastructure.
But these early pilots may not be revolutionary in nature compared to the unprecedented opportunity we now see in this country when it comes to energy. Stock and profit-sharing offer more upside.
I spent a large portion of my life working every day to further the energy industry, fully believing energy is a net positive, a staple for good. I still do. That conviction is only bolstered by the belief that a better way forward may involve exploring a new compensation model for all involved.
It could also be faster, and that speed is something we desperately need to keep pace with America’s seemingly quenchless thirst for more electricity.