The Oklahoma legislature passed three bills (H.B. 2973, S.B. 1787, and H.B. 3028) in 2010 that affect the renewable energy industry. Two have already gone into effect and the third will go into effect on January 1, 2011. A summary of each bill is included below.

The Oklahoma Wind Energy Development Act (the “Act”), H.B. 2973, becomes effective on January 1, 2011 and will be codified in Okla. Stat. tit. 17 §§160.11-17 (2010). The Act includes the following:

  • Decommissioning: Decommissioning requirements apply to any wind energy facility entering into or renewing a power purchase agreement (PPA) on or after January 1, 2011. If energy is not being sold under a PPA, the requirements apply to wind energy facilities which commence construction on or after January 1, 2011. The requirements include:
    • Restoration: Owners of a wind energy facility must remove wind energy equipment (to a depth of 30”) and restore land surfaces to substantially the same pre-construction condition (excluding roads) within 12 months of abandonment of a project or the end of the useful life of the equipment.
    • Cost Estimate and Posting of Financial Security: After the 15th year of operation, facility owners must file a professional estimate of the decommissioning costs together with a financial security (either a surety bond, collateral bond, parent guaranty or letter of credit) to cover such costs. Those failing to so file may incur an administrative penalty of up to $1,500/day.
  • Payment Statements and Access to Records: Any owner or operator making payments to landowners based on the amount of electrical energy produced is required to deliver a statement to the landowner, within 10 business days of payment, explaining the payment calculation and a means for the landowner to confirm its accuracy. Landowners have the right to inspect owner/operator records to confirm the accuracy of payments for up to 24 months following payment. Records must be made available for review within the state of Oklahoma.
  • Insurance: Owners or operators are required to obtain commercial general liability insurance policy with limits consistent with prevailing industry standards (or a combination of self insurance and excess liability insurance policy), which name the landowner as an additional insured and certificates of insurance must be delivered to landowner prior to commencing construction of the facility.

No Severance of Wind and Solar Rights. Wind and solar right severance was restricted in another Senate bill out of the same session, Oklahoma S.B. 1787. The bill restricts the permanent severing of rights to the airspace above the surface estate for the purpose of developing and operating commercial wind and solar energy conversion systems. Thus wind and solar resource leasing arrangements (broadly defined to include easement and option arrangements) must be made with the legal owner of the surface estate. The bill confirms that wind and solar agreements run with the land and outlines provisions for recording the interest. The bill will be codified in the Okla. Stat. tit. 60 §820.1 (2010) and became effective July 1, 2010 .

15% Renewable Generation Capacity by 2015. The Oklahoma Energy Security Act (the “OES Act”), H.B. 3028, sets a goal that 15% of all installed electric generation capacity within the state be generated from renewable energy sources by 2015. Qualifying renewable energy resources include: wind, solar, photovoltaic, hydropower, hydrogen, geothermal and biomass (including crops, residues, animal waste, MSW and landfill gas). Demand side management can be used to meet up to 25% of the overall 15% goal. Notably the OES Act does not include any provision for the use of renewable energy certificates (RECs) to meet the goal.

Expand Transmission in SW. To better facilitate wind-energy development, the OES Act also directs the legislature to work with the Southwest Power Pool to develop a plan to expand transmission capacity in Oklahoma.

Develop Natural Gas and Add Fueling Stations. Noting the opportunity to develop Oklahoma’s abundant natural gas resources, the OES Act sets natural gas as the preferred choice for any new fossil fuel based electric generation capacity until January 1, 2020. It also sets a goal to develop public CNG fueling stations every 100 miles along the interstate highway system by 2015 and every 50 miles by 2025. The OES Act became effective November 1, 2010 and will be codified in the Okla. Stat. tit. 17 §§801.1-7 (2010).