Minn. AG files suit against wind turbine energy developer

By Jessica M. Karmasek | Jan 28, 2013

ST. PAUL, Minn. (Legal Newsline) -- Minnesota Attorney General Lori Swanson is suing a developer that failed to keep its promises to Minnesota farmers who invested in wind turbine energy systems.

In her lawsuit, Swanson alleges developer Renewable Energy SD LLC, or RESD, sometimes failed to deliver and maintain operational systems or make good on the company's sales promises and revenue projections.

"These are big investments. We don't want to see a company make promises it can't or doesn't keep," she said in a statement.

The suit was filed against the South Dakota company and its founder, owner and president, Shawn R. Dooling, in Hennepin County District Court Friday. It alleges violations of the consumer protection and corporate registration laws.

According to Swanson's suit, the company marketed wind turbine energy systems as a winning proposition to farmers, who paid the company $119,000 or more for the projects.

The company promised farmers that the systems would essentially pay for themselves through a combination of federal grants and a state electricity buy-back law that requires local utility companies to pay retail rates for excess energy generated from a small wind turbine and delivered to the power grid.

The federal American Recovery and Reinvestment Act of 2009, which was passed during the economic recession, provides federal cash grants to purchasers of small wind turbines. For those who qualify, so-called "1603 Grants" cover 30 percent of the cost of new and functional wind turbines.

According to the attorney general's suit, Dooling formed RESD two months after passage of the federal grant program.

At that time, RESD told farmers that the federal grants would cover 30 percent of the cost of their purchase. The company represented that all or most of the remaining 70 percent would be covered by money made by the farmer in selling energy back to their local utility company under the "net metering" law, Swanson's suit alleges.

The state's net metering law requires local utility companies to pay farmers at retail prices for energy transmitted from a turbine energy system to the power grid.

In sales presentations, RESD provided farmers with detailed financial projections showing how much money the farmer would generate each month from selling their excess electricity generated from the turbine system back to their local utility. This typically ranged from about $700 per month to about $1,300 per month, according to the attorney general's suit.

Farmers have reported that RESD misrepresented numerous key points to them, including:

- That the company will timely install a functional turbine energy system;

- That the company will maintain the operability of the wind turbine energy system during its lifetime;

- That the turbine energy system will produce sufficient revenue under Minnesota's net metering law to pay for the farmers' bank loans used to finance the turbine system;

- That the company will pay the interest on farmers' bank loans used to acquire the turbine systems; and

- That the turbine energy system will meet the requirements to qualify for federal grants, which will never need to be paid back.

According to Swanson's office, at least four farmers have filed individual suits against RESD in state or federal courts in Minnesota, and the company has a D- rating from the Better Business Bureau.

In addition, RESD's certificate of authority to transact business in Minnesota lapsed in August, when the company failed to file renewal paperwork. It has done business in Minnesota since that date without proper registration, the attorney general noted.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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