Xcel Energy has taken the position that an owner of property under development must assume substantially all environmental liability associated with Xcel's installation of utilities, located both on and off the property, required to serve the property. In line with this position, prior to installing the utilities, Xcel requires that the property owner sign an environmental agreement. These agreements contain many burdensome provisions, including provisions that require the property owner to:
- disclose to Xcel any known or suspected soil contamination and/or groundwater contamination;
- manage excavation of contaminated materials located both on and off the property;
- provide financial guarantees or obtain environmental insurance that cover the owner's responsibilities under the environmental agreement;
- release Xcel from liability related to the management and disposal of contaminated materials located both on and off the property; and
- indemnify Xcel against any environmental claims or related costs, regardless of whether Xcel's activities caused, contributed to or exacerbated the release of hazardous materials, unless such materials were introduced onto the property by Xcel.
Until now, this shift in environmental liability has only been Xcel's practice and it has not been part of Xcel's regulations. Earlier this month, Xcel filed a request with the Colorado Public Utilities Commission ("PUC") for changes in Xcel's regulations to incorporate the terms of the environmental agreement. If these regulatory changes are adopted, the burdensome terms of the environmental agreements will be sanctioned by the PUC and will be subject to very little negotiation. Interested parties may file statements in opposition to this regulatory change with the PUC on or before June 12, 2009. Currently, the proposed effective date for these regulatory changes is October 3, 2009.
Otten Johnson's Real Estate practice group represents owners and developers of property in dealings with utility providers and before the PUC. For more information on this Client Alert or how this proposed regulatory change might impact you, contact any of the attorneys in the Real Estate practice group (for a listing, click here).
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