Windfall

The world's second-largest wind energy project yields costs and benefits for a sheep-farming family in Eastern Oregon.
 

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When Oregon Trail pioneers passed through what would become Clint Krebs’ and Skye Krebs’ land holdings in Eastern Oregon, they couldn’t wait to get clear of it. It was the dry hills, scarce water and, most of all, the perpetual wind that pushed them quickly on to their greener destinations.

Yet the Krebs’ sheep-ranching family has held on to this tumbleweed-choked terrain that sits south of the Columbia River, just past Arlington and north of the tiny burg of Ione, for four generations. To all appearances, that tenacity has paid off.

The same wind-scoured landscape that wasn’t considered good for much more than generating the native grasses that the Krebs’ sheep eat turned out to be superior for one of Oregon’s newer industries:  wind energy. Shepherds Flat, the world’s second largest onshore wind farm, sits on a plateau of land mostly owned by the Krebs.

This blanket of electricity-generating turbines as far as the eye sees is not just visually awe inspiring; it is also highly symbolic, sitting as it does on land that still supports an older, disappearing style of Oregon industry — ranching — right along with the newer form of resource extraction. And one question this piece of land poses: Can the wind business, an industry whose own trajectory is uncertain, spread its benefits widely enough to keep the older (and, more importantly, food producing) rural economy going?

The duality is not lost on landowner Clint Krebs, 61, as the shift from a more traditional way of farming and ranching to a newer era of diversified agriculture and energy production has brought undeniable economic benefits, yet also real costs and consequences, for his family and for the local rural economy.

The cash from the wind farm may have stabilized ranches locally, paved and repaired roads, even built new county buildings. But the money doesn’t benefit everyone evenly, nor does it guarantee the continuance of the rural economy or lifestyle. Five years after the wind boom hit the region, the Krebs family business is emblematic of the challenges and opportunities facing the region. But there is more at stake in this story. Fraught with Shakespearean undertones, the tale suggests as much about the fragility of human hopes and relationships as it does the impermanence of economic fixes.

“Wind has been a most educational experience,” says Clint ruefully on a clear September day outside Enterprise in Wallowa County, where the past president of the American Sheep Industry Association has his primary residence now and significant ranch holdings. For, long before there was a single turbine spinning or a dollar of revenue coming in from the Shepherds Flat wind farm, the Krebs brothers’ families were in conflict over who would benefit and by how much.

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The story begins 150 years ago in the shadow of those turbines at Shepherds Flat. When Oregon was first being farmed, a wheelwright named William Cecil decided one day to hop off the Trail just past the Krebs Ranch sign on Highway 74. Cecil settled near a trickling brook called Willow Creek with the idea of helping to fix the wagons of others going farther to the Willamette valley.

Cecil the wheelwright established a tiny burg and serviced the stagecoaches rolling past the front door. Eventually, rails were laid just a few strides from the store’s front door, and that railway brought Oregon’s premier crop of the time — wool — to market. All around Cecil in Morrow County, families tried their hands at dryland and wheat farming and sheep ranching. By the 1890s, millions of pounds of wool were shipped out of Morrow County and neighboring Gilliam County. For a while, the rail stop at Shaniko, west of Cecil, was deemed the “Wool Shipping Center of the World.”

“[Sheep] create cash and two paychecks,” says Clint, who has ranched all his life. “You get a wool check in the spring and a meat check in the fall.” Of medium build, with kind eyes and that slightly-stiff gait associated with cowboys, Clint describes himself, wryly, as a “pineapple”: prickly on the outside, sweet on the inside.

By 1918, at the end of WWI, the Krebs, a family of dairy farmers from Switzerland who had started their Oregon story in first Helvetia and then Heppner, set down permanent roots in the dusty soil around Cecil and adapted their bovine skills to sheep tending. Henry Krebs Sr. and his wife, Annie, had three sons and two daughters working on the ranch. Soon the family also bought a sister ranch in Montana and, amazingly, for 50 years, shipped thousands of sheep by rail each summer to graze on the later spring grass there, then shipped them back to Oregon’s milder winter.

In the 1970s, when the railroads made it more difficult and expensive to move livestock by rail, the Krebs bought late-grazing grounds near Enterprise. By then Clint Krebs’ father and a great-uncle were running the ranches, and the 30,000 acres and thousands of sheep at Cecil were deemed “impressive” to the local Heppner Gazette Times.

Forty years later, the sweeping if desolate landscape still inspires awe. But sheep ranching has always had a bit of a boom-and-bust quality. And over the decades, it’s been more bust than boom, as a confluence of social and economic disruptions — urbanites eschewing wool for cotton and polyester, commodity price fluctuations — steadily diminished Oregon’s sheep industry.

Today the American sheep industry is a $1.7 billion sector on a continuous decline. In 1920, 2.25 million sheep grazed in Oregon; this year less than a tenth of that — 195,000 — are being raised here. The Krebs have not been unaffected. In 1976 Clint came back to his family’s ranch with an OSU degree in agricultural economics.  He came as a wage earner, with only a tacit understanding that he and his brother Skye, 57, would inherit the land and the business when his father Henry Jr. died or retired. But that transition to ownership accelerated in 1992, when the bank gave the Krebs’ ranch some bad news.

“It was broke,” Clint says. “Well, wait, not broke, there was the land and the livestock, but the bank came around and said, ‘You will have to sell something.’”

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Clint and Skye put together a partnership deal with their father. Diversification became the silver bullet that was going to keep the ranch solvent. “Had we not gone into wheat, had we not expanded our cattle, had we not looked at newer genetics…those all helped, plus damned hard work,” Clint says. “It’s all about vertical integration and a willingness to change.” Today, along with 2,000 sheep, his 300 cattle are a significant slice of Clint’s’ current operations. He is a Country Natural Beef provider, which entails commitment to continual environmental and management improvements, and also a higher price for his cows.

New business divisions helped sustain the Krebs’ ranch. But it wasn’t until late 1999 that the concept took on an entirely new meaning, and a new trajectory was set in motion for the family, the business and the region. Riding a national wave of enthusiasm for renewables, Oregon lawmakers created a funding subsidy source — collected from electricity consumers through utilities — aimed at spurring efficiency and wind and solar energy projects. The wind industry quickly came calling in Cecil and, Clint claims, said he was going to be a rich man.

Clint told that first unnamed visitor to turn right around and leave. But these were “economically stretched” times, as Clint puts it. And over time, the brothers got help erecting an anemometer on the ranch to measure the wind speeds. When the statistics came back, the news was overwhelmingly positive: The average wind-speed on their Cecil ranch was 19 miles per hour. Looking at Oregon wind speed maps, the Krebs’ land was some of the windiest in the state.

That new potential — to lease ranch land for wind turbines and collect lucrative annual fees when electricity started feeding into the grid — was a dangling carrot. It also became something of a poison pill.

Disagreement about spending before wind royalties arrived caused strain. Though Clint Krebs is sparse with details, and Skye Krebs did not agree to any interview requests, anticipation of the potential wind-revenue stream — which would amount to millions of dollars — sent the partner families to lawyers and, eventually, to a rupture of the ranch partnership. The break-up process took around three years to negotiate.

“It was not an amicable split,” says Clint. “In the end we divided it 50/50, or approximately so.” Clint formed a new ranching company called Krebs Livestock; his brother Skye formed Krebs Sheep Co. Clint says his brother and his father were always more focused and expert on ranch operations, while he was better at financial management, making the separation of interests doubly unfortunate.

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Fourth-generation rancher Cameron Krebs picks wheat berries from a harvested field to show how grazing cows can still snack at his ranch in Cecil.

In a short post about Oregon’s wind boom, The New York Times in 2010 quoted Skye saying the ability to ranch on land also generating lease payments was the “best of both worlds.” But for ranchers, who depend on owned land as well as private and public landleasing for their grazing needs, any diminution of acreage owned is an economic privation. During a later interview in Cecil with Clint’s wife Maureen, and their son Cameron, when talking about the ranch past, present, and future, Maureen says with slight frustration in her voice, “Forget the wind.”

The brothers’ estrangement is not the only family tragedy. Although Clint is able to partner with son Cameron, 30, in Krebs Livestock, Skye lost his elder son Cayle, a committed ranch partner, in a tragic auto accident earlier this year.

As the brothers faced dissolution of their partnership, plans for the wind farm moved ahead, if slightly fitfully, with New York-based Caithness Energy emerging as the designated developer of Shepherds Flat, which straddles Morrow and Gilliam counties. The $1.9 billion project consists of 338 turbines, and collectively, the Krebs brothers lease land comprising 728 of the 845-megawatt project, with several other landowners leasing the remainder.

Neither the Krebs brothers nor Caithness have revealed specifics of their royalty arrangements, although a Caithness official did estimate each of the turbines would bring landowners approximately $4,000 per year, or a total of $1.3 million. Caithness declined to be interviewed for this story.

Apart from the stunning sight of all those bright white towers and a new ranch house for Skye Krebs, the outward appearance of the two separate ranches along Highway 74 is little changed since the Shepherds Flat turbines started turning in 2012. Wheat still pushes up its stalks; sheep and cattle still graze here. Krebs Livestock reports annual revenue of approximately $900,000 and six employees; Krebs Sheep Co. reports two employees and approximately $180,000 in revenue. Both Krebs brothers still employ the time-tested practice of moving their sheep back and forth between their separate land holdings near Cecil and acreage farther east in Wallowa County.

But beneath the surface, change is percolating — in the wind and the sheep industry both. Clint, nominally retired, works every day on his Wallowa property, hauling supplies to his shepherds, caring for his cattle and grooming his grasslands. “I consider myself a meat producer, and that’s what I’m proud of,” he says. He estimates that 850 sheep equals 10 rural jobs, and he is bent on increasing his flock.

But obstacles abound. Clint ticks off a list of concerns: the increasing demand for access to his property by hunters; the growing nuisance of local elk herds to his flock because of hunters’ demand for big- buck elks they can bag for antler trophies.

Wind cash won’t do much to make people eat more lamb or wear more wool. Clint is also worried about changes to federal H-2A visa programs that would make ranchers pay far more to bring in shepherds from Peru and Ecuador to tend the sheep. Yet in mid-October, a Wall Street Journal story reported the increase for shepherds in particular would be more modest than first projected. Clint, hoping far fewer ranches will quit due to economic hardship from the wage increases, pronounced this “the best news of my life.”

Environmental challenges lurk, too; overgrazing and drought from climactic changes are on Clint’s mind. He looks at the yellow hills in Wallowa County and sees not simply dry earth or acres of hills waiting for new turbines but rather millions and millions of tiny, active solar collectors in the form of grass blades.

“If I can mow these lands with my animals in order to grab carbon and send it down hundreds of feet through the [grasses’] root systems — if I do that and take care of these solar collectors, the land will give more and more and more.”

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Rancher Clint Krebs sees himself as a meat producer and dedicated land steward.

This land has already been fruitful for Clint and for Oregon — if not for most other landowners. According to the nonprofit Renewable Northwest, wind has brought a total of $153 million in cumulative public benefits to Oregon, with $9.8 billion invested and over 3,350 megawatts installed  — nearly one-fifth of that total is Shepherds Flat’s 845 megawatts.

Morrow County gets around $1.1 million annually for the 15-year contract with Caithness; Gilliam County reaps $5 million annually. Many road-paving projects and improvements, cash infusions to certain county entities such as the Ione School District and a new Morrow County administration building would not have happened or happened far more slowly without wind revenues, says Judge Terry Tallman, the Morrow County commissioner who helped negotiate the economic benefits his county would receive from Caithness for Shepherds Flat.

There are plans for more wind: namely, a locally grown 500 megawatt wind project in the planning phase from Wheatridge Wind Energy that would link together a group of Morrow County families to reap royalties from 292 turbines spread over 50,000 acres.

But if Wheatridge suggests economic incentives still exist, the region is unlikely to see another Shepherds Flat size project. Just like ranching, wind has proven to be a boom-and-bust industry. And today a combination of factors, uncertainty over wind-energy tax credits (state and federal), low oil and natural gas prices and transmission challenges have created a lull in the industry.

Stagnant state mandates are another roadblock, says Renewable Northwest director Rachel Shimshak. Utilities are on track to meet state-mandated renewable portfolio (RPS) requirements, so there is not a lot of incentive for them to initiate additional projects, she says. “Utilities, subject to state’s RPS policy, are required to have a gradual increase of percentage of renewables — they are meeting the targets,” Shimshak said. “It’s time to have a conversation about increasing [them.]”

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Near the Krebs’ Wallowa County property there is a still a sense of the wide open land expanses ranching craves.

The state has 27,000 potential megawatts of wind capacity, according to the National Renewable Energy Laboratory.

Yet wind’s benefits alone aren’t enough for a robust rural Oregon economy, acknowledges Bruce Sorte, an economist at Oregon State University. Shepherds Flat itself created 400 temporary construction jobs — but only 35 permanent positions. Still, he says, wind farms are an important economic driver. “It does absolutely help stabilize the agricultural economy, and helps keep farmers and ranchers farming and ranching. Income from the turbines isn’t instant riches but it has put counties on stable footing.”

That attitude is shared by many in the community. Eric Harlow, who has a sheep-ranching operation near Milton-Freewater with about 2,000 sheep and has worked extensively with the Krebs families through the years, says he supports the idea of wind energy in Eastern Oregon because of its ability to create jobs and revenue and still support grazing – animals can forage right up to the turbines’ concrete pads. Unlike the Krebs, Harlow has to lease all the land he uses to graze his sheep, making his economics more tenuous.

With his lack of a large land base, Harlow could share the envy and “not in my backyard” attitudes that dominated debates over wind-farm siting in the 1990s. But he says he doesn’t. Harlow was a network technician before leaving Portland nine years ago and says he wants a rural economy that allows him to continue to ranch. “As farming evolves, we need a lot fewer farmers, but people still have to have jobs. We have just a fraction of the wind development we could have.”

Mindful, perhaps, of the (unequal) treasure and toll wind has wrought, Clint himself seems reticent to state the obvious: Wind income will yield years of financial security for the family and sustains the sheep operation that is his passion. So while Cameron describes wind turbines as graceful, with a slow-dancing quality, and Maureen sees their perpetual turning motion as a soothing metronome, Clint himself evinces a slight dispassion for turbines. “The wind money does some amazing things,” he finally admits. For example, Clint has built a 10 kilowatt solar array to power a beautiful new passive-house bunkhouse, complete with radiant heat floors, on his Wallowa property near Enterprise. He is also constructing a large water-holding tank to keep more water on-site for sheep and cattle during droughts.

"Sheep create cash and two paychecks. You get a wool check in the spring and a meat check in the fall."

As he works to steward the land — the Krebs family objective for more than a century — a new generation is reenacting family and community history. Like his father, Cameron graduated with a degree in agricultural economics from OSU. Like his father, he was eager to return to the ranch — though on certain conditions. “I wasn’t going to just work for wages,” Cameron says. “I wouldn’t have come back just for that. In order to have the family’s ranch stay in the family I had to have some financial control.”

Thus began another (excruciating) round of allocating family assets — this time in the form of estate and secession planning. “You’ve got to keep going until you get to tears in the room,” says the elder Krebs. Here Clint notes one positive outcome of the wind facility and the resulting family fissure: It made him and Maureen realize the urgent importance of estate planning, not only because of new wealth but also because of the vulnerability that changing family alliances or generational changes could cause. (Without an estate plan, inheritance taxes, which currently kick in federally on assets worth more than $5.43 million, can stymie heirs’ ability to hold on to a ranch or farm with large lands.)

In the end, Clint and Maureen kept ownership of the land and the wind income stream and are annually gifting portions to their heirs, Cameron and his two sisters. “If it was perfectly equal, it wouldn’t be fair, and if it was perfectly fair it wouldn’t be equal,” Clint says.

Wind advisory
In late summer, Gov. Kate Brown announced the formation of the WindFloat Pacific Offshore Wind Advisory Committee, which will work on the proposed Principle Power offshore wind demonstration project off the coast of Coos Bay. Berkeley, California-based Principle is one of three companies slated to receive Department of Energy funds to explore the potential for offshore wind. Advocates hope the new renewable energy projects will help revitalize Oregon’s struggling coastal communities.

The same might be said for wind energy’s financial benefits, which are not distributed equally and can seem like a fluke of fate. As Judge Tallman puts it, “There’s no place in life where we don’t have some winners and some losers. I guess I see it that if you aren’t participating you can’t ever win.” Wind energy is not the hot-button item it used to be in Morrow County, Tallman says. Yet there will always be dissenters. Next door in Umatilla County, which the proposed Wheatridge project crosses into, there is far more hesitancy in siting turbines due to residents’ noise and visual disturbance concerns.

A miniscule dot on the map, Cecil today looks to be nothing more than some weathered barns and buildings, including a defunct wooden storefront that looks like it was directly lifted from an old Western movie set. Wind is allowing the storefront and the ranches to weather another generation of Krebs families and sheep.

Yet not even the wind — or the wind income — will last forever. There is no silver bullet in rural Oregon, but a silver lining is always on the horizon. Under the shadow of hundreds of futuristic-looking wind turbines, the sheep that still graze on the Krebs brothers’ land stand as a reminder of natural, human and economic cycles — and of market forces that give and then take away. 

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