It is recommended that community benefits arrangements become formalised through a legal agreement between relevant parties. The Good Practice Principles set out the most fundamental aspects the agreement should cover, as follows:
- The proposed community benefit package, including the time period it covers.
- The proposed roles of all involved, including any third parties.
- The protocol for advising the community if a site is to be sold.
- A commitment to honour all agreements should the site be sold on with documents being passed to the subsequent owner.
In addition, it is helpful for the agreement to:
- Clearly define the ‘area of benefit’.
- Detail the package value and basis on which it will be calculated, for example an equivalent amount per megawatt installed capacity, index linked. Indexing arrangements should be stated, including whether the Consumer or Retail Price Index will apply.
- State the circumstances under which the package may be reduced or ceased, such as significant periods of downtime of the renewable energy installation.
If a Fund forms part of the package:
- Set out payment procedures including the date of first and subsequent payments, and how these will be made.
- Establish arrangements for administration of the Fund, including which body will receive/hold and distribute the monies.
- Agree the renewable energy business’s role in contributing to any fund administration costs over and above the Fund’s value.
- Clarify whether the Fund is to be deemed charitable for the purposes of tax exemption.
- State the purposes towards which the Fund can be directed.
- Set out arrangements and responsibilities for reporting on the Fund’s use and financial position at regular intervals.
Look thoroughly at any terms and conditions – are they clear and do they seem reasonable?
