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<br />, <br />'J <br />Alternative Payment Plans to the Site Owner <br /> <br />There are two basic approaches to compensating the <br />owner of a hydroelectric site. One approach is to <br />purchase the site and/or the rights to the site outright. <br />A second approach is to lease the site from the owner <br />or pay the owner royalty fees. <br /> <br />Under the first approach, the site owner may choose <br />to sell the entire property or just the property needed <br />to produce power. Developers tend to avoid purchas- <br />ing the full site because the total package orten <br />involves excess real estate in the form of land or <br />buildings. Most developers don't want to be in the real <br />estate business, so they prefer to limit their purchase <br />to that property or easements required to generate <br />power. <br /> <br />Under a lease or royalty arrangement, the owner is <br />paid a percent of the gross and/or net revenues. One <br />variation on this is to guarantee a fixed minimum <br />payment and a percentage of gross revenues, which- <br />ever is larger. The risk to the developer is that in any <br />given year the site may not generate enough revenues <br />to cover all costs plus the minimum royalty. Such a <br />situation would require the developer to fund such <br />expenses from sources other than the project. One <br />way to protect against such a situation would be to <br />have the cumulative gross revenues in past or future <br />years credited toward these guaranteed minimums. <br /> <br />A more important consideration for site owners is to <br />see actual development plans proposed for their site. <br />Owners should verify that the installed capacity and <br />the total kilowatt hours proposed by a developer are <br />the optimum that could be installed at the site. <br />Unless the developer is required to install equipment <br /> <br />13 <br />