Council seeks clarification on Utility District process

Fri, 12/22/2017 - 9:45am
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The process of forming a new Utility District on Block Island, and how that entity purchases the Block Island Power Company, was in need of some clarification for some members of the New Shoreham Town Council.

The subject was bandied about prior to the Council’s unanimous approval of the town’s loaning $25,000 for start-up funds to the new Utility District at its meeting on Wednesday night. The motion was made by Councilor André Boudreau and seconded by First Warden Ken Lacoste.

Councilor Chris Willi asked Utility District Chair Barbara MacMullan if she could explain how the process would “play out.” Willi said he wanted to know if BIPCo was currently in negotiations with the power company’s one-third shareholder, Sara McGinnes. “Or, are we going to get this Utility District up and going with the seed-money they need, and have them negotiate with the executive board?”

First Warden Ken Lacoste, who is the Town Council representative on the BIPCo Board of Directors, said, “At this point the shareholders are in communication with each other over that issue. The BIPCo executive board is in communication with the other shareholder, but only on a preliminary basis.”

“If any offer is couched, from one side to the other, it has to come before the Town Council for approval, from the executive board,” noted Lacoste.

Boudreau asked Lacoste if he would make a point of updating the Town Council so the members would know what is “going on.” In response, Lacoste said that he would inform the Council about action taken regarding the Utility District. “You can also come to the board meetings,” he said to Boudreau.

“That’s not what I’m getting at,” said Willi. “We have five members that have just been elected by the town — town people — ratepayers.” Lacoste offered to explain the situation to Willi, but he said, “Let me finish. I put more faith in the five of them, the entire Utility Board, negotiating, as a whole, with the executive board — apparently that’s not possible.”  

Willi said he was “trying to get to the bottom of whether or not the Utility District, once we get them an attorney, and insurance, etc.” would proceed with its financing.

“Are you going to wait until negotiations are over to find out how much you will have to finance?” asked Willi. “This is what I’m getting at. I want to know how this is going to play out.”

“The Utility District wasn’t formed for the sole purpose of purchasing the minority shares,” said Lacoste. “The Utility District was formed going forward to be the operational entity for the power company, for power sales and generation on the island. Correct, Barbara?”

“Well, the only way for us to become that is for us to acquire one hundred percent of the company,” said MacMullan.

“Right,” said Lacoste.

“But you won’t be negotiating until you become one hundred percent, the board of directors will be?” asked Boudreau.

“Not necessarily. No,” said MacMullan. “That’s not necessarily the case.”

“Is $25,000 enough?” asked Boudreau.

“It’s difficult to answer that question,” said MacMullan, who noted the complexity of forming the Utility District. “We are not doing things in the order that we expected them to happen.” She noted if the enabling legislation had been passed by the state prior to acquisition of the power company then it would have been a simpler transition.