A look at BIPCo’s assets
The main focus of the Block Island Power Company’s latest Board of Directors meeting was the review of the audited financial statements for the years ending May 31, 2017 and May 31, 2016. Financial statements can paint a picture of the condition and operations of a company, but sometimes they can be misleading, as former BIPCo President Cliff McGinnes pointed out.
McGinnes asked why there was a lesser value to the buildings, machinery, and equipment on the books when some of it was brand new. The fire in late July of 2016 caused damage to three generators and the building that housed them. Those assets have been replaced or repaired, with the exception of one generator which will be replaced in the coming weeks. Despite that, the net value (after depreciation) of the assets has shrunk by approximately $165,000.
BIPCo’s accountant, Dave Bebyn, explained that the reason why was that assets are not reflected at fair market value on financial statements, but at cost, and since the replaced assets were done so with the proceeds from insurance, there was essentially no cost to the company that could be recorded.
“Reporting doesn’t always line up with what you are seeing,” said BIPCo Interim Board Member and President, Jeffery Wright.
McGinnes thought that the Board should be aware of the increased value of the assets, something that they have been taking steps to do. Board Chair Nancy Dodge said that they have checked with three separate appraisers who specialize in utilities to do an asset valuation that will show the value, as opposed to the cost, of BIPCo’s assets. At the meeting on Jan. 17, the Board voted to enter into a contract with George E. Sansoucy, P.E. LLC, of Portsmouth, New Hampshire, to perform the asset valuation at a cost of $45,000. The work is to be done within the next 45 days.
Other highlights from the audit are that income from operations was up substantially. Operating income for the year ending May 31, 2017 was $34,564, whereas for fiscal 2016, there was an operating loss of $106,817. The biggest difference in the line items making up operating expenses was maintenance.
BIPCo earns more from “Other Income” than it does from operations. Other income is comprised of the rental of utility poles, tower space, and property.
Despite the increase in operating income in F/Y 2017, the overall income before income taxes was down from F/Y 2016 by $312,553. That was because there was a gain on the sale of an asset in F/Y 2016 of $486,808.
In his “President’s Update,” Wright spoke about many of the ongoing projects at BIPCo. As reported before, the five underground fuel storage tanks have been removed. However, they are still sitting on the property. Instead of being broken up and then removed, the tanks will remain intact and be removed by crane and boat to the mainland.
When the tanks were dug up, contaminated soil was discovered beneath them, although the tanks themselves were not leaking. “The soil still sits out back,” said Wright, but tests show that it is not so contaminated that it can’t be dumped at the state’s Central Landfill in Johnston. Wright estimated the cost of removal would be $100,000 for 300 cubic yards, most of which will be paid for by the R.I. Department of Environmental Management. The DEM has a fund that will cover up to $1 million of cleanup costs, with a $20,000 “deductible.” In budgeting for the project, $300,000 was set as the potential cost of cleanup.
Wright said he was “eager to get the dirt gone because it’s delaying final grading” at the site.
The new tanks are in service and working. As of now they contain 15,000 gallons of fuel for the generators. The total capacity is 24,000 gallons and Wright said they would be “topped off” before summer.
The generators are for emergency back-up use only, and a new one is set to arrive in February. It will need to be set up with new switchgear and should be “up and running” by summer according to Wright, who also said: “Hopefully we’ll never have to use them.”
The generators will, however, be used during a planned National Grid 24-hour cable outage in March, while National Grid performs work on its substation in Wakefield.
Tree trimming will be ongoing for a little longer. “Tree trimming, in my opinion is going great. I haven’t gotten one compliant,” said Wright. He said he was nearing his budgeted amount of $45,000 and requested an additional $20,000 to complete work on High Street and on the west side. He said the crew from Davey Tree was great and “I want to keep them here.”
Next year, tree trimming will take place along some of the side roads and lanes. Wright said it could be a challenge because of the size of the equipment being used in comparison to the narrowness of the roads.
System mapping is also going well. It’s about three quarters complete, and the system map is updated nightly as work is performed. They’re “going pole to pole, transformer to transformer,” said Wright, adding that each asset is being assigned a GPS coordinate. Work should be complete by the end of February.
The system mapping will be used to develop short- and long-term plans for maintenance and upgrading. “By summer we’ll have a good short term and long term plan,” said Wright, “to hand off to the Utility District.”
Wright added that as a result of the mapping: “Our guys are learning new things every day,” and uncovering “puzzles underground.”