Barnstable County and the Cape Light Compact agreed to join a new energy cooperative this week, with the Town of Barnstable expected to take action on June 21.
The Cape and Vineyard Electric Cooperative is the combined work of the county, Compact and Town of Barnstable. It is the first such Cooperative proposed under the electric deregulation act of 1997.
The ultimate goal of the co-op is for all Compact members to join the cooperative, which could develop and own renewable energy project and provide long-term energy contracts. Currently, towns and the Compact are specifically prohibited from such activities.
The sole initial task for the co-op is to seek a ruling from the Internal Revenue Service on the tax status of the organization. The point of limiting members to public entities like towns, counties and fire districts is to pursue a tax-exempt status for the cooperative.
In an interview Tuesday, Barnstable assistant town attorney Charlie McLaughlin said that if the IRS determines that the cooperative’s transactions are taxable, the co-op concept is dead before it begins.
The draft letter to the IRS requesting the ruling provides a good explanation of what the co-op is, how it’s different from the Compact and what it could do.
“The Cooperative can do things that the Compact cannot do. For example, the Cooperative may directly own or develop “¦ renewable energy or distributed generation projects,” the draft letter explains. “Municipalities may not be empowered to do this without special legislation and the Compact does not have the authority to directly own renewable energy or distributed generation projects. The Cooperative is authorized to borrow funds for its activities. Without special legislation, cities and towns may not be authorized to borrow to finance renewable energy projects.”
McLaughlin said that the town of Barnstable’s interest in such a cooperative dates to last fall. He said the change in governors and that office’s now-favorable outlook on the Cape Wind Associates project proposed for Nantucket Sound was among the prompts for the investigation.
McLaughlin said that the stars started to align both politically and legislatively at the state and federal levels to make such a cooperative attractive. Unbeknownst to Barnstable officials, as they were developing their plans, the county, through the Cape Light Compact, was working on a parallel path.
Late last fall, those efforts were combined and the proposal was approved by the compact and county this week as a result. The co-op was to be introduced to the council this week, with a public hearing planned for Thursday.
While in private practice, McLaughlin was among the founders of the Alliance to Protect Nantucket Sound and came up to speed on energy issues and options while serving on the board. Now an assistant town attorney for Barnstable, McLaughlin no longer holds any position with the Alliance.
At the Cape Light Compact meeting Wednesday afternoon, the 14 members present unanimously endorsed joining the cooperation. The by-laws, which call for the executive committee and other organization items, were approved on a 12-2 vote.
Earlier in the day, the three-member board of county commissioners unanimously approved joining the compact. At that meeting, Commission Chairman Lance Lambros expressed some reservations about the longer-term commitments that could come as a result of the county’s participation.
“This is a baby step, but I want to see what the “˜run’ will be,” Lambros said.
His concern was less about the coop owning and developing generation facilities, which he supports, as it was about entering into the buying and selling of power, which can be a tricky market.
During the county commissioners’ discussion, it was explained that the proportionate financial exposure for pledges of credit will be based on each member’s kilowatt hour usage. As such, assistant county administrator Maggie Downey said that the Town of Barnstable “would always have the greatest exposure.”
That exposure was among the concerns in Barnstable, which led to the executive committee.
The Executive Committee
The three initial members of the cooperative ““ the town of Barnstable, Barnstable County and the Cape Light Compact ““ would hold permanent seats on a powerful executive committee. The executive committee would essentially have veto power over decisions made by the cooperative.
In the County assembly, Barnstable has a weighted vote of 22 percent based on population, but such a weighted vote is not allowed for entities such as the co-op. The executive committee was an attempt to achieve some of that same power in voting for the coop.
For both the town and the county, the concern was placing the town’s financial pledges in the hands of other smaller towns. McLaughlin said that the town could be asked to back projects, and it wanted a greater say in how those decisions were made.
Conversely, there is protection in the by-laws for smaller towns, as the executive committee cannot commit their financial pledges. That point was made at Wednesday’s Compact meeting.
While towns can develop wind power for their own use, they are prohibited from selling it on the open market.
“Conceptually, it is very exciting,” McLaughlin said. “We want to be very proactive at a very local level.”
During the Compact’s discussion, Eastham member Fred Fenlon raised a concern about the speed at which the decision was being made. He said he did not think enough time was allowed between the release of documents to Compact members last week and the vote for an adequate discussion at the local level.
Though Fenlon suggested a month delay, it was never made in the form of a motion.
During the discussion on bylaws presented by Compact attorney Jeff Bernstein, the power vested in the executive committee was understood as a potential sore point for other towns. The objections raised were satisfied for the moment.
By David Still II
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