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More CLC- CVEC -MONEY

Where Did The Money Go ?
Where Did The Money Go ?
In a letter dated February 26, 2014, the Massachusetts Department of Public Utilities has requested that the Cape Light Compact file its proposed revisions to the Compact's existing Municipal Aggregation Plan no later than April 4, 2014 

After the Proposed Plan has been filed, the DPU will review the plan, issue a notice that public hearings are to be conducted and establish a schedule for the Department's investigation of the Compact's proposed revisions to its Aggregation Plan. 

All members of the public will be afforded an opportunity to submit comments as part of the Department’s investigation.

Please also find attached a copy of the "Quick Facts" on the Revised Aggregation Plan that has been circulated by the Compact and which can be found on the Compact website, along with a red lined copy of the Revised Plan, here: http://www.capelightcompact.org/about/govdocs/agplan/.

Please note that the Revised Aggregation Plan that the Compact has prepared for submission to the DPU does not discuss the Cape Light Compact's involvement with the Cape & Vineyard Electric Cooperative (CVEC) and nor does it discuss, or justify, the Compact's ongoing diversion of CLC Ratepayer funds to CVEC, which currently total over $3.2 million in subsidies (that we know of). 

In its Revised Aggregation Plan, the Compact proposes to convert the existing Power Supply Reserve Fund, currently funded by the "mil adder" surcharge on Compact consumers, from a contingency fund whose purpose is to ensure the the continuous delivery of power to its customers, to an unrestricted pool of funds to be deployed by the Compact Board for any purpose at the Board's discretion.  To this end, the Compact proposes to rename the "mil adder" surcharge -- approximately $1.2 million per year -- as the "operational adder." 

In its proposed revisions to the Aggregation Plan, the Compact simply dismisses any need to discuss its financial sponsorship of CVEC since 2007, or any of the obvious conflicts of interest that arise from the Compact's use of this de facto subsidiary to enter the business of producing renewable energy -- which every municipal aggregator is prohibited from doing -- by characterizing CVEC as a "New Program" -- and then declaring the any "New Programs" (including CVEC), will be considered and approved solely by the Cape Light Compact Governing Board, at its discretion.

Please also note that with a stroke of the pen, the Cape Light Compact proposes to unilaterally redefine its founding purpose from obtaining the "best price" for electricity for all of its consumer members to obtaining the "best terms and conditions" for the power that is procured for them by the Compact. 

The definition of "best price" was simple and straightforward.  The fundamental objective of the Compact, at its founding, was to "aggregate" the demand of electricity consumers on the Cape & Vineyard and to use this purchasing power to obtain a "better price" for electricity.

The definition of "better terms and conditions," on the other hand, is subject to interpretation -- by the Compact management and Board. 

In practice, "better terms and conditions" for the electric supply -- the newly defined official Purpose of the Cape Light Compact -- means anything that the Compact Board wants it to mean (including purchase of electricity from CVEC). 


Finally, please note that CVEC is running out of money -- again.

According to the minutes of the CVEC meeting on January 16, 2014, CVEC is once again anticipating additional "cash flow requirements".  

Clearly, these "anticipated cash flow requirements" will only be exacerbated by CVEC's enormous recent legal expenses associated with the twin crises of:

a) last minute negotiations of the American Capital Energy projects in November (Phase I); and

b) the abrupt failure of Broadway Electrical and the withdrawal of Rockland Capital, CVEC's erstwhile partners on 49MW (now no more than 13MW) of PV projects.

CVEC "anticipates" that it will approach the Cape Light Compact, or possibly some private lender, for a "line of credit." 

The second option -- borrowing money from a private lender -- is a mere face-saving suggestion, or naive wishful thinking, as no private lender will  ever loan CVEC a dime, absent the guarantee of a creditworthy parent.  And the Cape Light Compact is prohibited from borrowing money or providing such guarantees.

Therefore, there is only ONE option -- the usual option -- for CVEC to replenish its exhausted capital.  A "grant" from the plaint group of "Community Representatives" on the Compact Governing Board.

CVEC will respectfully request that the management of the Cape Light Compact use its "discretion" to divert additional Cape Light Compact Ratepayer funds to CVEC -- with no tangible benefit to the Compact's ratepayers.  

You can count on this as there are no other options apart from the complete, and total, subsidization by CLC of CVEC's "anticipated cash flow requirements" -- especially since CVEC has declared that it will NEVER -- God forbid! -- ask CVEC's municipal members to contribute any capital to the enterprise!


Anyone who wishes to comment to the Department of Public Utilities -- the Compact's regulator -- rather than to the Compact management -- concerning the Compact's Revised Plan to:

1) Redefine the mission of the Compact to mean whatever the Compact Board wants it to mean ("better terms and conditions");

2) Redefine the permitted uses of the CLC Ratepayer funds collected through the "mil adder" from their original restricted use to the new purpose of being used for anything that the Compact Board decides to use them for -- while simultaneously removing all of the provisions for public notices and hearings for any change in the amount of these levies (unrestricted "operational adder");

3) Redefine the Cape & Vineyard Electric Cooperative -- founded in September of 2007 -- as a "New Plan"; and

4) Ignore the fact that Compact's boldest "New Plan" has dissipated over $3.2 million in Cape Light Compact funds without ever once identifying a tangible benefit to the Compact's ratepayers;

will have an opportunity to do so shortly.

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