Originally published in Island Ad-Vantages, February 8, 2018
Town payout from PERC dwindles
by Rich Hewitt
The town could lose as much as $50,000 of equity funds in the Penobscot Energy Recovery Corp. as the result of a court-approved agreement between PERC and the Municipal Review Committee.
Selectman Evelyn Duncan reported to selectmen recently on information she received during a conference call with MRC officials in which those officials explained why the town’s equity in PERC has dwindled. As charter members in MRC, the town of Stonington, along with 86 other towns in Maine, owns equity in the company and its profits. An audit last fall of those equity funds, built up by Stonington and other member towns over the years, showed that the town’s share had decreased since the last report.
Although the town’s equity amount has been a moving target over the past year, estimates of the town’s share have consistently been more than $200,000 and, at one point, were estimated at around $220,000. As of January, Duncan said, the amount the town will receive when the agreement between MRC, PERC and the town ends in April, will be about $171,000.
Duncan reported that the reason for the decline in equity is related to a settlement agreement between MRC and PERC that established the value of that part of the company owned by the member towns. Under that agreement, which, Duncan said, was approved by a court, the value of the member towns’ share of PERC was reduced from about $8.3 million to about $1.5 million. It does not appear, she said, that any other portion of the company was similarly devalued.
Although they had previously been warned that the town’s equity had dipped, selectmen were still shocked at the amount and the reasons for the decline.
“They sold us out!” exclaimed Chairman Chris Betts.
Adding insult to that financial injury, the towns apparently will not receive all of their equity funds in April when the agreement with PERC ends. Duncan reported that, based on the conversation with MRC officials, Stonington will receive only a partial payment in April and the remainder later in the year, possibly as late as September.
Betts questioned whether the town should hire an attorney to look into the matter, but both Duncan and Town Manager Kathleen Billings argued against that. Since the PERC/MRC agreement was approved by the courts, there is little the town can do to recover the lost funds. Also, any legal action likely would drag on for several years, tying up those funds in the meantime.
The town has counted on those equity funds to help cover the costs of ongoing upgrades at the transfer station. The selectmen have proposed using $200,000 from surplus for those upgrades with the idea that that allocation would be offset by the PERC funds. That proposal will go to voters at the annual town meeting in March.