HARWICH — The Cape and Vineyard Electric Cooperative, which oversees the solar farm at the former town landfill site, is facing financial issues and has asked selectmen for assistance with funding administrative operations.
Selectmen last week agreed to pay an administrative fee to the organization for its oversight of the solar array at the town's landfill, money CVEC officials say they need to stay financially viable.
CVEC is the regional non-profit energy cooperative formed a decade ago under state statute to develop, generate and transmit energy and enter into private/public contractual collaboration to purchase, sell and distribute the energy. The cooperative is the biggest power block in New England, providing nearly $6 million in benefits to members.
In its first round of projects, photo voltaic modules were developed in eight communities on the Cape, including 15,488 modules placed on 15 acres of former landfill in Harwich with no capital costs to the town. The town provided the land and CVEC entered into a contract with American Capital Energy, Inc. to construct the solar array. The developer gets a share of the proceeds from the energy produced along with the town.
The cooperative, which has a representative from each member community, initially voted in 2010 to charge a one cent per kilowatt hour generated administrative fee to the first round projects, but a year later agreed to apply that administrative cost to only the second round projects that were under consideration.
Still saddled with debt from the first round in 2014, CVEC's board recognized it couldn't maintain financial and operational services for all the participants and voted in 2015 to add the one cent fee to round one projects. All but three communities – Harwich, Barnstable and Edgartown – agreed to pay the fee.
In 2016 the CVEC board voted to reduce the round one administrative cost to a half cent per kilowatt hour. Harwich held back on agreeing to the administrative fee, stating its intention to see how Barnstable responded. Barnstable has now agreed to pay the administrative fee.
The initial plan for round two was to develop photo voltaic systems that would generate 60 megawatts of electricity, but projects were pared down to 12 MW, greatly reducing CVEC's ability to generate administrative fees.
“We've done a really good job of belt tightening,” said Liz Argo, manager of programs and administration at CVEC. She cited a reduction in CVEC's annual budget from FY 17 to FY18, but also pointed out the agency is running a deficit, with annual income in FY17of $188,200 and expenses of $238,750, a net loss of $50,548.
In FY16, the Harwich solar array facility generated $658,253 in net electricity. The administrative fee of one cent per kWh would have reduced that figure by $43,581; the half cent fee would reduce that figure by only $22,033.
Argo pointed out Harwich has the largest installation in round one and receives the largest return, a 55 percent benefit through the CVEC offtaker distribution. That is the distribution of excess net metering credits to other CVEC members, which generated $97,410 in revenue for the town in FY16.
Barnstable County Commission Chairman Leo Cakounes, a Harwich resident, is also president of CVEC. As a member of the county assembly of delegates, Cakounes has been a thorn in the side of CVEC and the Cape Light Compact (CLC), the sister organization that worked to form CVEC, over finances.
He pointed out last week that CVEC got start-up money from CLC, but those funds have gone away and the round two administrative fees do not generate enough to operate CVEC.
“We can't go on doing the good work of CVEC without funding it,” Cakounes said. “I don't want it said Leo Cakounes put the nail in the coffin. If you like CVEC's work, it's time to pay the fiddler.”
Selectmen praised the reduction in the CVEC budget and had a number of questions about its operation and services. Cakounes made it clear the budget is as low as it can go, adding the organization is down to one employee and there is need for another part-time employee.
Argo said the administrative fee would be revisited next year. She estimated the fee for this year across the board would generate $106,000. Cakounes emphasized they are looking for new projects to bring in additional revenues.
There was discussion about building up an operational reserve, but it was made clear that because the cooperative is run by town membership, it could provide the towns a dividend.
Selectman Peter Hughes said he examined the website showing production for this month in Harwich and there was none. Argo said there are times when the system is down, but the company must notify CVEC if there is a problem. She also said under the contract the operator of the system has set an annual output figure and is required to meet it.
“They have to make us whole if they don't meet the annual output,” Argo said.
Hughes said he thought CVEC was trying to sell the administrative fee the wrong way. The town agreed to the project and was told it would save $300,000 annually. It had “been exceeding that expectation,” he said, so the town can afford to provide the fees to CVEC. Argo said Harwich's system has run 5 percent over the projected income, providing the town with about $20,000 more than projected.
Cakounes said if they don't get the funding, within five years CVEC will be out of business and owing people money. He also said the people who formed CVEC did not realize all the work it would have to do to oversee the operations.
Board of Selectmen Chairman Michael MacAskill said the town has a revenue sharing agreement with its water department for the solar array, adding the department is sharing the income but not the expenses. That should be rectified, he said.
“It's $22,000 out of a $60 million budget. If they close their doors it will cost us more to operate it,” MacAskill said of CVEC's services to the town.
Town Administrator Christopher Clark pointed out there is a balanced budget prepared for town meeting and he would have to look at how to fit this request into the budget. Cakounes also said a memorandum of understanding would be crafted to define the agreement beyond the existing contact. Selectmen voted to approve the half cent administrative fee for FY18.