What's the Deal?
A large portion of the questions that came up a the June 23 community meeting at the schoolhouse on the Maine Aqua Ventus (MAV) Trubine project centered around the issue of benefits to the Monhegan Plantation and larger community of persons who consider Monhegan's sanctuary as an integral party of their lives.
The dissussion was good and orderly but left a lot of details unanswered. Now a survey is being circulated that will answer questions about the broader sentiment beyond those who were able to be involved directly in the discussions. When the survey is tabulated, we will have a glimpse into the direction that this community would rather move. The results will be circulated for all to see and debate.
In late July, armed with information from the survey, the registered voters of Monhegan, arguably the rightful voters for what will happen to their island when the MAV project is installed, will vote at town meeting on whether to have a cable from the turbines run up onto Monhegan to supply power to the island, or have some kind of compensation in lieu of the cable, or possibly, as some have suggested, vote to have nothing to do with the MAV project except having to see it off the end of the island.
While there is a scheduling logic to making this decision (MAV has to continue their design and knowing whether the design will include the cable to Monhegan is a big design branch) it seems that very little effort has been put into articulating "the deal" that each of these options present. The deal that is stated in the Final Term Sheet, Dec 2, 2013, is rather vague: (The Commission in this text is the Maine Public Utilities Commission.) I have bolded parts of the text that I see as vague and needing more definition.
4) Monhegan Plantation Benefits:
"Provide electric energy to the Monhegan Island Plantation Power District(District) for the entire duration of the Contract Term without charge, in an annual amount not to exceed 340 megawatt hours , escalating at one percent per year and a maximum demand of 300 KW (Electricity Provision Plan), or through consultation with the District provide benefits in an alternative form that are acceptable to MAV and approved by the Commission (Monhegan Alternate Benefit)
MAV will pay the commercially reasonable costs and installation of all interconnection to fulfill the commitment. As part of the design phase, Project Engineers will work with the District representatives to locate and design the interconnection consitent with the annual and maximum demands above.
In addition, MAV commits to paying for and installing a fiber optic cable to Monhgan Island in conjunction with the interconnection, to working with the Distric to arrive at a mututally agreeable entitlement structure for the cable, and to execute agreements with Monhegan Plantation addressing ownership, maintenance and capacity allocation issues.
MAV agrees to work with the Distrcit and the Commision to adopt a memorandum of understanding describing the structure of the Electricity Provision Plan and Monhegan Alternative Benefit in detail to be incorporated into the Contract."
The language in paragraph one would lead one to believe that the Monhegan Alternate Benefit (an alternative to the simple thresholds of maxumim power and maximum usage) is in the hands of MAV (acceptable) and the Power Commission (approved) but it is also true that this has to be done through consultation with the district. This implies that the District is consulted on this. I am not a lawyer, and I do not think this language was constructed as carefully as a lawyer would construct it. My guess, however, is that a lawyer would push this issue to claim that "consultation" would include some form of participation in the formation of the agreement, that is, negotiation of the terms.
In the fourth paragraph, it states that MAV agrees to work with the District and the Commission to adopt a memorandum of understanding describing the structure of the electricty plan and the Alternative Benefit Plan. This clearly implies that the District is involved in the forumulation of what happens. If they are going to be involved in the details, they are certainly in a position to negotiate the terms that will be specified in the memorandum.
When being called on to make a descision like this, it is essential that some estimate of the economic impact or value be made and this means numbers – specifically numbers of dollars – coming from and going to the community for each option and feature and how it comes from and goes to the community.
If I buy a house, the comings and goings are spelled out in infinite detail and I am only allowed to sign up for "the deal" in the presence of lawyers for both sides that have mutually agreed to "the deal". Dollar ammounts are spelled out. Details about foreclosures, defaults, discovery of lead paint, vaivers for unknown problems etc.
I remember buying my first house. I had to sign about fifty different documents represeting all the contingencies that I had to consider to buy a house for $220,000. Articulation of and my wareness of all these details was part of "the deal" that I was signing up for when I voted "YES" on my mortgage.
The language in the term agreement adequaqtely explains the intent of the eventual contract but there are no details to be voted on. Before any final vote, before "buying the house", it should be expected that the Final Term Sheet (now 2 1/2 year old and very vague) should be updated and clarified.
I believe that Monhegan should have a professional negotiator to manage the details of the final terms. The MAV project is backed by some very big money. Big money always has big lawyers behind it and they will try to economize in as many ways as they can. Without professional help, the Monhegan Power District cannot hope to get the best deal.
On January 7, 1999, my house in Burlington had a fire. The fire did not consume the house but it was evaluated to be a total loss by the insurance company. A knowledgeable friend of mine, kindly suggested that I hire a public adjuster to handle my claim against the insurance company. The public adjuster would get 10% of the final settlement in return for his services. I did some quick math and was horrified at a possible $25,000 loss. My friend's logical response was simple. "As smart and confident as you are, Fred, you have no idea what you are up against here. Think about it this way – he only has to do 10% better than you for you to come out ahead."
For the next 3 months, I watched the negotiations by a professional as he took the "big boys" to the mat. His knowledge of the fine print and his gall at going after things I would not have had the courage to ask for paid off. It is easy to say that he eventually doubled the payback that I would have gotten had I handled it myself.
A good example of this is found in the fact that the insurance on the "contents" of the house cannot be regained in any other way than to buy lots of replacement stuff, keep all the receipts, and then get re-imbursed by the insurance company. I would have one year to do that. The way I live, I coule probably have replaced most of what I wanted and needed for about $20,000, but the insurance was for six times that, or $120,000. So my negotiator told me to go to the insurance company with a letter stating firmly my commitment to actually spend all $120,000. However, if they would give me $110,000 in unrestricted cash, now, I would relinquish the claim to the other $10,000. It worked! And we used the cash to invest in a better house rather than lots of stuff. How would I have known to pull that maneuver? Would I have thought of it? Would I have had the courage to do it? Apparently, it is pretty standard practice in the industry, but I would have had a horrible task of actually following what I thought was the only solution.
The deal we are talking about is a deal that will affect the Monhegan Plantation for at least 20 years and the effects of how it is handled will linger far into the future. Its worth, at face value, is somewhere around $4 million, perhaps considerably less if it is negotiated poorly and possible more if negotiated well.
Final terms for both scenarios (cable or no cable) should be negotiated BEFORE they are put up for a vote. If the vote is taken to go cable or no cable, and THEN the final deal is negotiated, the negotiator has far less leverage. With both options on the table, a good negotiator will leverage each option against the the other for a better deal on either side. Besides, voters are not able to discuss or make a justifiable decision based on no specific information.
Below I will try to address some obvious questions that really should be answered before the small voting population can appropriately consider the options:
There are probably other issues that should be written out. Again I will emphasize that in my oppinion, it is unfair to ask Monhegan voters to vote on a deal that is not written out in detail, on which they can make an informed decision about the cost benefit to them and the island that will affect the island far into the future.
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