Towns were then offered the ability to purchase the system after a 5- or
10-year period so that they could own the system, produce their own
power and sell the overage to the grid.
Towns were also offered the ability to renew their contract to purchase
the power and continue to pay undermarket rates, or they could have the
system dismantled and taken away. The deal sounded great and, after
closer inspection, appeared to truly be a good deal.
The contracts had to be drafted and signed tout de suite because all
such systems had to be approved by the Vermont Public Service Board -
which was only accepting applications for such projects until July 15,
2010. The Vermont Public Service Board deadline was based on the need to
review and approve all systems in time for them to be built and
operational by the end of the year - when state and federal tax credits
expire.
All these proposed municipal systems started with investors maximizing
the state and federal tax credits that expire at the end of 2010. That
deadline created the July 15 application deadline so that the Public
Service Board could review the applications.
The July deadline meant the proposals had to be pitched, understood and
signed quickly. But things don't always move that quickly at the
municipal level. The contract needed legitimate vetting by town counsel,
who raised valid issues about the authority of the select board to
commit taxpayers to a multi-year financial obligation.
What ultimately sunk the deal was not the hastiness with which a signed
contract was needed; it was the fact that the state reneged on its
promise to extend the tax credit to all comers after a certain point.
By taking the time to analyze the legality of the deal, Waitsfield and
its unsigned contract missed out on the state's largesse before the
faucet was turned off and hence the financial advantages of the contract
and the entire proposal changed.
It did seem like a really great deal - maybe too good to be true.
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