Wednesday, July 6, 2011


STOP MAKING SENSE: With Friday's high noon deadline for the ballots to be received in Kaua`i Island Utilities Co-op (KIUC) "Hydro Vote"- as they insist on calling it, with the words Federal Energy Regulatory Commission (FERC) being entirely absent on the the ballot- looming, the lack of full disclosure, straight talk and transparency in the process are what stand out to those voters who have done their own "due diligence."

In examining the ballot one question that hasn't received much attention is, what exactly are co-op members being asked to vote upon?

In asking "As a KIUC member do you approve of the Board action set out above?" the "above" part says, in main:

This ballot allows KIUC members to approve or reject a KIUC Board action that authorized contracting services for hydroelectric development and acquiring those hydroelectric assets...

A valid petition... requests a member vote on the KIUC Board’s action taken at its Regular Board Meeting on March 29, 2011, approving a Development Services Agreement and an LLC Assignment Agreement that had been negotiated by KIUC Staff with Free Flow Power Corporation.(emphasis added)

So in essence members are being asked whether they approve of the "Development Services Agreement and an LLC Assignment Agreement."

We aren't just being asked to approve or disapprove of a board decision. It's not the decision that's central to the vote. Instead members are being asked to approve or disapprove the contracts the board approved.

The problem is that, as we all know, those agreements- referred to as a Memoranda of Agreement or MOAs- are not being made available to the voters making the decision on whether they are in the best interest of members effectively impossible.

How exactly are members to decide if they approve of the "contracts" if they have no idea what exactly they say?

Well, that "Star Chamber" aspect of this whole affair will certainly be central to any legal action by "no" vote proponents should the co-op members approve of the contracts- that and KIUC's costly, "vote yes," disinformation campaign and suppressing the claims of the petitioners

That alone should be enough for a judge to grant an injunction to enjoin a suit to invalidate the vote, giving the shareholders- the co-op members- derivative injunctive relief, according to a legal expert we spoke to who asked not to be identified.

In other words, we were told, "the guy in the robe would, most likely, tell Proudfoot 'no way'" can you ask voters to approve or disapprove of a document they're not allowed to see.

But let's examine the central claims that we do know concerning the whole deal.

According to documents uncovered by reporter Joan Conrow and information that has been dragged out of KIUC CEO David Bissell and their attorney David Proudfoot, the MOAs came about after FFP filed for six- and already received at least three- FERC preliminary permits that allow the holder to exclusively investigate the possibility of constructing hydroelectric systems for the named areas, potentially leading to FERC licensing of the projects.

But those permits are non-transferable so FFP set up shell corporation to file for the permits and after they were granted they "sold" the shell corporations to KIUC under those MOAs.

There's a reason why we put sold in quotes. Because, according to the information repeated over and over by Bissell and Proudfoot, should the members vote no, the MOAs say that the permits would have to be turned over to FFP- AND we would have to pay them $325,000 to take them back to boot.

Of course we have no way to know how much of this is the truth because no one can see the MOAs. But one thing rises to the top.

If the preliminary permits were part of the deal to "purchase" the shell corporations- which KIUC apparently now "owns"- how can the "non-transferable" permits be transferred back to FFP? And why would we have to pay them almost a third of a million dollars for taking them off our hands?

Especially if the MOA has been invalidated by the vote- something that all involved knew was a possibility when they were signed.

Another note before we take a long weekend and await the vote...

People might be interested to know that the person who approached KIUC for FFP to set up the "offer they couldn't refuse" is said to be investment banker Bill Collett, the same person who set up the whole purchase of Kaua`i Electric from Citizen's Electric for an exorbitant amount of money that was still way more than the book value even after it was decreased by $50 million by the PUC.

We've heard from many of the opponents of the FERC process that they are waiting to see the outcome before filing suit, saying that they would be satisfied if the contract is rejected.

But frankly as someone who smells corruption behind the whole deal, at this point we care less about the outcome of the vote than the contents of the two contracts that are likely so explosive that KIUC would go to these extraordinary measures suppress contents.

Regardless of what happens at 12:00 noon on Friday we hope members will still be demanding to see those MOAs at 12:01 pm. Because if we don't you can be assured that we'll be right back here again after the board and executive staff of KIUC gets the message that they can get away with withholding vital information from its members.

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