Heads up to Andrea Stewart

Liberty Utilities: Can we trust these people?

Town Supervisor, Malone NY

Calvin Luther Martin, PhD

Calvin Luther Martin, PhD

March 9, 2020

Dear Andy,

I’m writing this as a letter to you.  As Malone Town Supervisor, you’re the chief public officer dealing with this natural gas company.  

The letter, below, makes some points which you and the town board should weigh carefully.  So, too, should the Franklin County Industrial Development Agency (IDA), the county legislature, and the Village of Malone.  

Calvin

Let's begin with this notice in the Malone Telegram. Note the date:

Liberty Utilities: Who these people?

Andy, there is a bigger story than the Telegram reveals and Liberty’s Mark Saltsman discloses.  

FARM (Friends Against Rural Mismanagement) has been a party to a Liberty Utilities case before the Public Service Commission (PSC) for over 2 years. There are, in fact, two cases before the PSC:  18-G-0140 and 18-G-0133.  Click here to access these on the PSC website.

Bear with me, this is a bit of a convoluted story.  

Let’s begin by working backwards.

Start with the January 28, 2020 letter, below, from Liberty (aka St. Lawrence Gas aka Enbridge) to the PSC asking for a time extension to comply with an order “to file a business case demonstrating the economic feasibility . . .  for . . . distribution enhancements it [Liberty] intends to construct in the Expansion Area in 2020.”  Liberty’s representative, Kimberly Baxter, asks to have the compliance deadline extended to March 2, 2020.

The so-called Expansion Area is

The PSC required Liberty to produce, as well, a 2020 Outreach & Education Plan based on 2019 business results.  On p. 38 of the Outreach Plan, reproduced to the right, we read:  “Within our Franklin County Expansion Area, a business case for the Route 11 Corridor in Malone will be filed with the Secretary by January 31, 2020. The main extension would provide gas services to many of the large retail employers in the area and will end at the IDA park.” 

It’s interesting that Liberty kept its plans from public scrutiny until Feb. 26, when it showed up at a town board meeting and, as the Telegram put it, “unveiled plans . . . for an expansion of the current natural gas service along a roughly 4-mile stretch of U.S. Route 11 from Sawyer Avenue in the village almost to Creighton Road in the town.”

Why the secrecy?

Even more interesting is that Liberty “unveiled” its plans to you well before the Feb 26, 2020 town meeting, and prevailed on you to write an effusive letter, dated Feb 18, supporting their Rte. 11 “Expansion Area” proposal before the PSC.  (Liberty posted your letter to the PSC Dept. Matter Master on March 3.)

Liberty “unveiled” its scheme to the North Country Chamber of Commerce and Franklin County IDA, cajoling the former to write a similar enthusiastic letter of “complete and enthusiastic support” on Feb 4.  The IDA wrote in “strong support” on Feb 24.

Andrea, my question to you and Jeremy Evans and, for that matter, Garry Douglas is: what you are so completely and enthusiastically supporting?

Did any of you before writing those letters? Did any of you speak to Don Dabiew? Or check out this company with the NYS regulator: the PSC? Or speak to your constituents (e.g, FARM) for their input?

As I say, FARM (Friends Against Rural Mismanagement) has been a party to this case for over two years. Here’s what’s going on:

  • Liberty is seeking PSC permission to buy out St. Lawrence Gas (SLG).
  • SLG lost its shirt, financially, through poor planning, bad management, and probably some bad luck.
  • In any event, SLG is being dumped by its owner, Enbridge, a large Canadian energy company.
  • Liberty Utilities, whose parent company is a Canadian utility named Algonquin, has offered to bailout SLG with a $70 million purchase offer. The transaction requires PSC approval.

This is where the story gets

Last June, the Public Service Commission staff issued a 51-page report on:

  1. Liberty’s acquisition of St. Lawrence Gas (SLG) and the process whereby Liberty/SLG would be permitted to take on long-term debt.
  2. How Liberty would be permitted to pay off this debt by adjusting rates and other charges to the businesses on Rte 11 in Malone.
  3. How Liberty would behave (hopefully) transparently and honorably with its business customers on Rte. 11 and in its reporting to the PSC.
Highlighted and annotated by me:

Here is the PSC report

Andrea, you and Jeremy Evans (IDA) and Garry Douglas (No. Country Chamber of Commerce) should read it. So should all the businesses on Rte. 11 who are being approached by Liberty/SLG for natural gas service.

Here are some of the red flags

Liberty is an opportunist.  This is why FARM became an intervenor.  Liberty sees dollar signs.

So does every corporation, one might respond.  To which I would say:  When you read the PSC report, paying close attention to my highlights, you realize we are dealing with a hard-nosed outfit. One, I might add, with a Standard and Poor’s (S&P) and Dominion Bond Rating Service (DBRS) rating of BBB:  medium credit quality.  A hair above BB.  (BB = junk bonds.) Notice the PSC’s unease over this on p. 29.

By the way, St. Lawrence Gas (SLG) will continue operating after the PSC has signed off on the acquisition.  Hence, when you see SLG negotiating in the PSC document, above, it is representing Liberty — its new owner.  

F.A.R.M. made a lengthy submisssion to the PSC in August 2008

Here is the FARM submission

Andrea, you and Jeremy Evans (IDA) and Garry Douglas (No. Country Chamber of Commerce) should read it. So should all the businesses on Rte. 11 who are being approached by Liberty/SLG for natural gas service.

Click here to read the full article where the above statement was taken from.

Andy, I began this letter by saying there is a larger story than Liberty disclosed.  On behalf of FARM, I have presented a more complete record.  

Based on this record, it’s reasonable to conclude that the town, village, county, and merchants along Rte. 11 should exercise caution regarding this company—mirroring the caution evident in the PSC report, above.  

The nagging questions being:

  • Will Liberty use unorthodox accounting to stiff ratepayers with SLG's debt?
  • Will the PSC conscientiously monitor Liberty to ensure this doesn't happen?
  • What happens to rates after May 31, 2022? What is the limit of a rate increase? Is there any kind of cap?

It’s no secret that businesses are not beating down the doors to set up shop in Malone, “Star of the North since 1802.”  We need to protect what business we have.  This includes all those stores along Rte. 11 which are essential for Liberty’s plan to work.  Without those businesses, Liberty’s gamble collapses.  This is clear from the PSC report.

Am I suggesting Liberty might rip them off?  No, I am not.  Fact is, I don’t know what will happen if they become Liberty customers.  It may turn out well.  It may turn out the way you and Jeremy Evans (IDA) and Garry Douglas (No. Country Chamber of Commerce) confidently predict.  I hope you’re right.  However, under the circumstances, you, Jeremy, and Garry should exercise prudence.  

I recommend that prudence take the form of having the town and county attorneys meet with Liberty and review the contracts being offered to the Rte. 11 businesses.

I have learned from reading numerous wind and solar energy contracts that, what salesmen say when making their pitch, compared to what the contract winds up saying, are often two very different things.  

All contracts contain a clause pointing out that nothing said verbally during negotiations has any legal validity.  What counts is what’s written in the signed contract.  

Andy, you would be amazed at what corporations get away with in their contracts.  Don’t assume that all these potential customers will have an attorney review the contractual terms before signing.  

I recommend, in addition, that town and county attorneys offer to review the contracts offered to the property owners who are leasing their land for the pipeline.  As I say, in their ignorance of legal language and procedures, oftentimes people sign away a host of rights to utility companies.

Lastly, there is this.

Do you, Jeremy, and Garry realize that you threw our local propane and fuel oil suppliers under the bus? 

Arnold Oil, Adirondack Energy, Matthews, Barry Collins Oil, etc.  These are our neighbors and colleagues.  All these home-grown companies contribute substantially to the welfare of the community.  

Liberty is not from here.  By and large, its staff are not from here.  Certainly its management is not from here.

Andy, if you, Jeremy, and Garry imagined that natural gas from Canada will always be breathtakingly cheap, you were mistaken.  Such an assumption is not worth throwing our local companies and their employees under the proverbial bus.  

To have the Malone Telegram crow over Liberty “unveiling its plans” to drive local business out of business, is to add insult to injury.  

Andy, I suggest that next time you and Jeremy and Garry be more circumspect about that letter of endorsement.

Leave a Comment

Your email address will not be published. Required fields are marked *

Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn