Dear Fellow Islanders,
I want to share the Village’s position with respect to the poll initiated in the 11/14/22 BHA “Compass” and offer you background as to why we have taken that position.
In the absence of further information and assurances, including additional protections for users of the system, the Village is unable to support the transfer of the Common Carrier Certificate covering the operation of the ferry and tram system from BHI Transportation to SharpVue. This position is not a reflection of the Village’s view of SharpVue as an entity, but it is instead driven by various outstanding issues and concerns that have yet to be sufficiently addressed in the proceeding before the North Carolina Utilities Commission (“NCUC”). Until these issues are addressed, we are not able to take an informed position supporting the application.
As you are undoubtedly aware, there are two critically important proceedings pending before the NCUC impacting the transportation system serving BHI.
- The Village’s request that the NCUC assert regulatory authority over parking and barge components of the transportation system
- BHI Transportation’s request for approval of transfer of the Common Carrier Certificate permitting the operation of the ferry and tram to a subsidiary of a newly-created investment company to be managed by SharpVue, a Raleigh-based private equity firm.
The Village’s primary motivation and concern in both these proceedings is to advocate for the long-term best interests of the Island and the users of the transportation system. That has not and will not change. Our efforts are focused on ensuring all homeowners, businesses and other Island stakeholders will have access to a reliable and reasonably priced ferry, parking, and barge system not just now, but into the foreseeable future, so that the Island will be best positioned to grow, prosper and remain a destination of choice for so many members of the public.
I want to address three items: first, a summary and status of the Village’s petition asking the NCUC to assert regulatory authority over the parking and barge operations; second, a summary and status of Transportation’s/SharpVue’s application to transfer the certificate for the ferry/tram operations, including the Village’s position on the transfer application; and, thirdly, a call to action.
Current Status of the Petition by the Village to regulate the parking and barge operations:
The BHA and the BHI Club each intervened in this proceeding.
The Village’s direct testimony in support of its petition was filed on August 9, 2022. Limited filed its testimony on September 8, 2022. The Village filed rebuttal testimony on September 28, 2022. A three-day hearing before the NCUC took place from October 10-12, 2022 in Raleigh.
Following is the core of the Village’s position in this proceeding:
- The ferry, barge, and parking operations are monopoly services.
- The components of the system, including the ferry, barge, and parking, are interrelated and entwined such that each component is an essential component of the utility operation and each component is critical to the continuation of the Island as a viable community.
- While this monopoly, or any of its parts, is held by a private entity, the NCUC is the appropriate governmental body to protect the community’s interest through regulation.
- The NCUC has a long history of ensuring fair and reasonable rates for users of utility services, while offering the regulated utility the opportunity to earn a fair rate of return.
- The NCUC has a history of establishing differential rates based on usage, just as it currently does with the ferry.
The basic question before the NCUC is whether the monopoly transportation functions servicing the Island, as owned by a private entity, should be regulated in the interest of protecting our community?
Post-hearing briefs were submitted by the parties on November 8, 2022.
We await the NCUC’s decision on the Village’s petition.
Current status of the application by Limited and SharpVue to transfer the Common Carrier Certificate for the ferry/tram operations:
On July 14, 2022, BHI Transportation and SharpVue applied to the NCUC to transfer the Common Carrier Certificate for the ferry and tram operations of Transportation to a subsidiary of a newly-created investment company, Pelican Legacy Holdings, LLC, to be managed by SharpVue. NCUC approval is a requirement for any transfer of a regulated public utility from a private seller to a private buyer.
The Village, the BHA, and the BHI Club have intervened in this proceeding.
On November 1, 2022, the NCUC held a hearing in Bolivia to obtain direct public input regarding the matter. Ten members of the community spoke at the hearing.
Transportation and SharpVue filed testimony together with their application. Intervenors may file testimony on November 30, 2022.
On January 17, 2023, the NCUC will conduct an expert witness hearing in Raleigh on the matter.
Sometime thereafter the NCUC will rule on whether or not to approve the certificate transfer.
For additional information, here is the link to the transfer application docket:
https://starw1.ncuc.gov/NCUC/page/docket-docs/PSC/DocketDetails.aspx?DocketId=0ca83bf3-b8f6-4090-95b5-e332b0819ffc Members of the public may submit written “Consumer Statements of Position” at any time by electronically filing in Docket No. A-41, Sub 22CS via the NCUC’s website at www.ncuc.gov.
The Village’s Position: The Village appreciates SharpVue’s interest, especially as a North Carolina-based entity, in facilitating the acquisition of the transportation system and related assets by putting together a pool of potential investors in those assets. However, at this time, the Village simply does not have sufficient answers to the following critical questions necessary for us to support the transfer:
- Will the Commission assert regulatory jurisdiction over the parking and barge operations sufficient to ensure that users and the public are protected with respect to the overall operations of the transportation system?
- What precisely is the relationship between SharpVue and Pelican Legacy Holdings, LLC, who will be making day-to-day managerial and operational decisions impacting the transportation system, and who would the public look to for questions and concerns about the system’s operations?
- Is the newly-created investment company adequately capitalized to close on the $67M deal to acquire the transportation and other assets from BHI Limited and to fund the various improvements that will be necessary to operate the system consistent with the needs of the community?
- What is SharpVue’s business and capital plan to make the necessary improvements to ensure operation of the system at satisfactory levels, e.g., ferry replacement and repair, baggage handling and passenger capacity, BHI Marina access and dock improvements, dredging and dredge spoils capacity, etc.?
- What is SharpVue’s long-term commitment to operate the transportation system?
- Has SharpVue demonstrated sufficient experience in and expertise with the operation of a utility and/or transportation system?
- What are SharpVue’s specific plans for improving upon the unsatisfactory “on time arrival” performance of the existing operator as well as the ongoing maintenance of ferries and trams?
- Will SharpVue commit to maintaining the existing continuity of ownership in all components of the transportation system, including the ferry, parking, and barge operations?
- What long-term assurances will the public have that that rates and service terms for ferry, parking, and barge operations will remain reasonable and affordable?
- What assurances will the public have that SharpVue will not seek to recover transaction costs or the “acquisition premium” paid for the transportation assets from parking and barge customers?
- What is SharpVue’s plan for ensuring the capacity and willingness to keep up with the growing demand and needs of the system and does it have sufficient access to necessary capital for such needs?
- How will the public be assured that any commitments made by SharpVue in this proceeding will be binding on any future owner of the transportation system?
We do not expect these answers will be known until sometime after the January 17 expert witness hearing on the matter.
The Village’s position, therefore, is not able to support any transfer of the certificate until these answers are known. As this matter moves forward, we look forward to continuing to work with SharpVue and other interested parties to ensure that the interests of the Island are sufficiently protected.
Since we expect the BHA intends to submit the results of its November 14 survey to the NCUC, please vote “No” or “Do not know enough” regarding the question of whether or not to support the transfer. The deadline for the survey is end of business on Monday, November 21.
If you have already voted and want to change your vote, please contact the BHA at (910) 457-4676 to ensure that happens.
Thank you for your attention to this matter,
Peter Quinn, Mayor
Village of Bald Head Island