The North Carolina Utilities Commission (NCUC) issued an order on August 22 on the application to transfer the Common Carrier Certificate from Bald Head Island Transportation (owned by Limited) to Bald Head Island Ferry Transportation, a company owned by SharpVue Capital, a venture capital firm. The order concluded that the transfer of the Certificate of Public Convenience for the ferry and tram, parking, and barge operations to SharpVue should be permitted, subject to regulatory conditions intended to provide protections for the users of the system.
The Village is grateful for the NCUC’s hard work in both the transfer proceeding and the regulatory proceeding concerning the parking and barge operations. It is difficult to overemphasize how important these proceedings are to the Island, which is completely dependent on the ferry, barge, and parking operations.
Given the unique nature of the assets and the complex regulatory issues relating to the transfer to a privately-owned equity firm, the Village advocated for comprehensive safeguards on a potential transfer with the overall goal of (a) ensuring the availability of transportation services on reasonable terms and conditions into the future, and (b) protecting ratepayers and the public from potential adverse consequences from the proposed transfer.
The NCUC did not accept all of the Village’s recommendations in its order, but did include a number of conditions, including:
- Prohibition of recovery of acquisition premium from the ferry operations;
- Continuation of the existing imputation of parking revenues ($523,725);
- Requiring that any transactions or leases that occur affecting parking and barge be approved by the NCUC;
- Allowing no change to ferry prices for one year after closing and the increases to parking and barge rates are limited to an inflation index for a period of six years;
- Requiring the potential buyer to adopt a ten-year capital improvement plan and hold bi-annual on-Island meetings to discuss operational issues and concerns;
- Targeting a 90% on-time departure service level standard (subject to circumstances beyond the operator’s control); and
- Requiring that any successors-in-interest be bound by the conditions.
Although these conditions are helpful, the NCUC’s order does not fully address the public concerns about the proposed transaction. Among other things, the order does not resolve issues relating to the value of the parking and barge operations for ratemaking purposes, nor whether SharpVue would be permitted to recover any acquisition premium paid for the utility assets from ratepayers through barge and parking rates, should SharpVue be the purchaser. The order also does not ensure that existing excess revenues generated by the consolidated system are put back into capital and operational improvements for the benefit of ratepayers.
The regulatory issues related to the potential transfer of these assets to a private equity firm are complex, and the impact of the regulatory conditions is further complicated by an ongoing judicial challenge by the seller and the potential buyer to the Commission’s jurisdiction over parking and barge operations, as that jurisdiction is key to many of the conditions and to the Commission’s evaluation of the public interest in approving the transfer.
The Village will carefully review the order in considering next steps and evaluating whether the safeguards adopted in the order are sufficient to protect the Island’s property owners, businesses, employees, contractors, and visitors, if SharpVue ultimately secures the right to purchase the assets. Regardless, the Village will continue to seek to ensure that public access to Bald Head Island on reasonable terms and conditions is preserved going forward.
To read the full order issued by the NCUC, click HERE.