BVU board hears about lawsuit, possible rate cut

BVU board hears about lawsuit, possible rate cut

BRISTOL, Va. — The BVU Authority board spent about 50 minutes in closed session Friday, in part to receive an update on litigation recently filed against it by the city of Bristol, Virginia, but members had little to say afterward.

The city’s July 31 complaint seeks $6.5 million from what it claims are proceeds from the $48 million sale of the former OptiNet telecommunications division, which concluded in August 2018. BVU filed its response last week, claiming there were no funds left over and asking that the issue be moved to U.S. District Court in Abingdon.

“I will say it’s time this issue is resolved,” newly selected board Chairman Gary Bagnall said after the meeting. “Both sides deserve that. This has been two years now and it may take two more years.”

The City Council and former BVU boards twice approved a transition agreement — in 2009 and again in 2016 — that decreed any proceeds from the sale of a division of BVU would be split evenly between the two entities once all related debts were resolved.

At issue are monies used to resolve an old loan from the electric division to the OptiNet division. The loan was improperly removed from BVU’s books without being repaid. That error was flagged during a state audit and the BVU board subsequently voted to reestablish that debt on its books. After the sale closed, BVU used $13.74 million from the sale proceeds to resolve that debt.

The city has until Sept. 11 to respond to BVU’s filing.

In other matters, President and CEO Don Bowman outlined plans for a 2.5% reduction in electric rates, following the Tennessee Valley Authority’s Thursday announcement of a $200 million COVID-19 relief package that amounts to a 2.5% credit on wholesale energy and grid access charges for its member providers. It doesn’t apply to the agency’s monthly fuel charge.

“We’ll bring the proposal to the board at its Sept. 25 meeting,” Bowman said. “The reduction for industrial customers is automatic and goes into effect Oct. 1 and we anticipate everyone else would be Jan. 1, pending approval.”

This would mean a monthly reduction of between $2 and $3 for BVU’s average residential customer using 1,000 kilowatt-hours per month, Bowman said.

If approved, it would represent a combined $730,000 annual savings for customers, Bowman said.

In other action, the board approved spending $25,000 to acquire five vacant lots on Vermont Avenue and one Norfolk Avenue parcel as part of the next phase of its sewer renovation project.

Work on the first two phases of that project is progressing but both contractors received extensions on deadlines, due primarily to issues related to COVID-19, according to Phillip King, the authority’s water and wastewater systems manager. Final paving is expected to be completed by Sept. 11 on both segments of Valley Drive and all work is expected to be completed by mid-November.

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