Rockton’s next step uncertain after Rock Energy case is dismissed

May 26, 2010

By Stuart R. Wahlin
Staff Writer

After 17th Circuit Judge Ed Prochaska (R) dismissed a lawsuit against Janesville-based Rock Energy Cooperative last month, village leaders appear poised to take the dispute to appellate court.

In 2005, village voters approved a referendum supporting the purchase of local utility distribution systems, which were later acquired by the co-op from Alliant Energy. The village has long sought a municipally-owned utility, which would purchase energy at wholesale prices for distribution in Rockton. The village was not atop Alliant’s list as a potential purchaser, but Rock Energy was.

Once Rock Energy purchased the assets from Alliant, the co-op began negotiating with the village, and entered into a memorandum of understanding [MOU] to consider selling the Rockton portion of its distribution system to the village.

In 2008, Rock Energy CEO Shane Larson told The Rock River Times the co-op never pledged to sell local assets to the village, but that Rock Energy would only explore the viability of such a venture.

“On the front page [of the MOU], ‘Rockton has expressed interest, and we’d explore the feasibility,’” Larson paraphrased. “That doesn’t sound too definitive.”

Despite Larson’s assertion, Village Attorney Paul Nicolosi maintained the MOU was an enforceable contract.

Although village leaders asked the court to enforce the MOU, no price was ever agreed upon. The village had previously balked at the co-op’s $25 million asking price. Nicolosi suggested $13 million as a more reasonable offer.

“The Memorandum of Understanding,” Prochaska stated in his ruling, “is not definite and certain as to be a valid, binding and enforceable contract, because the parties have not agreed the price, which is an essential term of the contract. …Since the MOU cannot form the basis of a complaint for breach of contract, the dismissal is with prejudice.”

Naturally, Larson was pleased by the ruling.

“We appreciate the judge’s decision and are hopeful that this matter can be put behind us,” he said. “We want to continue providing safe, reliable and affordable electric and natural gas service to residents of the Village of Rockton, as we have successfully done since 2007.”

According to Greg Cox, a village attorney from Nicolosi & Associates, the village will appeal the ruling.

“We expect to file the notice of appeal prior to the end of this week,” Cox indicated May 25. “The Village believes its position with regard to its contract with Rock Energy is supported by well-established Illinois law.”

Despite Rockton’s case being thrown out, Rock Energy has no plans to drop an appeal of the dismissal of its own lawsuit in federal court against the village, which challenges the validity of the 2005 referendum.

Barb Uebelacker, a Rock Energy spokesman, explained: “The federal case is aimed at the ordinance that would give the village the right to acquire assets from REC, while the village’s state court case was limited only to the memorandum of understanding. Even now that the memorandum of understanding has been ruled unenforceable, the ordinance has not.”

From the May 26-June 1, 2010 issue

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