Berea College and the City of Berea entered into an agreement this morning for the sale of Berea College Utilities.

The purchase price of $18,336,878 includes property, plant and equipment necessary to operate both the existing electric distribution system and water treatment distribution system. The College will retain ownership of the existing dams, reservoirs and watersheds. The City will continue to draw water from these sources while taking over responsibility to maintain and operate the dams and reservoirs. The College will continue to manage the watersheds.

“This is a historic day for Berea College and the City of Berea. The Electric and Water Utilities have been two departments of the College for nearly 100 years,” said Berea College President Larry D. Shinn. “Our two basic concerns in selling the Utilities were local control of policies and preservation of the jobs of our current employees. This agreement accomplishes both.”

Under the terms of the principal agreements, all Berea College Utilities (BCU) employees will be given the opportunity to continue their work under the City’s ownership. The City will continue with its due diligence concerning the transaction and seek the necessary approval of the Berea City Council. The transaction will be submitted to the College’s Board of Trustees for its final approval. These aspects are to be completed by August 17, 2004.

Concurrently, the City will be making arrangements for financing this project. A joint application will be filed by the City and the College before the Kentucky Public Service Commission seeking approval of the sale. Subject to these requirements, it is anticipated that a closing will be held on or be before December31, 2004.

Berea College Utilities was started by Berea College early in the past century to serve the needs of the College and wider Berea Community for water and electricity. Over the years, BCU evolved into an auxiliary business as a department of the College regulated by the Kentucky Public Service Commission.

The decision to sell BCU followed a strategic planning process beginning in 2001. The College’s administration and the Board of Trustees concluded that the long term needs of the College and the Berea community would be better served by an electric and water utility operating outside the structures, decision making and administrative processes that are tailored for an institution of higher learning. It also became apparent that the College’s capital and management resources devoted to BCU could be better used to support the College’s educational mission, core programs and other capital needs. The sale of the utilities to the City accomplishes these objectives as well as serving the best interests of our employees and the community by supporting community and planned growth, providing good local customer relations, service and control, and providing the most reasonable rates to the community.

“While our colleagues at the Utilities will soon leave the employ of the College, they will continue to be our friends and neighbors. They will still be the team that provides electricity and water to our community,” said Diane Kerby, the College’s Vice President for Business and Administration. “We wish them well as they continue to serve the community on behalf of the City of Berea.”