I have a device that turns off the power for a couple minutes if there is any surge or drop. Seems to help even more than surge suppressors (which I also have).

If you want perfect power you can go through the AC->DC->AC that a solar inverter + charger allows. No surges or brownouts.

Inverter driven heat pumps (and appliances) should do much better with bad power.

How much you could shift loads to when the sun is shining by using thermal storage is an interesting question. It's fairly easy with water tanks.

There is no problem putting in a PV and a UPS system that will take the spikes out. The batteries don't need to drop more than 5% max and should therefore last a very long time. It doesn't address the cost discrepancy between oil and electricity though. I don't know why you don't get an island association together to look at a better way and force something more efficient on the utility.

Block Island Power Company is a privately owned utility that burns 1 million gallons of diesel a year. It is a cash cow for it's owners who refuse to perform upgrades or maintenance and pass on the cost of those inefficiencies to the rate payers. The Town and/or ratepayers have tried to buy BIPCo out numerous times to no avail. The distribution system is now literally a museum piece - pre WWII technology. Hopefully this will change with the windfarm coming on line.

Pie in the sky here, but Is there any way that the the town, and/or rate payers would like to set up a alternate company or does BIPCo have an exclusive charter? Or is there any EPA efficiency or pollution regulations that can force their hand.

Yup. Pie way in the sky. Town has offered to buy out BIPCo often but price always too high. The cost of duplicating the existing infrastructure is just too prohibitive.