During a joint meeting Tuesday of the City of Henderson Board of Commissioners and the Utility Commission, local leaders agreed to pursue hiring a national firm to determine the value of Henderson Municipal Power & Light (HMP&L), a taxpayer-owned utility that has served the community for more than a century.
The decision followed a presentation during the joint meeting by Big Rivers Electric Corp. CEO Bob Berry, during which Berry outlined a proposal to purchase HMP&L from the City of Henderson. It was the second proposal offered by Big Rivers in the past year. The previous proposal included a provision to maintain Big Rivers’ headquarters operations in Henderson, but that offer was dismissed after Big Rivers announced it will relocate its headquarters to Owensboro.
The latest proposal from Big Rivers includes an offer to maintain Big Rivers’ transmission operation in Henderson with about 30 jobs. Berry told the commissions during the joint meeting that those operations also will be moved if Henderson does not sell HMP&L to Big Rivers. Berry also told the board Big Rivers would be willing to discuss maintaining its headquarters in Henderson as part of a sale. He did not provide specifics or say how that would affect the company’s plans to expand in Owensboro.
The decision to hire a valuation firm does not indicate that a sale is pending or that Henderson is negotiating a sale of its utility assets.
“This is third time overall and the second time in the past year that Big Rivers has approached us with an unsolicited offer to buy Power & Light,” said Henderson Mayor Steve Austin. “We were prepared to take this step to evaluate our options last year, when Big Rivers announced it was moving to Owensboro. As stewards of the community’s assets, we felt it was our obligation to review this offer to determine if a sale would be in Henderson’s best interests.”
Latest Big Rivers proposal
In a letter sent last month to the City of Henderson by Berry, Big Rivers renewed its offer to buy HMP&L and assume its operations.
The highlights of the proposal included:
Under the proposal, the City would retain current pension and bond liabilities and would turn over local control of HMP&L to Big Rivers.
HMP&L Review: Henderson would lose $173.7 million on deal
HMP&L general manager Chris Heimgartner was also asked to give a presentation during the joint meeting, and Heimgartner shared highlights from a preliminary evaluation of the offer by HMP&L staff.
The HMP&L evaluation found that overall, the City and HMPL customers would not benefit from the Big Rivers proposal. The proposed deal would result in a cost of $173.7 million, or nearly $7 million per year over the next 25 years. It also would transfer decision-making control from locally elected and appointed commissions to Big Rivers. The decision also could not likely be reversed, Heimgartner said.
Conversely, the proposed deal would likely provide significant benefits to Big Rivers. The HMP&L analysis found that the proposed deal (including the purchase price and franchise fees) would result in a net gain for Big Rivers of $157.6 million, or $6.3 million per year.
“HMP&L is a tremendous asset owned by the taxpayers of Henderson,” Austin said. “We have not decided whether it would be smart to sell it or whether legally the City would be required to ask for other purchase proposals. However, we must look closely at this proposal and consider not just the financial implications but also the long-term implications on utility rates, community benefits and economic development.”
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