Henderson city leaders hear valuation analysis of possible utility sale to Big Rivers

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HENDERSON, Ky. (WEHT) — Henderson city officials hear the financial pros and cons of selling its power company to Big Rivers Electric Corp. 

The Henderson City Commission and Utility Commission held a joint meeting on Wednesday afternoon hearing the overall analysis of the offer from Big Rivers to purchase the city’s utility.

In March, the city selected and entered into an agreement with a third-party firm PFM Financial advisors to assist in valuing the worth of the utility. . 

The agreement was made in response to an offer received from  Big Rivers Electric Corp. to purchase the assets of HMP&L. 

PFM officials say the analysis was not a recommendation to the city, but merely just a look at valuation. The scope of the report included an estimated impact on the city and on customers. The analysis also looked at economic and non -quantitative impacts and the long-term timeframe of the analysis up to 30+ years. 

PFM said upfront the city would receive a net gain of $1.5 million, but over time according to analysis, there would be a net loss. If the purchase were to move forward, the city would lose the power to regulate the utility, meaning they wouldn’t have a vote on what it’s future. 

One clear point made by PFM was that all of their outcomes were very dependent on various assumptions. The report did not include an independent valuation of the potential HMP&L sale price or potential buyers. 

Big Rivers Electric Corp. officials said the analysis was flawed and did not look at the whole picture.

“I think they should have used more empirical data rather than a bunch of assumptions,” said Big Rivers Electric Corp. CEO Bob Berry. “I think they should have sat down with us before they designed a business plan over what we would do with the utility if we were the owners.” 

Berry said they needed information from the city regarding their current contracts that are in place, but they refused to give that information to Big Rivers. 

“PFM just made assumptions based on what they believe, what they believe we would do, not necessarily what we would actually do,” said Berry. 

The commission went into executive session following the presentation. Officials said they will wait 7 to 10 days before deciding whether or not to move forward with the offer from Big Rivers to purchase the utility.

(This story was originally published on June 2, 2021)

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