Submitted by respaaaaaj t3_11oupts in Maine
EldVrangr t1_jbunvot wrote
> The Pine Tree Power Company is not permitted to use general obligation bonds or tax dollars of the State. The company finances itself by issuing debt against its future revenues to purchase the facilities of investor-owned electric transmission and distribution utilities in the State.
This is a direct quote from the initiative petition. Basically a mortgage secured by the revenue generated by the non-profit.
Longjumping_West_907 t1_jbuvt6t wrote
The bonds are state issued and ultimately guaranteed by the state so the interest rate will be very low. That's the key to making the numbers work. The interest rate will be roughly half of what the utilities GUARANTEED profit margin is. That's fairly simple math in favor of the takeover.
6byfour t1_jbxcctn wrote
LOL no it’s not. You are looking at one out of thousands of cost elements.
You should divorce from CMP through the legal and ethical process that already exists, but there is nothing simple about this deal. I can’t tell if the people presenting it are naive or dishonest. Maybe both.
I’m 100% in favor of revoking CMP’s franchise or rejecting every rate hike request until they leave voluntarily. You can then have an orderly sale of assets with PTP being one bidder out of several. Then you can choose the best mix of cost, resource plan, etc. vs just pointing at one entity and saying they win.
At my company anything over $50K requires multiple bids, and you guys want to sole source a contract with a value greater than the entire 2023 state budget. And that’s just the purchase price - you need a shitload of capital too.
No_Landscape4557 t1_jbzer2x wrote
One thing you bet is not considered or thought about is how many departments are consolidated into one group say at their headquarters.
You can bet CMP doesn’t have a full HR department, maybe one person that here full time but the rest will be at the headquarters. Dames goes for many other departments that doesn’t need to be at CMP when it can be located at NY or CT. I heard how they pull linemen from other OPCO when a big storm hit and so on.
A new Pine Tree Power will probably need to hire hundreds of new workers not accounted for driving up cost
6byfour t1_jbzns8n wrote
Totally agree, and see a huge lack of understanding of these things in the posts I read.
TheRogIsHere t1_jd658v3 wrote
100% agree. It's just a lot of "CMP BAD!" because it's (supposedly) an evil, private, foreign-owned company that just cares about money and raises rates for no reason. The idea that some politicians in Augusta will be able to not just take over, but do a better job, is dangerously naive. It will suck, be a lumbering, bureaucratic nightmare that will result in a whole lot of Mainers without power.
redcoat777 t1_jbxeban wrote
You seem knowledgeable about this so could you elaborate? Just from reading headlines 10B purchase price and 100M per year profits from cmp seem reasonable assumptions, with no interest (ie interest matches inflation) it would take 100 years to pay that down.
6byfour t1_jbyko16 wrote
The $10B (or 13, or whatever gets decided after years in court) is just for the assets CMP already owns. Actually operating the utility will take hundreds of millions per year.
Some individual storm restorations in New England have cost tens of millions in a week. Isaias in CT cost over 100M for one utility.
redcoat777 t1_jbz22n7 wrote
Yes, but operating expenses plus 100m are already covered by the existing income.
6byfour t1_jbz3t9d wrote
They’re covered by a mix of prior income and credit. To have cash, they need to have charged someone money in the past, which they haven’t.
So all of this talk about just buying the assets and skipping away ignores the money it takes to actually serve the customers. A distribution system is a very hungry animal, especially when the weather is bad.
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