Henderson, Ky., City Commission Rejects Sale of Public Power Utility To Cooperative
July 27, 2021
by Paul Ciampoli
APPA News Director
July 27, 2021
The City Commission of Henderson, Ky., recently voted to reject a proposal by Kentucky electric cooperative Big Rivers Electric Corporation to purchase Henderson Municipal Power & Light (HMP&L), the city’s public power utility.
The vote by the Henderson City Commission took place on July 13 and came after the Henderson Utility Commission in June recommended against selling HMP&L.
At the meeting, Henderson City Commissioner Austin Vowels said that “what our consultant told us was you can expect rates in Henderson to increase if you accept this offer and sell” HMP&L. He noted that Big Rivers offered its own analysis related to the cooperative’s offer.
“My fear and the reason I vote against this transaction happening is that I think it ultimately in the end leads to significant rate increases for the people of Henderson,” Vowels said.
Henderson Mayor Steve Austin said that he sees “no pressing reason for the City of Henderson to sell its municipal utility to an outside agency.”
He noted that HMP&L “offers our citizens the lowest household electric rates in the state, provides excellent service and provides steady financial support for the city.”
Big Rivers, which has made previous offers to buy HMP&L, also attempted to buy another Kentucky public power utility, Owensboro Municipal Utilities. “It is very interesting to me that the City of Owensboro turned down Big Rivers’ offer to buy its municipal utility within about 72 hours after the offer was made,” Austin said at the Commission meeting.
Austin went on to say that “municipal utilities across the state have added value to cities and customers in many, many ways.”
Among the provisions of the Big Rivers offer to buy HMP&L was a payment of $90 million to the City of Henderson.
But Henderson City Commissioner Bradley Staton noted that HMP&L has more than $30 million in its reserves and so “if Big Rivers were to purchase HMP&L they would be using that money to go toward the purchase of HMP&L. So the offer was really for a little less than $60 million, not $90 million.”
Earlier this year, Chris Heimgartner, General Manager of HMP&L, made a presentation before a joint meeting of the City of Henderson, Kentucky Board of Commissions and the Utility Commission regarding Big Rivers Electric’s offer to purchase HMP&L.
Among other things, Heimgartner said in the presentation that the Big Rivers offer was “a very poor proposal” for the City of Henderson and HMP&L’s customers and said it should be declined.
Meanwhile, in early June, PFM Financial Advisors made a presentation before a joint meeting of the City of Henderson, Kentucky Board of Commissions and the Utility Commission regarding Big Rivers Electric’s offer to purchase HMP&L. PFM was hired by the City of Henderson to analyze the offer made by Big Rivers.
The report completed by PFM did not make a recommendation to either sell or retain HMP&L.
In its analysis of impacts on the city as a result of a sale, PFM listed a number of qualitative considerations including, among others, reduced operational and economic synergies with the city and loss of control over an essential service and on its leadership.
Big Rivers is a member-owned, not-for-profit, generation and transmission cooperative (G&T) headquartered in Henderson, Ky., which provides wholesale electric power and services to three distribution cooperative members across 22 counties in western Kentucky.
HMP&L provides electric transmission, distribution, and fiber internet and phone services to the citizens of Henderson.