Opponents of Pine Tree Power talk about the costs and length of time for Pine Tree Power to acquire CMP and Versant Energy as if they are huge, scary numbers.

But there are real numbers. And they are based on what we know from similar transactions elsewhere.

London Economics International, a respected utility consulting firm, looked into these numbers in a 2021 study commissioned by the Maine PUC (Public Utilities Commission). Here’s what they found:

1. The average acquisition price of 13 utilities recently sold was 1.55x net book value. (1) Net book values are published by the Federal Energy Regulatory Commission (FERC).

CMP’s net book value at the end of 2022 was $4.16 billion. Based on the price formula above, the selling price for CMP would be $7.13 billion today. Similarly, Versant’s’ net book value was $1.24 billion. Based on the above formula, the price for it would be $1.92 billion.

Financing for utility acquisitions is usually provided by revenue bonds, paid for by ratepayers. In the case of Pine Tree Power, profits will be eliminated freeing up funding to pay back the bonds.

2. The length of time to negotiate the purchase of five investor owned utilities was between 1 year and 4.5 years. The average was 2.85 years. (2)

In addition, Versant Energy acquired Emera in 2020, giving us a Maine data point. Emera was sold for 1.4x its net book value.

The Pine Tree Power referendum language anticipates that the two sides may not agree on a fair price. If they are unable to agree, then a qualified referee appointed by the Kennebec County Superior Court will determine the price, based on a hearing and available data. (3)

Then there’s the possibility that CMP and Versant Energy may try to delay the legal process. This could add cost and frustration to those who support the change.

The power companies might also try to make some big investments before their assets are sold, in order to raise the price of the assets. These investments are likely to be the most profitable projects, not necessarily what Maine people most need.

None of these developments are things to fear. They are simply issues to be faced with the good information we have. The courts, the proponents and the people will be pressing forward to complete the transaction, as has happened elsewhere.

The costs and timeline of the Pine Tree Power acquisition are most likely to fall into the known and reasonable framework of utility acquisitions around the country. Which is not so scary after all.

1. Lond Economics Report, p. 56.
2. London Economics International Report, p. 36.
3. Pine Tree Power Petition, p. 8
For further reading: London Economics Report: https://legislature.maine.gov/doc/4350