BANGOR — Central Maine Power Co. set the stage for its industry counterparts on Tuesday.
Both Bangor Hydro-Electric Co. and Maine Public Service Co. are ready to follow up on CMP’s example with plans to unload their generating assets. The question now is whether the two smaller investor-owned power companies will be able to get the same kind of sweetheart deal that analysts are saying CMP got.
Maine Public Service will start getting bids on its power plants next week. Bangor Hydro is the laggard in the group. It is waiting for the state’s permission to go ahead with sale plans, but company officials say that could come as early as next month.
Whatever the case, CMP set a high standard for both companies. At $846 million, the sale price is 3.2 times the book value of the central and southern Maine electric utility’s assets.
That would mean, if all things were equal, Maine Public Service would get something on the order of $39 million for its power plants, which have a book value of $13 million.
Of course, all things are not equal. With a power grid mostly limited to Aroostook County and only one hydroelectric dam in its portfolio, Maine Public Service will likely face a different group of buyers.
Robert Briggs, the president and chief executive officer of Bangor Hydro, also said each hydro dam comes with its own peculiar set of circumstances. The Penobscot Nation on Indian Island near Old Town has been a vocal critic of the Bangor Hydro dams because of their effect on fish runs. Those are some of the issues, Briggs says, that companies inevitably take into account before they make a bid to buy a power plant.
“It does indicate that there is a substantial interest in the sale of generating assets,” Briggs concedes of the CMP deal. “But you’ve still got challenges at all the different hydro sites.”
Nonetheless, the CMP deal, on top of other deals in Massachusetts and California, does seem to suggest that there is a seller’s market for power plants. And, with Maine moving headlong into the world of energy deregulation, favorable prices on power plants can only help alleviate some of the costs of moving to a more competitive model.
That includes trying to determine who picks up the bill for the utility company’s investments into power that are not recouped by selling plants.
“It’s a painful process to get there,” notes Douglas Fischer, a utilities analyst with A.G. Edwards Co. in St. Louis.