Sale proposal faces several hurdles
By Jennifer P. Brown, NEW ERA DEPUTY EDITOR
Several things have to happen before the Hopkinsville Electric System can be sold to generate millions of dollars in revenue for city government.
The proposal to sell HES to Pennyrile Rural Electric Cooperative Corp. — unveiled Friday in a surprise announcement by Mayor Dan Kemp — would require the approval of the HES board and Hopkinsville City Council. Assuming it passes those two hurdles, it then would go to Hopkinsville voters in a referendum on the November general election ballot.
First, though, someone has to decide how much HES is worth.
Kemp said the utility’s value is substantial — in excess of $10 million.
HES General Manager Austin Carroll said Friday night that the physical plant alone is worth $22 million. The replacement cost would be greater. Other factors, including the utility’s income potential, will influence the total value.
“I think you are looking in the range of $30 million,” Carroll said.
Eston Glover, president and chief executive officer of Pennyrile Rural Electric, said Pennyrile has hired GDS Associates Inc., a Marietta, Ga., firm, to evaluate the deal and help appraise the value of HES.
He said the firm will have an appraised value by May 1, which is the deadline Kemp has given a committee he appointed Friday to study the sale of HES.
Glover said he supports the purchase of HES if it benefits customers and employees of the two utilities, and if it benefits Hopkinsville taxpayers.
“I think it is something that could be real positive for Hopkinsville,” he said.
Carroll said he’s open to studying the idea but raised several questions.
“I think we should do what’s best for the community,” he said. “We should do what’s best for the customers. Right now, I think the customers have got a good deal and they need to hold on to that deal. It’s hard to see how this is going to be best for the customers of Hopkinsville Electric and Pennyrile Electric.”
Pennyrile’s rates are higher than the rates charged by HES — 14 percent by the mayor’s count or about 18 percent by Carroll’s estimate.
Kemp that if HES is sold, those customers would keep their lower rates after switching to Pennyrile. The rate would not revert to the higher Pennyrile rate until a customer moves.
Pennyrile would likely borrow the HES purchase price from Rural Utility Service and would pay off the debt from revenue generated from the added customers, said Glover.
