As I read the morning paper, scroll through the internet and punch some numbers into my calculator, I can’t figure out how the proposed financing plan for Pine Tree Power will benefit consumers.
Based on the estimated price for the two utilities ($13.5 billion), and the current interest rates for municipal bonds (about 3%), the interest payments will be $405 million per year! That’s an increase of about $300 million per year over the combined interest costs in the financial statements of the two companies that currently operate in the state.
To offset the added cost of interest, there might be a savings of about $100 million for not paying dividends to stockholders. But that’s still $200 million on the wrong side of “consumer benefit.” With 160,000-plus customers in the state, it’s an increase of more than $1,000 per customer per year.
The websites and reports in favor of Pine Tree Power all claim that there will be a savings per household. That’s a mystery to me. Perhaps they are focusing only on the operational costs and not factoring in the costs of the financing plan.
Further, to pay off $13.5 billion in municipal bonds in 30 years, they would have to pony up an additional $450 million per year. Where does that money come from?
Certainly, there are lots of smart people in Maine who can explain how the financing plan might actually work to the benefit of consumers. My calculator and I eagerly await their insight and wisdom.
Larre Nelson
Portland
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