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Coffee-FlavoredSweat t1_j1ykd31 wrote

Reply to comment by DrMcMeow in Group opposed to Maine consumer-owned utility turns in signatures for a ballot question of its own by DrMcMeow

> Our Power estimates that the takeover would cost $9 billion, while No Blank Checks puts the cost at $13.5 billion.

And BOTH of those groups are only estimating the principal costs, they haven’t even considered the interest rates, which will be another $15 to $20 Billion over the life of the bond.

Some napkin math:

CMP Customers - 667,621

Versant Customers - 165,490

Total cost of a 30 year bond - $21 $24 Billion

Each customer’s responsibility - $25,000 or about $70 $80 per month

And that’s likely on the low end.

Everyone was crying about their electric rates jumping this past year. Just wait to see what they are when you actually own the mortgage on the power company.

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zorphium t1_j1ymvi7 wrote

How do u get 21B from any of the numbers you provided above

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Coffee-FlavoredSweat t1_j1ynq58 wrote

You’re right, it’s actually more than that, if I use 9 billion principal, and 15 billion interest, total would be 24 billion.

$80 per month per customer just for debt service, before paying for any actual electricity.

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redcoat777 t1_j1z5blr wrote

where did you get your interest rate? what payment term did you use? Using a 15 year loan at 3.84% (current 10 year treasury bond rate) on a 9B loan gives 2.85B of interest. That is a monthly “payment” of $79 per customer per month, which funnily you did get right. And using some base assumptions about profit it seems your numbers there are in the right ball park. i got $20/mo. So it seems like for an extra $60 per month we get to own and control our own grid.

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Coffee-FlavoredSweat t1_j1z8jsc wrote

There’s no way they would be able to finance $9B on a 15-year loan. It would likely be 30 to 35 years and closer to a 5% rate.

I did say that it was napkin math, though, and I’m just a guy on Reddit. You seem to have come to roughly the same numbers, though.

The $60 per month is just debt service for owning our own power company. Then we have to pay for the power generation, and transmission costs on top of that.

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redcoat777 t1_j206xtk wrote

30 years at 5% increases the total interest to 8.4B and drops the payment to $48/mo. Pulling out the $20/mo from their profits gives an extra payment of $28/mo. Though of course with a capital project, trying to figure out how much it “hurts” to make payments has to consider inflation. If we count on 3% inflation (which is conservative) it makes the effective interest rate 2%, and a monthly inflation adjusted payment of $33, which is $13/mo after you pull their $20/mo profit margin out. that seems like a good deal to me honestly. But like you said we dont have a true picture of the cost, loan terms, or their profit.

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megavikingman t1_j1yqawh wrote

Numbers are suspect, but now calculate everyone's share of profits.

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Coffee-FlavoredSweat t1_j1yqwog wrote

Lol, sure.

$16 per month. Don’t spend it all in one place, you’re still on the hook for the $80/month mortgage payment.

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megavikingman t1_j1yshd8 wrote

How I know your numbers are wrong: CMP is still in business, after being purchased.

If they make enough money to spend a million bucks on a ballot measure that may fail, they are profitable enough to buy.

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Coffee-FlavoredSweat t1_j1yy0ha wrote

It’s pretty easy math.

$40 million per quarter comes straight from the news article, divided by 3 months, divided by more than 800,000 customers.

Feel free to do your own math and prove me wrong though.

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popejohnpaul2nd t1_j1z4pv0 wrote

Not sure what interest rate you are using to come up with $15 billion of interest. At 5% lifetime interest on a 30yr, $9 billion loan would be about $8.6 billion.

Lets talk profit. The $40 million represents just CMP. If we take a look at the 2021 year end financial reports combined net income would be about $263 million. If we want to truly look at cash income, we need to add back depreciation, as well as add back interest, for a new entity wouldn't be responsible for the repayment of CMP's debt. That would leave us with about $487 million compared against $285 million in annualized interest repayments. I want to ignore principal repayments as those are accounted for on the cash flow statement and there is whole lot of additional fuckery going on there (e.g., CMP reported $183 million in net income in 2021 but $330 million of cash provided from operating activities). I am also not able to look at a Versant only cash flow statement.

It would appear a new entity could handle the debt load. I don't think it would result in cheaper rates right away, but certainly in the long run. I would imagine that service levels would also improve as they would be committed to serving their customers instead of padding the rate base to justify rate increases.

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bleahdeebleah t1_j1z8bd5 wrote

Where are you getting the idea that each customer would be paying a constant amount each month on the bonds?

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