Monday November 15, 2004
Responding to growing indications of a possible sale of LG&E Energy, Louisville Mayor Jerry Abramson met last Friday with the chairman of E.ON, the German company that owns LG&E, in an effort to keep the utility’s 1,800 jobs and headquarters in Kentucky.
“We cannot afford to lose LG&E, its headquarters, jobs and low utility rates that are important to our citizens and our economic development efforts,” Abramson said.
During a meeting Friday in Dusseldorf, Germany, Abramson also encouraged E.ON Chairman Wulf Bernotat to maintain its U.S. base in Louisville, should the company expand its domestic operations.
But if E.ON decides to sell LG&E, the mayor told Bernotat that he favors public ownership and has spent several months exploring the possibility. Abramson has assembled a team of legal, financial and energy consultants that have determined public ownership of the utility is a sound and feasible option.
Bernotat told the mayor that LG&E, the only U.S. utility among E.ON’s vast energy holdings, is not currently for sale. The chairman repeated his recent public statements that E.ON is focusing on expansion in Europe and the former Soviet Union and is studying whether to expand or leave the U.S. market.
“LG&E is a well-run utility and a good corporate citizen. My preference is for the company to stay here for the long term,” Abramson said. “But we need to explore all options available so that our community and our Commonwealth can better control our own destiny.”
Abramson said he’s been exploring the public ownership option since reports surfaced this spring that LG&E might be sold again. The utility company has been sold twice to foreign companies in the six years since LG&E and Kentucky Utilities merged.
Using private funds to avoid spending taxpayer dollars, Abramson hired top legal, financial and energy-industry consultants to thoroughly examine options for purchasing LG&E in the event that E.ON decides to sell.
The consultant team includes Stites & Harbison PLLC, a prominent Kentucky law firm with expertise in utilities; R.W. Beck Inc., a respected nationwide energy-consulting firm based in Seattle; and Coady Diemar LLC, an investment banking firm with extensive Wall Street experience.
Abramson said he is interested in public ownership of LG&E only if the approach meets these basic standards:
• E.ON is willing to sell LG&E. Public ownership cannot put tax dollars or government assets at risk.
• Public ownership cannot reduce the tax dollars that Kentucky communities now receive from LG&E.
• A public purchase cannot rely on reducing the commitment to environmental improvements that has made LG&E an industry leader.
• A public purchase cannot depend on increasing the rates that customers pay.
Abramson said he is now turning to state and local leaders to discuss public ownership options. He plans to meet with Kentucky Gov. Ernie Fletcher and other state and local officials beginning this week.
“Louisville has begun the discussion of public ownership because LG&E is headquartered here,” Abramson said. “But we must work cooperatively with leaders across the state to protect a Kentucky asset for Kentucky’s citizens. It’s an opportunity for people who live in different communities to focus on electric lines, not county lines.”