December 17, 2019 • EPE Related News
City Council approves settlement agreement on terms of El Paso Electric sale
City Council approves settlement agreement on terms of El Paso Electric sale
UPDATED as of 7:26 p.m. on Dec. 17, 2019:
El Paso City Council Tuesday approved a settlement agreement on terms of the pending $4.3 billion El Paso Electric sale.
The council by a 5-4 vote, with Mayor Dee Margo breaking the tie, voted to approve the sale agreement after spending more than 12 hours in closed-door, work sessions over two days.
Council met about eight hours in a work session behind closed doors Monday, and continued that session through early Tuesday afternoon to discuss if it should approve El Paso Electric's pending sale to the J.P. Morgan Chase-advised Infrastructure Investments Fund, or IIF.
Council specifically approved a proposed agreement on the sale terms initially made in November among the utility, IIF, and several organizations and government agencies that found problems with the terms of the sale. City officials have been negotiating final terms of that agreement since November.
Besides Margo, also voting to approve the agreement were city representatives Cassandra Hernandez, Sam Morgan, Henry Rivera, and Cissy Lizarraga.
The Texas Public Utility Commission set Tuesday as the deadline for the settlement agreement to be filed by IIF and El Paso Electric as either a unanimous agreement or as a non-unanimous one if the city and other intervenors in the case don’t sign on to the agreement.
El Paso Electric and IIF filed a request late Tuesday afternoon with the PUC to delay the filing of the agreement until 11 a.m. Wednesday. However, the PUC agreement and proposed changes in the city franchise agreement have been posted on the city's Website.
The Rate 41 Group of El Paso-area school districts and several other government entities, including El Paso County, have not agreed to the proposed settlement. The group wants El Paso Electric and IIF to keep an electric discount in place for the government entities.
The PUC still must approve the agreement. It has scheduled a hearing Jan. 7-8 on issues not settled in the agreement.
City Council in January will begin the process to vote on El Paso Electric’s request to transfer its 55-year-old city franchise agreement to IIF.
The franchise agreement has to be transferred for the sale to be completed.
Besides the city and the PUC, the New Mexico Public Regulation Commission and the Federal Energy Regulatory Commission also must approve the sale before it can become final.
IIF and El Paso Electric officials have said they expect the sale to become final in the first half of 2020.
City Manager Tommy Gonzalez at a news conference announcing City Council's approval of the settlement agreement, said IIF had made stronger commitments for keeping El Paso Electric's headquarters in El Paso, and for not reducing the utility's work force.
However, except for some changes in wording, IIF continues to promise to keep the utility's headquarters in El Paso for as long as IIF owns the company, and IIF commits to being majority owner of the company for at least 10 years. It also promises to not cut El Paso Electric jobs for at least five years.
Mayor Margo and city representatives were not at the press conference.
IIF and El Paso Electric also agreed to provide $80 million to the city for economic development over 15 years instead of the previously committed 20 years, Gonzalez said. The 20 year period remains for another promised $20 million in economic development for the utility's service area outside El Paso, which mostly covers the Las Cruces area.
El Paso Electric's Rodriguez told City Council members during its shortened, regular City Council meeting Tuesday that the proposed sale is an opportunity for the 117-year-old utility to retain its headquarters in El Paso, and retain jobs because of IIF's commitments. He maintained those things are not guaranteed with the utility remaining a publicly traded company.
El Paso Chamber CEO David Jerome also told Council that the proposed sale is a good deal it should not reject.
City Council last week spent more than two hours hearing public comments on whether the city should do a feasibility study on municipalizing the utility. That continued Tuesday with members of the Sunrise El Paso environmental group continuing to urge council to oppose the pending sale and to do a feasibility study.
Council also voted Tuesday at its regular council meeting to have the city manager begin the procurement process to come up with cost estimates for a feasibility study.
It's not likely a study would be done any time soon, especially after City Council approved the pending utility sale.
Robert Cortinas, the city's chief financial officer, said he did not know how long it would take to bring the best cost bid to council for a vote. However, Central city Rep. Alexsandra Annello requested that city officials give council a status report in 30 days.
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El Paso City Council Tuesday approved a settlement agreement on terms of the pending $4.3 billion El Paso Electric sale.
The council by a 5-4 vote, with Mayor Dee Margo breaking the tie, voted to approve the sale agreement after spending more than 12 hours in closed-door meetings over two days.
Council met about eight hours in a work session behind closed doors Monday, and continued that session late Tuesday morning to discuss if it should approve El Paso Electric's pending sale to the J.P. Morgan Chase-advised Infrastructure Investments Fund, or IIF.
The Texas Public Utility Commission set today as the deadline for the tentative agreement to be filed by IIF and El Paso Electric as either a unanimous agreement or as a non-unanimous one if the city and other intervenors in the case don’t sign on to the agreement.
The PUC still must approve the agreement.
City Council in January will begin the process to vote on El Paso Electric’s request to transfer its 55-year-old city franchise agreement to IIF.
City Council last week spent more than two hours hearing public comments on whether the city should do a feasibility study on municipalizing the utility. That continued Tuesday with members of the Sunrise El Paso environmental group continuing to oppose the pending sale and urge council to do a municipalization feasibility study.
El Paso Electric Interim Chief Executive Officer Adrian Rodriguez told City Council members that the proposed sale is an opportunity for the 117-year-old utility to retain its headquarters in El Paso, and retain jobs because of commitments made by IIF.
El Paso Chamber CEO David Jerome also told Council that the proposed sale is a good deal it should not reject.
That process means a selection committee will evaluate cost bids and then recommend to Council which bid is the best for the feasibility study, Robert Cortinas, the city’s chief financial officer told council. He doesn’t know how long that will take, but Central City Rep. Annello asked that council be given a progress report in 30 days.
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