December 23, 2019 • EPE Related News
EP Electric deal takes step forward
EP Electric deal takes step forward
The sale of the region’s only electric utility is one step closer to completion after the El Paso City Council approved a tentative settlement agreement with regulators and stakeholders in the deal.
But City Council members also indicated they’re not done asking questions.
In a 4-4 tie vote broken by Mayor Dee Margo, City Council last week approved a tentative settlement agreement on the $4.3 billion sale of El Paso Electric to JP Morgan’s Infrastructure Investments Fund, or IIF.
And in a unanimous vote, City Council also directed City Manager Tommy Gonzalez to identify what it would cost for the city to conduct a study into the feasability of taking over the utility.
At last Wednesday’s council meeting, opponents of the sale voiced concerns about a loss of local control over El Paso Electric, as well as concerns about the future of the company’s workforce.
In an emailed statement, El Paso Electric interim CEO Adrian Rodriguez said he’s happy to come to an agreement with most of the stakeholders.
“Serving the interests of our customers, employees, the communities we serve and our company were all top priorities in coming to our agreement with IIF,” Rodriguez said. “We are confident that the non-unanimous stipulated settlement agreement is in the public interest and we look forward to the expected closing in the first half of 2020.”
The non-unanimous stipulation report on the proposed deal was filed with the Public Utility Commission of Texas last week. The report lays out the terms of the sale that stakeholders were able to reach.
The city’s economic development department will receive $80 million of the $100 million committed by El Paso Electric and the IIF. The city will receive the funds over 15 years, with yearly installments, according to the stipulation.
The IIF is committed to owning El Paso Electric for at least 10 years, and the headquarters for El Paso Electric will remain in El Paso for as long as the IIF owns the utility.
The composition of El Paso Electric’s board of directors will also change after the closing of the sale.
The new board will be made up of the utility’s CEO, two representatives of the IIF and seven independent directors, including at least four disinterested members.
Under the terms of the sale, El Paso Electric has committed not to implement any workforce or wage cuts for five years.
The Rate 41 Group, one of the intervenors in the sale, was not one of the signatories on the stipulation filed last week.
The group is made up of several public entities from around the region, including nine school districts, El Paso County and the housing authority.
The group is asking the utility commission for a 30-day postponement on the upcoming hearings, scheduled for Jan. 7 and 8, citing the city’s inaction on the El Paso Electric franchise agreement and saying the city has yet to formally introduce the issue or hold public hearings on it.
The city had requested a similar postponement but was denied last week.
“The terms of the Franchise Agreement directly impact the rights of the citizens of El Paso related to the franchise they own, and the franchise fees directly impact the customers of EPE as they are passed on directly to those same customers,” the group writes in a report filed with the utility commission Wednesday.
City Council is slated to take up the El Paso Electric franchise agreement on Jan. 21.
City Rep. Cassandra Hernandez asked officials from the IIF to commit to holding public meetings on the deal in January, and El Paso Electric’s interim CEO and the IIF agreed. Hernandez also discussed trying to negotiate a first right of refusal clause into the agreement, but nothing has been agreed upon.
“Ideally, some of us would have preferred to have more time, Hernandez said. “Personally, I have seen drastic progression from where we were at and where we are today.”
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