Today, I want to talk about the proposed sale of El Paso Electric to the J.P. Morgan Chase-advised Infrastructure Investments Fund, or IIF. That sale could have a tremendous impact on our community, and I think we need to join the discussion about what that impact may be.  

Here is what we know: 

El Paso Electric is a publicly traded company that is owned by a large number of private and public investors who purchase stock primarily through the New York Stock Exchange. The stock is actively traded and has a market value established by that trading. 

Because the stock market index is so high, and because dividend-paying utilities are especially favored, the El Paso Electric stock value also has been very high. 

Nevertheless, the New York investment fund IFF is aggressively seeking to purchase all of the stock in this company at a HUGE premium, far in excess of its stock exchange value.  

So, the question today is why?  

We know that IFF is primarily interested in profits. Thus, it wouldn’t offer to buy the stock at this huge premium unless it thought it could recover those funds from its future earnings — paid for by the utility's ratepayers. 

We also know that the buyer is not accountable to us. It answers to its owners, who are also pursuing profits. Any interest they might have in our community is subordinate to their interest in profits. I submit that after the sale is completed and after all of the promised incentives have been paid, they will be even less interested in our community. This is especially bothersome as our community needs might change significantly in the future. 

Since this sale cannot go through unless the El Paso City Council consents, our best and perhaps only opportunity to influence this deal is right now. 

So, why would we want this proposed sale to go through? 

Some members of our community support this sale because the proposed buyer is agreeing to do several things that benefit our community. For example, the buyer would agree that El Paso Electric offices and employees, which are already here, remain here for several more years. It also would fund significant economic development. There are additional incentives that are being worked out now. 

However, I suggest that these current incentives, as well as any promises it makes for the future, are not being paid for from the New York investment firm’s money; they will be paid from the rate increases that WE will be paying. 

And if we ask ourselves why they are purchasing this company at this huge inflated stock value, it seems the obvious answer is they intend to increase our electricity rates to repay themselves. 

And we must ask ourselves why they would promise all of these incentives for the next few years to benefit our community. 

I submit that is to make sure that the sale goes through: These temporary benefits are merely an incentive to the current City Council to consent to the purchase. 

And that may be the rub. The reality is the City Council frequently makes decisions based upon the information that is provided by the city manager working closely with a few local business leaders. The temporary economic development funds from the buyer may be a huge incentive to them, but perhaps not so much to ratepayers in the future.  I think our $100 million streetcar system, with no provision for funding its annual operations and maintenance expenses, might be an example of this “economic development” thinking. 

So, folks, I submit that the sale of El Paso Electric to a private New York investment firm might not be in the best interest of our community. Perhaps now is the time to consider calling your City Council representatives and demanding that they give this a second look before they bind us to a permanent loss of influence over our electric utility. 

David Leeper is a board certified federal tax attorney with 40 years of experience. He may be reached at 915-581-8748, leepertaxlawelpaso@gmail.com and leepertaxlaw.com.