And it would cost the city hundreds of millions of dollars per year in financing costs to buy the utility at $4.3 billion, Robert Cortinas, the city's chief financial officer, told the El Paso City Council during a lengthy discussion on the issue Tuesday.
At least three members of the nine-member City Council indicated during the meeting that they might favor the city doing a feasibility study instead of the City Council approving the pending $4.3 billion sale of the 117-year-old utility to the J.P. Morgan Chase-advised Infrastructure Investments Fund, or IIF.
"It's premature to say it's (municipalization of EPE) a bad idea if we don't know what the costs are. We need a feasibility study to make an educated decision," said East Side city Rep. Cassandra Hernandez, who is in a runoff election Saturday to keep her council seat.
Hernandez said she'd like to use millions of dollars from El Paso Electric's annual franchise fee, which currently is put into a city economic development fund, to pay for a feasibility study. City Attorney Karla Nieman said the legality of doing that would have to be determined.
West Side city Rep. Peter Svarzbein and Central city Rep. Alexsandra Annello also appeared to favor having a municipalization study done by the city.
Dozens of members of the Sunrise El Paso environmental group urged the council to do the study while dozens of El Paso Electric employees urged the council to let the utility be sold during 2½ hours of public input on the issue.
El Paso County Commissioner David Stout told the council that the County Commissioners Court sent a letter to the council opposing the sale.
Joseph Valenzuela, a Sunrise El Paso member, urged the council to study municipalization of the utility.
"Our electric company should belong to our community, not Wall Street," he said.
The council was not scheduled to vote on the municipalization issue Tuesday. However, the council discussed two items tied to the El Paso Electric sale in a closed-door executive session.
More than 40 El Paso Electric employees attended the meeting, and many of them spoke to the council, urging city representatives to not try to municipalize the utility.
"They (employees) felt it was important to come and speak, El Paso Electric interim CEO Adrian Rodriguez said after sitting through the marathon discussion.
"We've been a private employer" in the El Paso and Las Cruces area for 117 years, and "when you talk about one city trying to take over the utility, it gets the attention of the employees of the company," Rodriguez said.
Salaried employees were paid during their time at the meeting, but hourly employees were at the meeting on their own time, El Paso Electric officials said.
Ricardo Carpenter, a power plant employee, said he felt strongly about speaking against the city acquiring the utility. He said he was at the meeting on his own time.
Nieman, the city attorney, said state law allows the city to use eminent domain to acquire utility property, but the Texas Supreme Court has ruled in two cases that a city would have to buy the utility's business at a negotiated price with the utility.
The city also would have to determine if it could legally acquire El Paso Electric's assets in New Mexico.
Cortinas said the city's analysis shows the city would need to come up with $169 million in additional annual revenue from electric utility operations to cover annual bond-financing costs of acquiring the company for $4.3 billion because the utility's annual profits aren't enough to cover all the debt-financing costs.
Cortinas said most city-owned utilities are in small cities, and that most have been owned for years. However, Austin and San Antonio, two of the largest cities in Texas, have city-owned electric utilities, but they have owned those for decades, he noted.
Hernandez said her research shows those two cities' electric utilities add millions of dollars per year into the cities' coffers.
©2019 the El Paso Times (El Paso, Texas). Distributed by Tribune Content Agency, LLC.
