New Mexico Sets Take-Over Precedent

Fortnightly Magazine - May 15 1997
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Cities throughout the U.S. contemplating take over of a privately owned utility may be more likely to move forward now that the governor of New Mexico signed legislation that has made such a prospect easier in that state.

New Mexico Gov. Gary Johnson (R) on April 11 signed H.B. 1181, which allows the city of Las Cruces to condemn property owned by El Paso Electric Co., paving the way for the municipality to take over the local electric distribution system.

"We're very pleased," said Christopher Good, a spokesman for the city. Las Cruces plans to move forward from here, he added. The next step is for the city to take El Paso to condemnation court. Condemnation would give the city the right to purchase the facility for fair-market value for use in the public domain. The city has issued $72.5 million in bonds to make the purchase.

Good said the city plans to take-over the utility to lower electric prices for Las Cruces residents. He said El Paso's electric rates are exceptionally high, while the standard of living in the city is one of the lowest.

According to a February 1997 survey of electric rates by the Texas Public Utility Commission, El Paso Electric has the highest electric rates in the state. A residential El Paso customer using 500 kilowatt-hours will pay $53.23. The average charge levied by investor-owned utilities in the state is $42.03 for 500 kWh, while cooperative rates average $38.57 and municipally run utility rates average $32.83.

"We, of course, are going to challenge the city every step of the way," said Henry Quintana, supervisor of public relations for El Paso Electric. "There are still a lot of unanswered questions," such as the issue of stranded costs, he said.

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