El Paso Electric does not support the municipalization efforts stated within the Climate Charter - Prop K
Since 1901, El Paso Electric (EPE) has been a privately-owned regional utility which now serves approximately 500,000 customers from Hatch, New Mexico to Van Horn, Texas. Municipalization by the City of El Paso (City) would carve out a portion of EPE’s assets to create two utilities for our service region – one utility for customers living within the El Paso city limits and another for customers living outside, which includes New Mexico and Texas. It is not clear how City of El Paso customers would be served since the majority of EPE’s power generation resides outside of the City and EPE has committed generation and transmission resources to serve both our Texas and New Mexico customers. Currently, EPE is highly regulated by local, state, and federal entities to ensure the affordability and reliability of our power. These experienced regulatory bodies determine what investments are prudent and how much the utility can earn. Oversight by the City of a small municipal utility with limited generation assets may result in increased risks to customer rates, as well as uncertainty around the provision of safe and reliable service.
Since EPE’s private owner is not voluntarily selling EPE, the City would be forced to condemn the utility assets within the City limits through a lengthy and complex process that would incur significant costs for both EPE and the City which would be paid by the taxpayers. The proposition does not clearly estimate any of these costs. Municipalization efforts would likely be unsuccessful based on other hostile takeover attempts which took many years and costed millions of dollars. Cooperation between EPE and the City is the most efficient and productive path to accomplish goals of an environmentally sustainable future.
To prepare for the future, EPE has begun planning the totality of its grid for more renewable generation and electrification, as well as the challenges of climate change and more extreme weather events. This long-term grid modernization includes broad and far-reaching technological and process enhancements. In fact, EPE will make significant investments of more than $2 billion in the next few years on infrastructure improvements, i.e., cybersecurity, smart grid, and fuel diversity. Of particular concern are Fort Bliss, which is headquartered in El Paso and extends into New Mexico, and other military installations which are seen as vital to our national security. Breaking up the utility would lead to higher costs for everyone by reducing the current benefits of economies of scale and scope and inject greater uncertainty into our economic development efforts.
Finally, EPE announced in 2020 a clear plan to achieve clean energy goals with reliability and affordability in consideration. The majority of EPE’s carbon-free facilities are located outside of city limits, such as existing solar facilities, a new 170 megawatts of utility-scale solar with battery storage to be energized in the spring, and our nuclear power plant located in Arizona. The proposition does not clearly state what investments the City would need to make to fill the gap if the utility was divided.
In close, while we are actively supporting the goals of an environmentally sustainable future for our region, we are embedding and evaluating all possible technology and generation to achieve these goals. We believe Proposition K is too limited and does not include the wide array of customer solutions and technologies available to affordably achieve those goals. For all these reasons, El Paso Electric does not support the municipalization efforts stated within the Climate Charter.