El Paso Electric Sale

Robert Cortinas, the city’s chief financial officer, gives a presentation on the sale of the utility at Tuesday’s City Council meeting.

City Council last week gave another stamp of approval on the $4.3 billion sale of El Paso Electric to the Infrastructure Investments Fund, a private fund advised by financial giant JPMorgan.

On Tuesday, City Council voted 4-2-1 to approve the franchise transfer, which was necessary for the sale of the utility to move forward. City Reps. Peter Svarzbein and Alexsandra Annello voted against the measure, and Rep. Isabel Salcido abstained.

“The amount of information and detail involved is so great that I have not been able to digest and understand it all to feel comfortable in making a prudent decision,” Salcido said on her reason for abstaining.

Most of what was rehashed in Tuesday’s three-plus hour hearing had already been addressed at previous City Council meetings and public hearings. There were also vocal protestors at the meeting from the Sunrise Movement, a group of environmental activists opposing the sale.

Opponents asked City Council to delay the franchise vote by 30 days, arguing that more time was needed to understand the implications of the sale and to explore alternative ownership options, including city ownership of the utility.

Annello made a motion to postpone the vote by two weeks, arguing that the issue deserved a vote by full council and city Rep. Sam Morgan was absent. That vote failed.

The franchise assignment was approved, but not unanimously. Protesters told City Council that their vote on the franchise would be remembered come reelection season.

There were a couple of provisions added to the franchise agreement that increase the amount of funding the city will get as part of the deal.

The city is set to receive $80 million over 15 years for an economic development fund. The city will administer the funds, but they will be put into a restricted account titled “Texas Economic Development Fund.”

In addition to the yearly franchise fee, El Paso Electric will pay the city $750,000 per year for 10 years. The funding will go into the city’s general fund.

El Paso Electric’s low-income assistance program will also get beefed up. The Infrastructure Investments Fund, or IIF, has pledged to contribute up to $1 million over five years to supplement the program.

The utility will also pay the city $250,000 for “the City’s reasonable consultants and attorneys fees incurred due to the City’s intervention” in the Public Utility Commission of Texas’ docket case number 49849, which is the El Paso Electric case.

“As we move through this process, we’ve taken those original commitments and made them even better, and that’s because of the work of this council, city management and city leaders,” said Adrian Rodriguez, El Paso Electric interim CEO.

The city also has a slightly better position to consider purchasing the utility in the future. The city will have a 120-day exclusive right to make an offer to purchase El Paso Electric if Sun Jupiter and the IIF considers selling 100% of its equity in the company.

“Thereafter, the City may make an offer to purchase EPE at any time, which may be in competition with other parties making offers to purchase EPE,” the franchise agreement states.

In a statement, El Paso Electric thanked the city for approving the franchise.

“We look forward to continuing to engage and invest in EPE’s communities over the long-term to benefit EPE’s customers, employees and communities and to further the development of a sustainable path for protecting the environment and a clean energy future,” the statement reads.

The word “franchise” has been floating around for months leading up to the approval. The assignment of a franchise allows El Paso Electric to operate and maintain infrastructure on city right-of-ways.

The city charges El Paso Electric a certain amount so the utility can operate in the city. City Council voted to increase the franchise fee in 2010 and again in 2018.

Opponents of the sale have argued that the IIF’s purchase of El Paso Electric will limit options for solar energy. The IIF agreed to include a renewable generation study commitment in the franchise agreement.

The study would look at how renewable generation would fit into the utility’s service capabilities, what legislative changes would be required to enable utility-scale solar power and renewable options for customers.

The company has one year after the sale goes through to complete the study and must share it with the city within 30 days of completion.

However, there’s no guarantee that that study will ever be made fully public. El Paso Electric will retain the right to mark some parts of the report confidential if it relates to critical infrastructure of sensitive information as defined under state law.

“The City will use its best efforts to not publicly distribute such designated material to parties outside of the City. The City will also provide the Company with notice of an open records request implicating such material so that the Company may assert its rights under the Texas Public Information Act,” the franchise agreement states.


Email El Paso Inc. reporter Sara Sanchez at sesanchez@elpasoinc.com or call (915) 534-4422, ext. 105.

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