As our region’s business advocates, we cannot overstate El Paso Electric’s economic importance to our community. The proposed transaction with Infrastructure Investments Fund, or IIF, helps safeguard El Paso Electric and ensure that it continues to meet our community’s growing needs.
While some have questioned this transaction, we want to be clear on our stance – including why we believe it is essential for this transaction to be approved and the real risks if it is not.
With more than 1,100 employees, El Paso Electric is our community’s second largest private sector employer. The jobs offered are high skilled, high paying and come with full benefits. During the past 12-month period, El Paso Electric injected over $38 million into the local tax base in franchise fees and property taxes, and the company estimates their local economic impact to be approximately $863 million per year.
The proposed transaction not only protects this presence and community investment, it builds on it. The facts are clear.
As part of the transaction agreement, IIF has committed to:
• Retaining El Paso Electric’s headquarters for at least 10 years
• Local workforce retention and continuity, including commitments to ensure that El Paso Electric’s workforce will remain in place
• Providing $21 million in rate credits over 36 months to customers
• Continuing the company’s local charitable contributions
Plus, with the closing of the transaction, another $100 million is coming into our region for economic development through a new fund sponsored by IIF. Additionally, IIF brings new resources and expertise to expand our access to renewable energy, which has long been a goal for El Paso. IIF has a record of doing so with other companies and is focused on doing the same here.
El Paso’s economic resurgence over the last 15 years is undeniable. Investments in transportation, the medical sector, Downtown and at Fort Bliss have created unprecedented business momentum. El Paso Electric has been an important part in this success.
If the transaction is not approved, there are no guarantees as to what happens to El Paso Electric as it will likely need to look for other partners or sources of funding to make the necessary investments to support our growing energy needs. Already, an independent credit rating agency has downgraded El Paso Electric’s debt.
The other interested buyers were not willing to make the same commitments to our community that IIF was. These entities may still be interested in pursuing El Paso Electric if the IIF transaction can’t be closed – but likely on terms less beneficial to our community than those offered by IIF. As we all know, when one utility buys another, job cuts and facility closings often follow.
Many of us remember the devastating impact of losing the El Paso Natural Gas headquarters in 1996. The utility industry is dynamic and the potential for employee downsizing, relocation and hostile takeover are real threats that other regions have experienced.
Some critics are misinformed in speculating that the transaction will result in increased electricity rates. This is simply not true, and the detractors do not provide supporting analyses for these claims. Moreover, these assertions ignore both the committed rate credits under the IIF agreement and the fact that El Paso Electric’s rates will continue to be set by regulators. The Public Utility Commission of Texas will continue to regulate rates, capital investments and El Paso Electric operations to ensure that the public’s interest is protected – just as they do today.
One step towards completing the sale of El Paso Electric to IIF is consent by the El Paso City Council. We urge our City Council to vote to approve the El Paso Electric IIF transaction as the proposed terms promote economic development, keep jobs in El Paso and ensure the continued presence of this keystone business in our community.
Jon Barela is CEO of The Borderplex Alliance, and David Jerome is president and CEO of the El Paso Chamber.