Read the Memo That Put a Kink in Electric Utility Debate

Santa Fe's top attorney is raising big legal questions about a plan for the city to acquire Public Service Company of New Mexico's electric grid in order to create a publicly funded utility company.

Property acquisition by government entities is generally accomplished through two methods, says a Dec. 31 memo to city councilors from Santa Fe City Attorney Kelley Brennan: a negotiated purchase or condemnation. The purchase of an electric utility must be approved by voters and financed through revenue bonds. Since PNM isn't a likely willing seller, as reports The Santa Fe New Mexican , that means the city would depend on the latter method.

Therein lies the problem.

"It does not appear that the City has the power to acquire the electric utility through condemnation," she writes, citing state law and a 1995 federal court case, Las Cruces v El Paso Electric Company, in that municipality's ultimately unsuccessful bid to create a public utility.

Brennan writes that state law allows municipalities "that own, operate or propose to construct" an "electric utility have the power of eminent domain for the purposes of acquiring property for the use of the electric utility."

But the court decided the definition of "construct" doesn't include condemnation.

"It is clear that condemning an existing public utility and planning to use the condemned property in the exact same fashion does not encompass 'construction' of an electric utility," it ruled.

Condemnation authority for a municipal utility, writes Brennan, "appears to be limited to Las Cruces, municipalities that owned an electric distribution system in 1979 and municipalities that own, operate, or are proposing to construct an electric utility."

The city should "seek to clarify its authority in this manner," by changing state law, seeking an opinion from the attorney general or asking a state district court for a judgement, she writes.

Meanwhile, that memo didn't stop Santa Fe City Council's Public Utilities Committee from approving a resolution sponsored by District 2 Councilor Peter Ives to create a public utility.

The committee approved Ives' measure, which would establish an electric utility company controlled by taxpayers called Santa Fe Public Power. The full council is set to publish the ordinance Jan. 28 and hold a public hearing on it on Feb. 25.

PNM is asking the Public Regulation Commission to approve a rate increase that would hit average homeowners with estimated $9.75 extra per month.

It's also running ads on the local radio stations boasting about a settlement it entered into between the company and the attorney general and environmental groups in which it agreed to retire two boiler units at the San Juan generating plant, as well as install up to $81 million in emission control equipment to comply with federal haze regulations.

The company says the rate increase will help come into compliance with these new standards, as well as invest in more renewable energies. Critics say the publicly traded company's portfolio, which includes 5 percent wind energy resources and 2 percent solar, is too reliant on coal, as evidenced by its desire to buy a coal mine.

The debate about whether to take over power delivery from PNM began in earnest with the election of Mayor Javier Gonzales, who campaigned on a green-energy platform with the endorsements to back up his rhetoric. 

But conversations so far have been been plagued by political, legal and financial questions, with Gonzales' mayoral opponent, District 1 Councilor Patti Bushee, leading the charge in criticizing a plan that she says doesn't give voters an accurate portrayal about whether the city can afford to take on the powerful company.  


Even District 2 Councilor Joseph Maestas, a supporter of the plan, has said that his constituents still had a "bad taste" in their mouths about the broken promise that water rates wouldn't rise significantly after the city purchased water delivery from PNM.

Santa Fe Reporter