Study Touts Benefits of Public Utility

November 2012

An electric utility owned and operated by Santa Fe city and county could mean more local jobs, greater renewable energy use and lower customer bills, a new draft report commissioned by local government says.

“Although this economic feasibility assessment of Santa Fe Public Power is preliminary in scope, the analyses suggest that the formation of such a utility could yield significant energy, economic and environmental benefits for electricity consumers and the region as a whole,” an executive summary for the report said.

The report, by Santa Fe consulting firm MSA Capital Partners, which worked under a city-county contract awarded to non-profit New Energy Economy, says the idea of a local utility merits further consideration by local officials.

The report looks at how three scenarios might play out over the next 20 years —a publicly owned local utility that purchases its power, a publicly owned utility that, after several years, generates some or most of its own power, and the continuance of the “status quo,” where PNM continues to provide electricity to most of Santa Fe County.

Within 15 years, a city-and-county-owned utility would mean customer bills that are up to 30 percent lower than with PNM, according to the report.

“The primary reasons for this are: more aggressive implementation of energy efficiency measures, reduced cost of capital (no profit and lower borrowing costs), and reduced administrative expense (lower executive compensation),” the report said.

The report also said that, under a city-and-county-owned utility, 45 percent of the local energy portfolio would come from renewable resources such as solar and wind power. If PNM continues to be the major supplier, that number would drop to around 20 percent, the report predicted.

The report also said that by 2028, per-customer residential and commercial energy usage could be reduced by 20 percent under a publicly owned utility.

Another benefit of a local utility, especially one that generates its own power, would be the boost to the local economy and the likely creation of many jobs.

MSA Capital Partners conducted its assessment with publicly available information and data from the American Public Power Association, U.S. Department of Energy’s Energy Information Administration, PNM filings with the Securities and Exchange Commission and Federal Energy Regulatory Commission and other documents and conversations with city and county staff and others, the report noted.

The MSA Capital Partners/New Energy Economy report was presented in draft form last week to the city-county Energy Task Force. Another review has been scheduled for Dec. 18 at county offices.

The idea of a locally owned utility has been bandied about for at least several years. In 2010, a city-county Regional Planning Authority’s energy task force first suggested that local governments look more seriously into the idea of operating an electric utility. The following year, New Energy Economy was hired to conduct an economic feasibility study.

The Santa Fe city and county governments have each contributed $10,000 to the study, while New Energy Economy has added $10,000 and the McCune Foundation $5,000.

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