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California Energy Markets - Lawyers Disagree on Legality of Municipal Electric Utility

CALIFORNIA ENERGY MARKETS ‹ January 16, 2015 ‹ No. 1317 ‹ Page 10


[16] Lawyers Disagree on Legality of Municipal Electric Utility (from [6])

Procedural delays and legal questions are bogging down efforts to establish a municipal electric utility for the city of Santa Fe, N.M., and possibly for all of Santa Fe County.

The Santa Fe City Council on Jan. 14 postponed consideration of a resolution to organize a meeting with the city’s Board of Commissioners on creating a jointly owned electric utility.

Santa Fe City Councilor Carmichael Dominguez persuaded the council majority to send the resolution back to the Council Finance Committee to consider changes that reflected suggestions made earlier by the committee.

Councilmembers Joseph Maestas, Peter Ives and Chris Rivera, who introduced the resolution, opposed the delay.

However, Santa Fe Mayor Javier Gonzales said the Finance Committee may recommend the resolution in time for City Council review of the resolution on Jan. 28.

The resolution calls for Santa Fe city and county staff to review steps outlined in a 2012 city-county economic feasibility study on creating a public power utility. In addition, the resolution would order a preliminary assessment of PNM’s load profile in Santa Fe County, the condition of the electric distribution system in the county, and whether Santa Fe could obtain and pay for power solely from natural gas, solar and wind generation.

The resolution would also direct staff to determine PNM’s attitude toward the proposed cooperative venture between the city and county. However, the Santa Fe Board of Commissioners has not discussed or taken action on the proposal to create a city-county electric utility. Nor does the county board have anything related to a city-county electric utility on an agenda, said county spokeswoman Kristine Mihelcic.

The Santa Fe city resolution was proposed on Nov. 12. Nine days earlier, Ives introduced an ordinance to create a city electric utility to provide customers with electricity “in a reliable, fiscally sound and environmentally responsible manner.” Ives’ ordinance has been pending before the finance committee since Jan. 5.

“If the city is interested in bringing more renewable energy to Santa Fe residents, it would be better served by partnering with PNM on important solar and other green energy projects, instead of trying to create its own utility from scratch,” PNM said in a statement on Jan 12.

By year-end 2015, PNM said it will have invested $270 million in solar energy—enough to power 150,000 average homes. “PNM’s electric system in Santa Fe is not for sale,” the utility said.

Furthermore, Santa Fe City Attorney Kelley Brennan questioned whether the city legally could condemn utility assets and take over PNM’s electric utility operation inside city limits. “While there is no explicit statutory authority to create an electric utility, we are not aware of any express limitations on the city’s authority to do so,” Brennan wrote in a Dec. 31 memo to the council. Brennan said the city could seek enabling state legislation, ask New Mexico Attorney General Hector Balderas for an opinion, or petition a New Mexico District Court for a declaratory judgment on Santa Fe’s legal right to condemn and take over electric operations in the city.

In a footnote, Brennan said she consulted with private attorney Bruce Throne, who believes Santa Fe may have the power to acquire the existing electric utility by condemnation.

Mariel Nanasi, executive director of nonprofit advocacy group New Energy Economy and a private attorney, offered another opinion in an e-mail to California Energy Markets. Nanasi said the City of Santa Fe does not have the authority under eminent domain to condemn and take over PNM’s utility property inside the city. However, Santa Fe Public Power could establish an electric utility to serve new areas of development in the city. The municipal power department could increase energy-efficiency and solar deployment through utility bonds, Nanasi said.

“The opportunities are exciting and create renewable energy jobs in Santa Fe that will address climate [change] and stimulate positive economic generation that stay within our community,” Nanasi said. “PNM clings to coal and nuclear, which require enormous infusions of continuous capital at the expense of consumers and business,” Nanasi said. She advocated use of solar and wind power, supplemented by gas-fired generation when necessary.

Nanasi referred to hearings the New Mexico Public Regulation Commission has been holding since Jan. 5 on the proposed restructuring of the coal-fired San Juan Generating Station. PNM proposed to close two of four units at San Juan to satisfy U.S. Environmental Protection Agency requirements for reduction of nitrogen-oxide emissions and to minimize regional haze.

The PNM proposal would reduce the total capacity of San Juan to 847 MW, down from 1,683 MW currently. PNM’s share would be cut to 365 MW, but PNM proposes to acquire another 132 MW of San Juan power generation from exiting utilities. Also, PNM wants to transfer ownership of 134 MW of the Palo Verde Nuclear Generating Station to its regulated utility assets, rather than continuing to use the Palo Verde ownership interest for merchant power sales.

–John Edwards,

Read the full newsletter here: California_Energy_Markets.pdf


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