Why El Paso’s Proposition K is Badly Flawed

El Pasoans will soon decide on a ballot measure, Proposition K, that may commit billions of taxpayer dollars for the City to go into the electric utility business.  Why?

Austin and San Antonio both own and operate their municipal electric utilities, including coal power plants, and neither does a particularly good job of keeping the lights on.  During Winter Storm Uri in February 2021, El Paso Electric did a much better job of serving its customers. Austin and San Antonio both lost electricity and were powerless to do anything about it for days because they rely on powerplants outside their jurisdictions.  Many died.  Residents had to boil water if they had any at all. Everything halted. And El Paso Electric was held out across the state and in the state legislature as THE leading example of what a utility got right about preparing for bad weather.

Both San Antonio and Austin view their electricity revenues as general revenues to the city. Their captive utilities must compete for budget dollars against the police, firemen, highway repairs and other city priorities. The elected officials starve the utilities of funds necessary to maintain the electricity infrastructure when they really should raise taxes to fund city operations. The consumers and voters know because they are one in the same.

If the climate charter is passed, a rather lengthy process to acquire El Paso Electric, Inc. will begin—and be revisited each year until the city concludes a purchase.  The company was acquired just three years ago for $4.3 billion.  Buying it will cost taxpayers billions more.  Proposition K’s goal is to stop using natural gas inside the city limits. This appears to be a foolish waste of money.  When was the last time you bought a car just to junk it and replace it with another?

El Paso Electric is currently a leader in renewable energy growth in Texas and New Mexico.   The new economic incentives of the Inflation Reduction Act ensure that the company can profitably expand its renewable energy portfolio.

Because there are few open spaces in the city limits, the location of these solar and wind farms will be distant. The city will stand in place of El Paso Electric’s current ownership to buy the lands or lease the rights to erect solar and wind farms.  These will not come cheaply because the landowners will know the city’s negotiating position.   On top of this will be the costs to build new transmission lines to move the electricity to the city.

El Paso Electric is a regulated monopoly, and the city council already has regulatory oversight.   The company cannot simply charge any price and provide any level of service   Municipalizing El Paso Electric will not improve oversight.    The Austin and San Antonio municipally managed utilities have failed to provide reliable service.  If El Paso municipalizes El Paso Electric, the costs will increase, and whether its paid for out of consumers’ pockets or taxpayers’ pockets does not matter.  The payments will come from the same pair of pants.