The deal is finally done.
El Paso Electric is no longer a publicly traded electric utility.
It’s now owned by the JPMorgan Chase-tied Infrastructure Investments Fund, or IIF, which on June 1, 2019, agreed to buy the 117-year-old electric utility for $4.3 billion, including assuming $1.5 billion of the utility’s debt.
The sale was completed Wednesday afternoon.
El Paso Electric and IIF also named a new chief executive officer: Kelly Tomblin, who most recently served as CEO and president of INTREN LLC, an electric and natural gas utility contractor based in Illinois. A new company board also has been named.
She replaces Adrian Rodriguez, the company's general counsel, who's been interim CEO since Aug. 1, 2019, after Mary Kipp left to head Puget Sound Energy in the Seattle area.
"EPE plays a critical role in the communities they serve and I look forward to making this community my own," Tomblin said in a statement.
The sale will bring multimillion-dollar paydays for several members of the utility’s old board of directors, and for some of the company’s executives. They will receive payments for El Paso Electric stock shares and stock awards that IIF bought for $68.25 a share, or about $2.8 billion, as part of the sale.
Primer: What does El Paso Electric sale mean for customers, community?
New York-based IIF is a $12.5 billion investment fund that buys companies, mostly in the energy industry.
It took just over a year for the proposed sale to get approved by Texas, New Mexico, and federal regulators, and by the El Paso City Council.
El Paso Electric has more than 436,000 customers in the El Paso and Las Cruces areas. IIF agreed to keep the company's headquarters in El Paso for as long as it owns the utility, and to keep the company's about 1,100 employees in place for at least five years.
Community leaders react to sale
Ted Houghton Jr., an El Paso businessman who was an early critic of the deal, is now a supporter.
A lot of changes were made in the original, proposed deal that now make the sale good for El Paso, he said in an email.
El Paso Mayor Dee Margo said the sale is good for El Paso and EPE customers.
“It provides financial stability to El Paso Electric while providing numerous economic incentives for attracting more jobs and investments,” Margo said in a statement. “The success of IIF’s purchase will not be based on rate increases, but on performance and growth."
But not everyone is happy.
Texas state Sen. José RodrÃguez, D-El Paso, who was a critic of the sale because of JPMorgan’s ties to IIF, said in an email: "It remains to be seen how this (sale) will work out. There are two facts: 1) Prior to this deal, EPE reported no financial concerns necessitating a sale. 2) The purchasers went to great lengths to deny an affiliate relationship with JP Morgan at the federal level, but admitted to as much at the state level. On its face, this should concern all of us."
Members of the Sunrise El Paso environmental group were the most outspoken opponents of the sale, mostly because of IIF's ties to JP Morgan.
Tyson Slocum, program director for Public Citizen, a consumer watchdog organization in Washington, D.C., was the first to raise questions and concerns about JPMorgan’s ties to IIF in filings with the Federal Energy Regulatory Commission.
"A community has expectations that new corporate owners of essential services like electric utilities will be honest and forthright. But IIF has done neither, with its continued denials that the Wall Street bank JPMorgan Chase controls El Paso Electric," Slocum said in an email.
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Slocum plans to continue to push the Federal Energy Regulatory Commission to deem JPMorgan a legal affiliate of IIF, which would have consequences for the bank, he said.
IIF is advised and managed by JPMorgan Investment Management's Infrastructure Investments Group. In that role, it helps manage companies that IIF owns and operates. Employees in the JPMorgan group sit on IIF company boards.
New board headed by New Jersey utility group veteran
EPE’s new, 10-member board’s chairman is Frank Cassidy, who worked almost 40 years for Public Service Enterprise Group, a large electric and natural gas utility operator in Newark, New Jersey. He retired in 2007 as president and chief operating officer of PSEG Power, the group’s power producer.
Three El Paso businessmen are on the new board, including two members of the company’s old board: Rick Francis, CEO of WestStar Bank, a large El Paso bank; Raymond Palacios, owner of new car dealerships in El Paso and Las Cruces, and a member of EPE’s old board since 2017; and Ed Escudero, founder and CEO of High Desert Capital, a business lender in El Paso, and member of the old EPE board since 2013.
Two employees of JPMorgan’s Infrastructure Investments Group are on the new board: Andrew "Landy" Gilbert, managing director of the group, who helped steer IIF’s acquisition of El Paso Electric through the yearlong regulatory review process; and Kathleen Lawler, an executive director in the group.
The other board members: Kathy Alexander, a lawyer with extensive experience in handling utility regulatory matters; Mike Jesanis, a board member of NiSource Inc., an Indiana utility holding company; Peter Kind, who worked as an investment banker for more than 30 years and a board member of IIF-owned SouthWest Water Co.; and Tomblin, the new El Paso Electric CEO.
Nuclear Regulatory Commission finds no ownership problems
Also, the U.S. Nuclear Regulatory Commission staff has determined that the sale poses no problems with possible foreign company control of El Paso Electric's part ownership in the Palo Verde nuclear plant in Arizona. The NRC in a July 17 letter asked El Paso Electric and IIF to provide information about possible foreign ownership in IIF companies tied to the utility's acquisition.
In a July 28 letter, the NRC staff told El Paso Electric that the transfer of the Palo Verde license to IIF meets federal law requirements. The NRC approved the license transfer in March, but then had last-minute ownership questions.
Vic Kolenc may be reached at 546-6421; vkolenc@elpasotimes.com; @vickolenc on Twitter.
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