Secrecy over possible sale of T or C electric facility continues

The Truth or Consequences city commission met in closed session for four hours yesterday to discuss the possible sale of the city’s electric facility.

City Manager Angela Gonzales, now at about the nine-month mark of her employment, was also on the closed-session agenda.

The city cited the Open Meetings Act exemption for “meetings for the discussion of the purchase, acquisition or disposal of real property or water rights by the public body,” which is state law 10-15-1(H8), in order to exclude the public from discussion on the sale of the electric department.

The city cited the Open Meetings Act exemption 10-15-1 (H2) to exclude the public from a discussion about Gonzales, which states: “limited personnel matters; provided that for purposes of the Open Meetings Act, ‘limited personnel matters’ means the discussion of hiring, promotion, demotion, dismissal, assignment or resignation of or the investigation or consideration of complaints or charges against any individual public employee; provided further that this paragraph is not to be construed as to exempt final actions on personnel from being taken at open public meetings, nor does it preclude an aggrieved public employee from demanding a public hearing. Judicial candidates interviewed by any commission shall have the right to demand an open interview.”

The Open Meetings Act requires that all government actions take place in public. The city commission came out of executive session, and according to the city clerk’s office, this is the action taken:

“The motion was to ask City Management for additional research regarding the evaluation of our assets, and to come up with those, and present them to the Commission at a later date so the Commission can make a better and informed decision. Mayor Pro-Tem Hechler made the Motion, Commissioner Harrelson seconded the motion. Motion carried unanimously.”

 For two and a half years the city commission has been keeping secret the information-gathering studies supposedly being done by a neutral third party. That party is the National Rural Electric Cooperative Association, which, according to Wikipedia, “represents the interests of over 900 electric cooperatives in the United States. Cooperatives are not-for-profit and are owned by their membership.”

It was previous-City Manager Bruce Swingle who launched the idea of the city possibly selling its electric facility to Sierra Electric Cooperative.

I have asked the city why only one possible buyer is being considered, but have received no answer.

Sierra Electric has about 4,000 customers, similar to T or C’s customer number, but their lines are spread out over the county and their rates are some of the highest in the state because it has so few customers per mile of electric transmission.

The Sierra County Sun did an electric-rate study a few years ago: https://sierracountysun.org/government/t-or-c/how-t-or-cs-electric-utility-rate-compares-to-other-cities-in-new-mexico/ .

Two and a half years ago, I contacted PNM, which has the lowest rates and is the biggest electric company in the state. I asked them if they would consider buying the city’s electric facility. PNM took my information and made contact with the city, but would not communicate the outcome.

I am concerned that the city is only considering selling to a company that is small, probably with limited cash and borrowing power. Sierra Electric probably cannot afford to both purchase the electric facility and upgrade it within the limited timeline imposed by the Public Regulation Commission’s standards. This could mean much higher electric rates for people living in T or C and the Village of Williamsburg, if the sale goes through.

PNM and Sierra Electric are subject to the Public Regulation Commission’s requirements, unlike the city, which is exempt from PRC oversight. If Sierra Electric or PNM bought the city’s facility, they would have to test equipment and report the state of that equipment and replace it if it is not up to par. The PRC forces electric companies to maintain their assets on a timely basis. To increase rates, electric companies must show their asset management plans and cost estimates. Their rates are subject to PRC approval.

The city has not maintained its electric facility. On the contrary, a recent engineering firm hired to determine a rate increase confirmed that the city commission historically transferred out, on average, $1.5 million a year from the electric department’s revenue. The study said the result was neglect of needed maintenance, which has caused the facility to deteriorate.

Unlike PNM or Sierra Electric, the city’s electric department has never drafted an asset management plan. The city paid a private engineering firm about $130,000 several years ago to locate and number the city’s assets, but the numbering system and inventory taking hasn’t been kept up. I don’t think the engineering firm assigned financial values to those assets/equipment either, so city staff probably has no starting point for the dollar value of the facility.

Swingle said, in a verbal, not written report, that four studies would be done to determine whether to sell the electric facility. Supposedly all four studies are being done by the National Rural Electric Cooperative. I submitted an Inspection of Public Records Act request for the studies about a year ago, but was informed that the studies will not be available until after the sale of the electric facility. The city’s electric customers are paying for half of the studies’ costs, which are about $30,000 per study.

Now, according to the action taken yesterday, the city commission wants city staff to further research asset evaluation. City staff who have never drafted an asset management plan, who have not taken stock of the city’s electric assets, who are not in the business of assigning financial figures to that equipment and who do not know PRC testing protocols and probably don’t have the needed testing equipment.

I reckon the city commissioners have all four studies from the National Rural Electric Cooperative and are shocked by the low dollar amount assigned to the city’s electric equipment and want city staff to come up with a way to beef up the values.

But state law does not allow a city to do the “evaluation” of its own property it wishes to sell. State law 3-54-1 requires the city to use a “qualified appraiser.”

Unfortunately, 3-54-1 allows the city commission to do a “private sale” of the facility. It may also hold a public sale. Any sale of the city’s real property valued at over $25,000, public or private, is subject to referendum. It would take about 215 T or C voters’ signatures on a petition to put the question of the sale of the electric facility on the ballot.

Of course, if the city commission keeps all the studies secret until after the sale, the people cannot properly determine the pros and cons of the sale.

It’s well past the time the city commission should allow sunshine into the electric facility’s valuation, state of condition and possible sale. This decision will affect the people greatly. To keep it secret shows the city commission’s lack of respect and care for its constituents. It also shows its conceit and over-confidence in its ability to judge such a sale on its own. This is a complicated transaction. The more eyes on it the better.

At the very least the city commission should explain why it is considering only one buyer. Competition would make public information available in bid documents. Other prospective buyers may have different book-value evaluation methods. And it’s not just the book-value of the facility. The city is also selling a monopoly of over 4,000 electric-rate payers for years to come. A bigger company with more cash might be willing to offer more for those customers than Sierra Electric.