Bloomfield wants to know what electric utility assets could cost. Guzman Energy will help.
Farmington City Manager Rob Mayes said Bloomfield's decision could make it harder to keep San Juan Generating Station open
- Guzman Energy provides electricity to the City of Aztec.
- Bloomfield is considering purchasing electric utility assets from the City of Farmington.
- Guzman Energy will pay legal fees and the cost of experts as Bloomfield learns how much the assets will cost.
BLOOMFIELD — Guzman Energy has been a driving force behind increasing renewable energy for small utilities in northern New Mexico. Now it has agreed to help the City of Bloomfield take the next step toward forming its own municipal utility.
In exchange, Bloomfield may enter into a power supply agreement if the city chooses to go forward with acquiring the utility.
The Bloomfield City Council voted 3 to 1 in favor of signing the letter of agreement with Guzman Energy. Councilor Sue Finch, who attended the meeting via phone, cast the lone dissenting vote. A panel of 20 Bloomfield residents also voted in favor prior to the council meeting.
“The vote by the council last night does not mean that we are forming an electric utility,” said City Attorney Ryan Lane during a special meeting on May 29, the day after the City Council meeting.
Bloomfield seeks more information about acquiring electric utility assets
Bloomfield has been pursuing forming a municipal utility for years. In 2015, it sued the City of Farmington in an attempt to acquire electric utility assets from Farmington Electric Utility System.
Bloomfield alleged that Farmington was required by a 1960s court judgment and decree to allow Bloomfield to purchase the electric utility assets from Farmington.
A district judge ruled in favor of Bloomfield last year. Lane described that multi-year litigation as the first phase. Now the two cities must agree on a price of the assets. If the cities cannot reach an agreement, the district court will set a price.
Lane said Bloomfield remains hopeful that the two cities can negotiate a price outside of the court.
“Bloomfield is very serious about forming its own electric utility,” he said.
Lane said the city will only move forward with purchasing the electric utility if it will not raise utility rates for Bloomfield residents.
Farmington city manager responds to Bloomfield's decision
Farmington City Manager Rob Mayes said Bloomfield's decision means ongoing wasted legal costs. He said Bloomfield is intentionally forgoing money it would receive from negotiating a new franchise agreement. Franchise agreements are essentially rent the utility pays to use the city's right of ways.
In addition, Mayes said the news is disheartening as Farmington and its electric utility are "doing everything possible to save 1,600 direct and indirect jobs" at the San Juan Generating Station and its associated mine.
"Bloomfield is considering striking a deal to buy power from an out-of-state company and thereby diminish part of the (Farmington Electric Utility System's) overall electric load that is generated locally at (San Juan Generating Station), thereby undermining real prospects to keep the power plant open past 2022," Mayes said in an email statement.
Mayes said Bloomfield will only be able to purchase power from Guzman if it successfully acquires the assets from Farmington Electric Utility System. He said those assets will cost Bloomfield tens of millions of dollars.
In addition, Mayes said Bloomfield will need a sizable amount of ongoing capital and the capacity to operate an electric utility and maintain the infrastructure.
"The matter of the value of the FEUS assets and other associated compensation requisite in any transaction remain a matter of considerable dispute that likely will require years of additional costly litigation to resolve," Mayes said.
Who is Guzman Energy?
Guzman Energy is based in Florida, but has offices in Denver. It recently made a bid to supply power to Tri-State, an electric co-op owned by more than 40 utilities including La Plata Electric Association in Colorado.
The recent bid would allow Tri-State to close coal-fired power plants sooner and move to a 70 percent renewable energy portfolio. However Tri-State turned down Guzman's offer this week, the Durango Herald reported. Tri-State stated Guzman did not provide detailed proposals.
Guzman Energy currently provides power to the City of Aztec as well as the Kit Carson Electric Cooperative and the Jicarilla Apache Nation.
Guzman Energy Managing Director and Head of Organization Jeff Heit said the company has helped tribes like the Pueblo of Acoma set up tribal utilities. Bloomfield will be the first time the company has offered to finance a city’s efforts.
Guzman Energy General Counsel Robin Lunt said the company customizes its offerings to meet the needs of the community.
In Aztec, the city wanted a way to generate some of its own electricity. Guzman Energy installed a one megawatt solar field that the city will own at the end of its contract with the company.
“We’re real proud about what we’re doing with Aztec,” Heit said.
Electric utility case has been contentious in Bloomfield
Bloomfield’s attempt to acquire the electric utility has been a contentious issue in the city. Mayor Cynthia Atencio, Finch and City Councilor Ken Hare criticized the lawsuit during their campaigns.
“When we did come into this election, we were thinking that the city needs to stop spending money on litigation,” Atencio said.
During the City Council meeting, Hare said the city cannot make a decision about acquisition of the electric utility unless it knows how much it would cost Bloomfield.
Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at email@example.com.
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