A consumer advocacy organization is pressing the Federal Energy Regulatory Commission to require more disclosure in the pending sale of El Paso Electric Co. to an unnamed group of owners.
Announced in June, the proposed deal would see Infrastructure Investments Fund, or IIF, an investment vehicle advised by J.P. Morgan Investment Management Inc., acquire El Paso Electric for an enterprise value of about $4.3 billion, or $68.25 per share in cash.
In a Sept. 20 filing, however, the advocacy group Public Citizen argued that FERC should reject the parties' joint petition for authorization of the sale as deficient because it fails to justify classifying the upstream buyers as confidential as required by federal statute.
El Paso Electric, a publicly traded electric utility, serves approximately 429,000 customers in the Rio Grande Valley in West Texas and southern New Mexico, according to the application. The company also holds an interest in power generating units representing a total net capacity of approximately 2,157 MW and purchases roughly 239 MW of electricity under long-term power contracts.
IIF's petition for authorization of the sale describes a series of partnership structures, with the ultimate parent — IIF US Holding 2 GP, LLC — owned by "three private individuals." Those applicants requested privileged and confidential treatment of the work papers supporting their petition because they "contain information that is privileged and confidential and not publicly available," according to the filing. The application also included a footnote revealing that the identities of the three private individuals are described in the confidential attachment in a different docket that does not involve El Paso Electric, Public Citizen noted in its own filing.
That separate proceeding (FERC docket EC19-27), among other things, resulted in a FERC order issued in January authorizing the transfer of an approximately 33% membership interest in the general partner of IIF US Holding 2 to another private individual.
Public Citizen is now requesting the contents of the confidential attachment in that separate proceeding, asserting that the parties in the El Paso Electric sale have provided "neither justification nor proposed access to the non-public identities of the buyers of a vertically-integrated utility with captive ratepayers."
In addition to FERC approval, the parties also need to secure approvals from El Paso Electric shareholders and meet customary closing conditions in order to complete the merger. In a special meeting, more than 99% of El Paso Electric shares voted in favor of the merger, according to a Sept. 19 news release.
The $4.3 billion deal is still subject to the approval of regulators in Texas and New Mexico, as well as the City of El Paso, among other conditions. The applicants asked FERC to issue an order by Feb. 10, 2020. (FERC docket EC19-120)