El Paso Electric Applies For Texas PUC Approval Of Acquisition By Infrastructure Investments Fund; Files Testimony Regarding Impact On Competition

El Paso Electric Company and the Infrastructure Investments Fund, an investment vehicle advised by J.P. Morgan Investment Management Inc. (IIF), have filed at the Public Utility Commission of Texas for approval of the previously reported transaction (details here) under which IIF would purchase EPE for $68.25 in cash per share representing an enterprise value of approximately $4.3 billion.

Applicants submitted testimony addressing the impact on competition from the proposed transaction.

A witness for the applicants testified as follows:

Q: DOES THE PROPOSED TRANSACTION IMPEDE OR INCREASE COMPETITION?

A: The Proposed Transaction does not impede or promote competition ... EPE will continue to be subject to the same regulatory oversight that it experiences today, and currently EPE’s service territory is not subject to retail competition under PURA § 39.553 and 16 Texas Administrative Code § 25.421.

Another witness for the applicants similarly testified as follows:

Q: DOES THE PROPOSED TRANSACTION RAISE ANY CONCERNS RELATED TO COMPETITION?

A: No ... EPE will continue to be subject to the same regulatory oversight that it experiences today. Further, EPE’s service territory is currently not subject to retail competition under PURA § 39.553 and 16 Texas Administrative Code § 25.421.

As previously noted by RetailEnergyX.com, although the standards in PURA under which the PUC will review the merger do not specifically include the impact on competition from any merger, a merger review under PURA must broadly consider whether the transaction is consistent with the public interest, and also consider the cost of service of the electric utility

While not required to do so under PURA, the PUC generally has considered, as part of its determination of other factors (e.g. the public interest) in prior utility merger proceedings whether the transaction would have an adverse impact on competition.