Dive Brief:

• Santa Fe's municipalization plans have hit a snag, as state law could preclude the city from forcing  Public Service Co. of New Mexico to sell its distribution assets.
• The issue is unclear, but Santa Fe's attorney has indicated that while state law may allow a city to condemn assets to be used by an existing utility, the law does not appear to allow condemnation to create a utility.
• In that case the city's municipal utility plans could move forward if PNM voluntarily divested its assets. The utility, however, has said its distribution system is not for sale.

Dive Insight:

Santa Fe's municipalization idea has been around a while, but it began to pick up steam two years ago when a feasibility assessment completed by MSA Capital Partners found Santa Fe Public Power could get off the ground for $155 million —  a figure which included high-end estimates for replacing PNM’s distribution network.

All that may be moot, however. The New Mexican reports that Santa Fe City Attorney Kelley Brennan has doubts that state law will allow condemnation of the necessary power facilities. The issue is complicated, and there are conflicting opinions, but Brennan said while municipalities owning or planning to construct a utility have the power of eminent domain, that authority may not extend to forcing PNM, an existing utility, to sell.

And the newspaper published a statement from PNM: “PNM’s electric system in Santa Fe is not for sale."

Municipal utility proponents say they want cleaner power than PNM is currently providing. The utility says it has a plan to boost renewables and slash coal use by almost a third, and has also warned the city not to underestimate the costs of maintaining reliable power.