PUC DOCKET NO. 21112

APPLICATION OF TEXAS-NEW	§	PUBLIC UTILITY COMMISSION

MEXICO POWER COMPANY AND TNP	§

ENTERPRISES, INC. REGARDING	§	OF TEXAS

MERGER OF TNP ENTERPRISES AND	§

ST ACQUISITIONS CORP.

RIO GRANDE ELECTRIC COOPERATIVE, INC.'S MOTION TO COMPEL RESPONSES TO FIRST REQUEST FOR INFORMATION TO TNP POWER COMPANY AND TNP ENTERPRISES, INC.

Pursuant to Section 22.144(e) of the Procedural Rules of the Public Utility Commission of Texas and the Commission's Procedural Schedule, Intervenor, Rio Grande Electric Cooperative, Inc. ("Rio Grande"), files this Motion to Compel Texas-New Mexico Power Company ("TNMP") to provide answers to Rio Grande's Request for Information ("RFI") Questions Nos. 1-4, 1-6, 1-8, 1- 13, and 1-16 through 1-20 and in support thereof would respectfully show the following:

I. Introduction

On September 20, 1999, TNMP filed Objections to Rio Grande's First Request for Information, Questions Nos. 1-4, 1-6, 1-8, 1-13, and 1-16 through 1-20. TNMP asserts that it faxed these objections to Rio Grande on September 20, 1999, at 6:03 p.m. Pursuant to the Preliminary Order, a Motion to Compel Responses is due on September 24, 1999. For the reasons discussed below, TNMP's Objections should be overruled.

II. Responses to Specific Objections

1-4	Please provide a copy of all analyses, studies, correspondence, electronic files, reports, and/or other documents regarding the consideration and/or feasibility of a sale of any TNP or TNMP assets since Kevern Joyce has been employed by TNP.

TNMP objects to this RFI on the basis that this request seeks information regarding "[a]lternative business combinations to the one proposed by TNP and TNMP" that are outside the Commission's purview in this proceeding. TNMP further objects that this RFI is irrelevant in that it asks for asset sales no matter how large or small.

Rio Grande, however, does not intend to propose that there should be some other structure for the merger. Rather, this question goes to the reasonable value of TNP as well as the issue of whether the transaction is in the public interest, as permitted the Commission's Preliminary Order. Issues No. 1 expressly allows consideration of "the reasonable value of the property, facilities or securities to be acquired, disposed of, merged, transferred, or consolidated in the transaction." Further, Issues Nos. 5 and 6 allow consideration of whether the utility will receive consideration equal to the reasonable value of the assets when it sells, leases, or transfers the assets and whether the transaction is within the public interest.

Clearly, any price offered to or valuations made by TNP for any of its assets is relevant to determining if TNP is receiving a reasonable value in the proposed merger. In addition, the requested information should reveal how TNP valued itself under different scenarios which can then be used as a benchmark for the value its stockholders will receive under the proposed buy-out. Finally, TNMP's ratepayers may have received benefits under other offers, unlike the current proposal. As such, TNMP's objection is without merit and should be overruled.

Finally, to the extent that TNMP objects on the basis that Rio Grande requests information regarding small asset sales, Rio Grande would agree to limit this request to asset sales of $5 million or more.

1-6	Please refer to page 10, lines 23-25, of the direct testimony of TNP witness Kevern Joyce. Provide a copy of all studies, analyses, correspondence, electronic files, reports, and/or other documents regarding each TNP and/or TNMP reevaluation of its "future strategy and options."

TNMP also objects to this request on the basis that it seeks information regarding "alternative business combinations." TNMP further objects on the basis that it is outside the preliminary order because it seeks information regarding "generic rate . . . issues other than those specifically listed or germane to the matters considered in [the Preliminary] Order." Finally, TNMP objects to this RFI on the basis that it is not relevant to this proceeding. For the reasons set forth below, each of these objections are without merit and should be overruled.

This RFI does not go to alternative business combinations, but rather goes to the issue of whether the "strategy" actually chosen by TNMP is favorable to the ratepayers as compared to other strategies and options considered, an issue that is clearly encompassed with the Preliminary Order Issues Nos. 4, 6, 8, and 14. Moreover, as mentioned in response to TNP's objection to RFI No. 1-4, Rio Grande is not planning to propose an alternative business combination and is, therefore, not seeking such information. As such, this objection is without merit.

Additionally, on its face, this RFI does not inquire into rates as also erroneously claimed by TNP. Again, this RFI relates to Issues Nos. 4, 8, and 14 of the Preliminary Order.

TNMP's relevancy objection is also without merit because the information requested directly relates to issues addressed on page 10, lines 23-25 of the direct testimony of Kevern Joyce. If TNMP is addressing the issue, it clearly is relevant to these proceedings and Rio Grande is legally entitled to such information.

Finally, to the extent that TNMP objects to this request on the basis that it requests sensitive information, a protective order was issued on August 9, 1999. Rio Grande is willing to abide by the confidentiality order issued in this case. Therefore, TNMP's objection based on confidential information must be overruled.

1-8	Please refer to page 17, lines 20-27, of the direct testimony of TNP witness Kevern Joyce. Provide a copy of all studies, analyses, correspondence, electronic files, reports, and/or other documents relating to each of the "alternatives to a sale of TNP" listed. Also, with regard to the alternative of "acquiring other small distribution companies and electric cooperatives," identify all such entities TNP and/or TNMP considered as potential acquisitions. In addition, will the merger result in TNP having increased access to capital markets for pursuing these potential acquisitions? If not, explain why not.

TNMP objects to this request for the same reason it objects to 1-4. TNMP further objects to this request on the basis that it believes that the true reason for seeking this sort of information is to assist Rio Grande, as a competitor of TNMP, in its efforts to compete with TNMP. These objections are without merit.

This RFI does not deal with alternative business combinations but rather serves as a base case to compare the benefit of the merger. The requested information should show how TNMP would have operated in the future, in the absence of the merger, and will provide a benchmark on which to determine if the merger is in the public interest. As such, it clearly falls within Issues 4, 8, and 14 of the Commission's Preliminary Order.

Moreover, TNMP's attempt to characterize or create an alleged improper motive should be ignored. The Commission granted Rio Grande's Motion to Intervene in this proceeding and allowed Rio Grande to fully participate as a party in these proceedings without restriction. Thus, Rio Grande's RFIs, which clearly relate to issues set forth in the Commission's Preliminary Order, are entirely appropriate.

Finally, to the extent that TNMP objects to this request on the basis that it requests sensitive information, a protective order was issued on August 9, 1999. Rio Grande is willing to abide by the confidentiality order issued in this case. In addition, in other PUC proceedings, the applicants have routinely produced similar documents such as business plans, and strategic plans. Therefore, TNMP's objection based on confidential information must be overruled.

1-13	For each TNMP Region (including New Mexico), provide the following statistics:

(a)	The number of distribution system operation and maintenance personnel dedicated to that Region per customer served in the Region for 1996, 1997, and 1998;

(b)	The number of transmission/distribution line crews available to respond to emergencies per mile of transmission/distribution line for 1996, 1997, and 1998;

(c)	The number of customer service personnel dedicated to that Region per customer served in the Region for 1996, 1997, and 1998;

(d)	The distance from each distribution service center to the farthest customer served by that service center;

(e)	The number of customers by customer class in the Region for 1998; and

(f)	The Kwh sales by customer class in the Region for 1998.

TNMP objects to this request on the basis that it is outside the basis of the Commission's Preliminary Order. TNMP asserts that, pursuant to the Preliminary Order, the Applicants have testified that this transaction will not have any effect on any of their existing obligations or future obligations that may arise with regard to rate making, and thus, generic rate issues are not to be considered. TNMP also objects that this RFI is not relevant to this proceeding, contemplates the production of highly sensitive material, and is burdensome to the extent it requires TNMP to create additional reports when some of this information is already on file with the Commission. Finally, TNMP asserts that Rio Grande's motive in seeking such information is to compete with TNMP. Each of these objections is without merit and should be overruled.

To the extent that TNMP objects to this request on the basis that it requests sensitive information, a protective order was issued on August 9, 1999. Rio Grande is willing to abide by the confidentiality order issued in this proceeding. In addition, Rio Grande does not believe the requested information is confidential or sensitive. Therefore, TNMP's objection based on confidential information must be overruled.

Second, this question does not deal with generic rate issues. Rather, this RFI relates to the issue of the reliability of service after the merger as it relates to current service conditions. Issues Nos. 4, 8, and 14 of the Preliminary Order expressly allow consideration of the following issues:

4.	Will the transaction result in a decline in service?

8.	Whether the merger results in improvements in service to Texas ratepayers;

14.	Whether guarantees or commitments should be required from the merged company to ensure that service quality and customer relations in Texas after the merger are equal to or better than current conditions.

Thus, because this RFI, as propounded, directly relates to issues of service conditions and reliability, it is clearly within the ambit of the issues expressly allowed consideration by the Commission.

Finally, to the extent that TNMP objects that it is burdensome in that it requires TNMP to create additional reports, TNMP has failed to provide any evidence or explanation as to what such a request would entail or how it would be over burdensome. TNMP has also failed to identify which part of the request is over burdensome and thus, Rio Grande is unable to revise the RFI to make it less burdensome. A vague, unsupported allegation of burdensome is insufficient. Moreover, TNMP, as the party with the burden of proof in this proceeding, has the burden to support each and every issue, including reliability as it relates to the Issues set out in the Preliminary Order. This information is within its control and should be provided.

Finally, as discussed previously, Rio Grande has been granted intervention in this proceeding without restrictions and seeks production of information clearly relevant to the merger and expressly allowed by the Commission. As such, TNP's comment regarding an improper motive should be disregarded and its objections overruled in their entirety.

1-16	For each TNMP region (including New Mexico), provide the number of customer complaints and total number of customers served for each of the last 5 years.

TNMP objects to this request on the same basis as its objection to 1-13. Like No. 13, this RFI goes to the issue of reliability of service and pertains to Issues 4, 8, and 14 of the Preliminary Order. Rio Grande also incorporates its response to 1-13 in its entirely to this response. As such, TNMP's objections should be overruled.

1-17	Please provide the same information requested in RFI Nos. 1-13, 1-14, 1-15, and 1-16 above for each TNMP Local Office.

TNMP objects to this request on the same basis as its objection to 1-13. Like No. 13, this RFI goes to the issue of reliability of service and pertains to Issues 4, 8, and 14 of the Preliminary Order. Rio Grande also incorporates its response to 1-13 in its entirely to this response. As such, TNMP's objections should be overruled.

1-18	Please provide a copy of all documents prepared since TNMP's filing in Docket No. 17751 which relate in any way to plans for closing, opening, or staffing levels of Local Offices.

TNMP objects to this request on the same basis as its objection to 1-13. Like No. 13, this RFI goes to the issue of reliability of service and pertains to Issues 4, 8, and 14 of the Preliminary Order. Rio Grande also incorporates its response to 1-13 in its entirely to this response. As such, TNMP's objections should be overruled.

1-19	For each TNMP distribution feeder, provide the following information for each of the last three calendar years:

(a)	The number of customers served by the feeder and

(b)	The SAIDI and SAIFI values.

TNMP objects to this request on the same basis as its objection to 1-13. Like No. 13, this RFI goes to the issue of reliability of service and pertains to Issues 4, 8, and 14 of the Preliminary Order. Rio Grande also incorporates its response to 1-13 in its entirely to this response. As such, TNMP's objections should be overruled.

1-20	Please provide a copy of all outage reports for TNMP for the last three years.

TNMP objects to this request on the same basis as its objection to 1-13. Like No. 13, this RFI goes to the issue of reliability of service and pertains to Issues 4, 8, and 14 of the Preliminary Order. Rio Grande also incorporates its response to 1-13 in its entirely to this response. As such, TNMP's objections should be overruled.

Respectfully submitted,

WICKLIFF & HALL, P.C.

By:

Alton J. Hall, Jr.

State Bar No. 08743740

Tammy R. Wavle

State Bar No. 24008908

1000 Louisiana, Suite 5400

Houston, Texas 77002

(713) 750-3100 Telephone

(713) 750-3101 Facsimile

ATTORNEYS FOR RIO GRANDE

ELECTRIC COOPERATIVE, INC.

CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of Rio Grande's Electric Cooperative, Inc. First Request for Information to Texas New Mexico Power Co. and TNP Enterprises, Inc. was served upon the parties of record as indicated on the service list by facsimile prior to 3:00 p.m. on Friday, September 24,1999.

Alton J. Hall, Jr.

PUC DOCKET NO. 21112

SERVICE LIST

Attorneys for Texas New Mexico Power Company

Louis S. Zimmerman

Lyn Dean

Fulbright and Jaworski

600 Congress Ave, Suite 2400

Austin, Texas 78701

Public Utility Commission of Texas

Mr. Charles Johnson

Assistant General Counsel

Public Utility Commission of Texas

1701 North Congress Ave.

Austin, Texas 78701

Cap Rock Electric Corp., Inc.

Lambeth Townsend

Lloyd, Gosselink, Blevins, Rochelle

Baldwin & Townsend, P.C.

111 Congress Ave., Suite 1800

Austin, Texas 78701

Power Choice, Inc. and

Valero Refining Company - Texas

Mr. Robert A. Webb

General Counsel

Power Choice, Inc.

401 West 15th Street, Suite 810

Austin, Texas 78701

Cities of Hamilton and Gatesville

Kimberly M. Hammer

Jim Boyle

Law Offices of Jim Boyle

1005 Congress Avenue, Suite 550

Austin, Texas 78701

Office of Public Utility Counsel

Mr. James K Rourke, Jr.

Assistant Public Counsel

Office of Public Utility Counsel

1701 N. Congress Ave. Suite 9-180

P. O. Box 12397

Austin, Texas 78711-2397

City of Lewisville

Geoffrey M. Gay

Steve Porter

Butler, Porter, Gay & day

1609 Shoal Creek Blvd, Suite 302

Austin, Texas 78701

NewEnergy Texas, L.L.C.

Vanus J. Priestley

Manager, Regulatory and Governmental Relations

NewEnergy Texas, L.L.C.

401 West 15th St., Suite 810

Austin, TX 78701-1665

Low-Income Intervenors

Randall Chapman

Neish A. Carroll

Texas Legal Services Center

815 Brazos, Suite 1100

Austin, Texas 78701

Kimberly M. Hammer

Law Offices of Jim Boyle

1005 Congress Avenue, Suite 550

Austin, Texas 78701

Mr. James K. Rourke, Jr.

Assistant Public Counsel

Office of Public Utility Counsel

1701 N. Congress Ave. Suite 9-180

P. O. Box 12397

Austin, Texas 78711-2397

Geoffrey M. Gay

Butler, Porter, Gay & Day

1609 Shoal Creek Blvd, Suite 302

Austin, Texas 78701