WHEREAS, on or about March 8, 1996, the Village of Capitan entered into a Joint Powers Agreement with the Town of Carrizozo for the continued operation of the Capitan Carrizozo Natural Gas Association; and

WHEREAS, the stated purposed of the Capitan Carrizozo Natural Gas utility is to operate the municipal natural gas utility for the benefit of the citizens of each of the municipalities and other customers who make application for natural gas service within the service area defined in Section 3-25-3 NMSA (1995 Repl. Pamp.); and

WHEREAS, the Board of Trustees finds that the Capitan Carrizozo Natural Gas Association is not serving its stated purpose, and is not operating for the benefit of the citizens of the Village of Capitan for the following reasons:

1.    CCNG is currently charging its customers a rate of $13.04 per mcf, which rate is approximate 60% higher than the rate charged by Zia Natural Gas, a regulated public utility providing natural gas service in Lincoln County, and, upon information and belief, the highest rate ever charged in the history of CCNG; and

2.    CCNG=s rates are not adjusted for atmospheric pressure.  As a result, the Board of Trustees reasonably believe that the utility is making a profit on the wholesale cost of natural gas.  Because regulated public utilities in New Mexico are not permitted to profit from the wholesale price of natural gas, CCNG=s should also be prohibited from making a profit on the wholesale cost of natural gas; and

3.    CCNG is bound by the terms of a twenty (20) year Gas Transportation Contract with Zia Natural Gas which results in a surcharge for transportation and distribution of natural gas of approximately $2.08 per mcf.    The Board of Trustees finds that this Gas Transportation Contract is not to the benefit of the citizens of Capitan; and





4.    The Capitan Board of Trustees finds that CCNG lacks the size, ability or technical expertise to bid for wholesale natural gas purchases in the current deregulated market.  As a result, CCNG has purchased wholesale natural gas at a significantly higher rate than that held by Zia Natural Gas resulting in significantly higher rates to the citizens of the Village of Capitan; and


 
5.    CCNG is exceeding its express authority under the Joint Powers Agreement by serving beyond the service area set forth in Section 3-25-3 NMSA, 1978.  As such, CCNG is operating illegally in serving customers who are more than five miles from the corporate limits of the respective municipalities.  The Board of Trustees determines that the illegal provision of service is an unwarranted liability to the Village of Capitan, and is not in the best interests of the citizens of the Village of Capitan.

NOW THEREFORE BE IT RESOLVED BY THE BOARD OF TRUSTEES OF THE VILLAGE OF CAPITAN that:

1.    The Capitan Carrizozo Natural Gas utility is not acting for the benefit of the Citizens of Capitan; and
2.    Unless an acceptable agreement for the sale of the natural gas distribution system is reached by the CCNG Joint Use Board on or before May 31, 2005, the Board of Trustees of the Village of Capitan elects, pursuant to the Joint Powers Agreement Act, NMSA 1978, Section 11-1-1 et seq., to terminate or rescind that certain Joint Powers Agreement entered into on or about March 8, 1996.   In so terminating and rescinding the Joint Powers Agreement, the Village of Capitan shall take such actions and enter into such agreements as will provide for a partition of the undivided interests in the CCNG gas utility, and ensure an economical, reliable and uninterrupted supply of natural gas to the citizens of the Village of Capitan, and the to the greatest extent possible, to all of the customers of Capitan Carrizozo Natural Gas.




_________________________________                                  Steven Sederwall
Mayor

Attest:

 ___________________________________                                                           
Anna Gail Grassie
Village Clerk