JPMorgan’s dual role at El Paso Electric, Meta El Paso data center

On June 9, Nichole Heil of PESP provided the below testimony to the El Paso, Texas City Council regarding the proposed Meta data center:

Good morning. My name is Nichole with the Private Equity Stakeholder Project.

We are a nonprofit organization that serves as the main watchdog group for private equity firms and similar financial firms.

I would like to speak about the proposed META data center, JPMorgan’s role in lining up $13 billion in financing for the data center, JPMorgan’s ownership of El Paso Electric, and conflicts of interest this may present.

Recently, we have seen a growing number of private equity acquisitions of electric utilities seeking to capitalize on the AI boom. For example, we are working with community organizations in New Mexico that are opposed to the private equity takeover of New Mexico’s main electric utility, TXNM.

One of the concerns we have seen repeatedly with Wall Street buyouts of utilities is the conflicts of interest they create given the investment managers’ broader business – i.e. they may own, lend money to, of otherwise benefit from other companies that do business with the utility. Utilities are supposed to serve the public, not their Wall Street owners’ broader business.

As you know, JPMorgan in 2019 acquired El Paso Electric for $4.3 billion through its Infrastructure Investments Fund, which continues to own the utility.

JPMorgan’s El Paso Electric is building an almost $500 million, 366-megawatt natural gas plant dedicated to Meta’s facility, which will be one of the utility’s largest customers.

JPMorgan, along with another bank, is also reportedly leading efforts to secure $13 billion in financing for the Meta El Paso data center, which would generate fees for JPMorgan.

In other words, JPMorgan is on both sides of the deal – working to secure financing for the data center and owning the main supplier of electricity to the data center.

JPMorgan’s dual role creates an unacceptable conflict of interest. Will JPMorgan really be looking out for El Paso Electric retail customers’ best interests in this deal if it stands to profit from securing financing for the data center?

We believe JPMorgan should immediately step down from its role in financing the data center given its ownership of El Paso Electric.

Further, we believe the city should investigate any whether there has any coordination between JPMorgan staff responsible for overseeing El Paso Electric and staff responsible for securing $13 billion in financing for the data center.