Las Cruces can move forward with its plan to remove El Paso Electric Co. as the city's electric power supplier, a federal bankruptcy judge in Austin, Tex., decided last week.

U.S. Bankruptcy Court Judge Frank Monroe lifted a stay that will allow the city on Jan. 1 to begin eminent domain proceedings to acquire some of El Paso Electric's assets.

On Aug. 30, Las Cruces voters approved by a 2-to-1 margin a referendum to purchase a citizen-owned electric system. The utility would b financed through the sale of up to $90 million of revenue bonds.

"After the election, we sent El Paso Electric a letter asking them to negotiate a fair market price for their distribution facilities, but they have not responded," said Jerome Trojan, Las Cruses assistant city manager.

Trojan said the city of 61,000 has been unhappy with El Paso Electric because its utility rates are among the highest in the nation. Las Cruces did not renew its franchise agreement with the utility when it expired in March 1993, and last month another company, Southwestern Public Service Co. of Amarillo, Tex., was awarded a contract to operate and supply wholesale power to Las Cruces beginning in 1996. Under the contract, Las Cruces will have decision-making authority on rates and service.

El Paso Electric has been operating under Chapter 11 of the federal bankruptcy code since January 1992, and it is hoping a proposed $2.2 billion merger with Dallas-based Central and South West Corp. will enable it to reorganize and emerge from bankruptcy.

But a press release issued by Las Cruces said its plans to create a city-owned utility would give Central and South West Corp. "grounds to abandon the proposed merger" with El Paso Electric.

"This is yet another big hurdle we've crossed, giving further momentum to the city's efforts to lower utility rates for our citizens," Las Cruces Mayor Rubin Smith said in a statement following the Sept. 20 court ruling.

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