Santa Fe Teachers' Suit Nets $74-Million Utility Rebate
When Santa Fe, N.M., school officials blamed rising fuel bills for the absence of pay raises for teachers in the mid-1970's, the local teachers' union decided to investigate the source of the problem--the Gas Company of New Mexico.
As a result, every gas consumer in the state will be getting rebate checks from the company as part of a $74-million anti-trust settlement--one of the largest of its kind in judicial history, according to lawyers who worked on the case.
Call for Rate Control
The suit was filed by five members of the New Mexico affiliate of the National Education Association.
Jay Miller, deputy executive director of nea-New Mexico and one of the five plaintiffs, said that in the fall of 1976, the union had asked the state legislature to control the rapidly increasing utility charges.
But despite the passage of legislation to control them in 1977, the prices continued to rise, according to Mr. Miller, because of various loopholes in the bill.
In the fall of 1978, Mr. Miller said, lawyers for nea-New Mexico began examining the gas and electricity prices and determined there was a conspiracy to artifically increase the cost of gas.
The suit charging the state's leading natural-gas producers with anti-trust violations was filed in 1979, on behalf of all the state's residential customers, state agencies, colleges and universities, and Public Service Co. of New Mexico, the state's electricity company and the largest consumer of natural gas.
Settled Out of Court
The case was ultimately settled out of court. The terms of settlement have been reached over the past three years with each of the five defendants: the Gas Company of New Mexico and its distributors, Southern Union Production Company, Consolidated Oil and Gas, Conoco, and Southland Oil and Gas.
Most of the state's residential consumers will receive gas rebate checks ranging from $100 to $300 before the end of the year. A second check for a similar amount will be mailed in 1986.
The Gas Company of New Mexico, which under the settlement was bought by the state's electric company, is now in the process of renegotiating its contract with its distributors, so both electricity and gas bills are expected to decrease in the future.
The teachers' provided $25,000 to cover the initial cost of filing the suit. Mr. Miller said legal fees may run as high as $11 million and will probably be covered by interest accumulated on the settlements placed in escrow.
Separate Suit Launched
However, since New Mexico's public schools did not join in the suit, they will not receive any rebate. Lawyers for the approximately 25 schools in the state that use natural gas are now filing a separate, similar suit to recoup possibly millions of dollars, according to C. Emery Cuddy, counsel to the New Mexico School Boards Association.
Mr. Cuddy said the schools were never asked to participate in the suit. However Eugene Gallegos, a lawyer representing the plaintiffs, said the schools refused to join the suit.
"Our pay increases are not as high as they would have been if the public schools had joined in," Mr. Miller said.
Mr. Cuddy said that if the districts were to win a large settlement, the money could conceivably be used for teachers' salaries.
Acknowledging that the teachers' suit paved the way for the public-school suit, Mr. Cuddy said, "The school districts probably would not have brought suit on their own. They just don't have the resources. [The previous suit] will make it easier for us, but it still doesn't make it a sure thing."