Las Cruces annexed three undeveloped tracts of land within Moongate Water Company’s service area, and Las Cruces committed itself to provide water to the area. The city won that right in the court of appeals, but Moongate took the case to the state supreme court.
The supreme court addressed two questions:
First, does Moongate have a right to provide water within the service area to the exclusion of Las Cruces? The court said “no”…because the city is not subject to the Public Utilities Act.
The second question: did Las Cruces engage in an unlawful taking of Moongate’s property entitling Moongate to just compensation? Again, the court said "no".
The court said Moongate has not proven that it had established infrastructure and was already serving customers in the annexed area. Absent such proof of a tangible loss, the court said a public utility is not entitled to just compensation when a municipality lawfully exercises its right to serve customers.