Proposed New Mexico utility merger spurs numerous concerns
ALBUQUERQUE, N.M. (AP) — Consumer advocacy groups, environmentalists and the New Mexico attorney general’s office are concerned about a proposed multibillion-dollar merger of the state’s largest electric utility with a U.S. subsidiary of global renewable energy giant Iberdrola.
The groups have filed testimony with state regulators ahead of hearings that will begin next month. It will be up to the state Public Regulation Commission to determine if the merger provides meaningful benefits to Public Service Co. of New Mexico customers and if it would be in the public interest.
Groups intervening in the case contend that PNM executives and shareholders will reap the benefits of the proposed transaction with Connecticut-based Avangrid, as the company is offering only $2.5 million in economic development funds and 100 new jobs.
A similar acquisition last year of El Paso Electric Co. by an investment firm resulted in $100 million to promote economic development in the utility’s service area. That included $20 million over 20 years in New Mexico — eight times more than what Avangrid is proposing for a deal that involves a utility with a larger customer base and infrastructure that includes transmission and access to eastern New Mexico’s lucrative wind resources.
Negotiations are ongoing among the groups involved in the case. Rebuttal testimony is due Wednesday.
PNM will be on the hook for making significant capital investments as it aims for carbon-free electricity generation over the next two decades. Experts have said the utility could benefit from a merger due to Avangrid’s credit standing and access to capital markets. Meanwhile, Avangrid wants to build its assets within the U.S. utility sector.
Andrea Crane, a financial consultant who is testifying on behalf of the attorney general’s office, suggested that the proposal falls short of meeting the general goals for New Mexico’s energy future: electrification for all, cost-effective greening, economic development and respect for the customer.
The benefits are “woefully inadequate to demonstrate that the merger, as currently proposed, is in the public interest,” she wrote.
She recommended that rate credits for customers be boosted fourfold and that economic development funds should be around $80 million.
The merger also is contingent upon regulatory approval of PNM’s application to abandon its ownership in the coal-fired Four Corners Power Plant, which serves customers throughout the Southwest U.S.