TECO Energy Inc. executives say they believe their “track record” of reliability and experience operating two Florida utilities will help sway Public Regulation Commission members to support their acquisition of New Mexico Gas Co.
TECO, a publicly traded company that supplies electricity and natural gas to about 1 million consumers in Florida, has offered $950 million to acquire New Mexico Gas, which serves about 509,000 customers here. State and federal regulators must approve the deal.
Executives from TECO and New Mexico Gas, who met individually with Public Regulatory Commission members Wednesday in Santa Fe, said they plan to file for regulatory approval within 40 to 45 days.
TECO President and CEO John Ramil said he expects TECO’s sound finances and lengthy experience operating Tampa Electric and Peoples Gas System to work in their favor.
“I think they will look at our company’s track record and background to make sure we can do this and that customers will be served reliably,” Ramil told the Journal .
Commissioner Pat Lyons said the agency likely will look favorably on the company’s history as a utility operator, rather than just a financial investor in utility businesses, because it suggests a stronger commitment to directly running the gas business.
That’s different from Continental Energy Systems LLC, the utility holding company that purchased New Mexico Gas from PNM Resources in 2009, Lyons said. Continental, backed by the private-equity firm Lindsay Goldberg, is now divesting itself of all its utility businesses.
“TECO is not just an investment company that’s owned by a group of investors somewhere … it’s a utility company that wants to concentrate on supplying gas to New Mexico consumers, and that’s a good thing,” Lyons said.
Ramil said the acquisition reflects TECO efforts to expand its natural-gas operations in growth markets.
“We like the natural-gas business because we can grow with a reasonable amount of capital,” Ramil said. “That’s different from electric utilities, where the cost of generation is so high that you grow in chunks, creating lots of pressure on customer rates.”
TECO said it would likely pursue a NMGC plan to build a $38 million liquid natural-gas storage facility in Rio Rancho to help manage gas supplies in emergency situations. The Attorney General’s Office and others have questioned the project’s price tag and scope.