Copyright © 2021 Albuquerque Journal
Public Service Company of New Mexico and energy giant Avangrid are doubling the amount of rate relief they plan to offer utility customers, plus other benefits, to gain Public Regulation Commission support for their proposed merger.
The companies filed an “initial stipulation” agreement on Wednesday at the PRC outlining a range of concessions negotiated with some intervenors in the merger case, which is scheduled for public hearings in early May. The commitments include a substantial increase in rate benefits for customers and in economic development funding for the state in general, including significant investments in Four Corners Area communities impacted by the transition from fossil fuels to clean energy.
Taken together, the new commitments offer at least $250 million in benefits for ratepayers, local communities and the state as a whole, according to PNM.
Many case intervenors criticized the original merger proposal, which the two companies filed with the PRC last November. Environmental and consumer advocacy groups told the PRC the merger was not in the public’s best interest unless Avangrid offered more social benefits and commitments in return for PRC approval.
Seven organizations, however, have signed on to support the new stipulation agreement, including the Attorney General’s Office, the environmental group Western Resource Advocates, an electrical workers union, and four community and Indigenous organizations.
PNM and Avangrid expect to negotiate with more parties in the case to expand support, potentially building the “initial stipulation” into an “amended” settlement with possibly more commitments. But the compromises negotiated so far already offer substantial returns for New Mexico, said Pat Vincent-Collawn, chairman, president and CEO of PNM’s parent firm, PNM Resources.
“PNM has always believed that this merger is good for our customers, our employees, our communities and the state as a whole,” Vincent-Collawn told the Journal. “The proposed stipulation builds upon the underlying merger agreements in tangible and concrete actions that improve the public benefit of the merger.”
Avangrid CEO Dennis Arriola called it an “innovative, community-based” agreement.
“We listened to local leaders, customers and other stakeholders to learn more about the unique circumstances in New Mexico,” Arriola said in a prepared statement. “As a result, we are proud to put forward this agreement, with strong local support, to increase our investments in New Mexico and build on our partnership with New Mexicans and help ensure local communities prosper.”
For PNM customers, the companies propose to double the amount of rate relief offered, from $25 million outlined in their November filing to $50 million now.
If divided among 530,000 PNM customers, that would amount to about $94.35 per ratepayer, paid out over three years. Customers would receive about $31.45 per year through a monthly credit on their bills, totaling about $2.62 per month.
That’s up from about $15.70 per year, or roughly $1.31 per bill, previously.
The companies are also offering:
n $6 million to forgive past-due residential consumer debt accumulated during the pandemic
n $5 million for energy-efficiency to help low-income customers reduce their consumption and electric costs
n $2 million to extend electric service to more people in remote areas
n $7.5 million in economic development funding, up from $2.5 million in the November filing
n $12.5 million to specifically benefit Indigenous community groups in the Four Corners area, with $2.5 million in annual investments over five years.
Avangrid is also promising to create 150 new full-time jobs in New Mexico over three years – 20 of them at PNM and the rest at other companies. PNM estimates that will generate between $150 million and $200 million in economic benefits for the state.
The stipulation outlines many other commitments as well, such as programs to contract locally for future goods and services; greater diversity in hiring, management and contracting; all merger costs paid by shareholders; elimination of all current PNM debt; creation of a carbon reduction task force to ensure that PNM not only meets, but exceeds its zero-carbon goals by 2040; and a guarantee that Avangrid will not seek to sell off PNM for at least 10 years, up from a five-year promise in the November filing.
Will it win more support?
It’s unclear if other key intervenors in the case, such as the Coalition for Clean Affordable Energy, will join an amended settlement. PNM and Avangrid didn’t invite CCAE to participate in the initial-stipulation negotiations, although they’ve now asked the coalition and other environmental groups to review the agreement, said CCAE attorney Stephanie Dzur.
“We were excluded from the initial process for some reason,” Dzur told the Journal. “We’re evaluating it now.”
The companies may have limited initial talks to reach an agreement with some parties before public hearings begin in May, and then continue negotiating with others, said Noah Long, Natural Resources Defense Council western director for climate and energy. But to support an amended settlement, NRDC will seek more concrete commitments on Avangrid investments in clean energy and decarbonization programs.
“There are some good things in (the limited stipulation), for sure, but we haven’t seen movement on some key items,” Long told the Journal. “We want movement on those things before we join.”
Initial-settlement supporters say the agreement breaks a lot of new ground. But they will work with other case intervenors to address their interests.
“The stipulation has advanced significantly from the beginning offer and prioritizes electricity to neglected tribal communities and securing additional resources for union workers and coal miners who have lost their jobs,” Attorney General Hector Balderas told the Journal in an email. “Other legacy issues can still be addressed as the case proceeds, and I look forward to advancing the interests of other parties to strengthen New Mexico’s clean energy future.”