Last November, Avangrid, an energy conglomerate with $36 billion in assets, applied to “merge” with PNM. Iberdrola, located in Spain, owns 81.5% of Avangrid’s stock. The “Wealth Fund” of Qatar owns 9%.
The merger is facially attractive because of Avangrid/Iberdrola’s investments in renewables, but as we know, the devil is in the details.
Past action is the best predictor of future behavior. In Maine Avangrid/Iberdrola own an equally small utility, Central Maine Power, and they have engaged in strong-arm tactics to push their agenda, creating dark money PACs, paying off legislators, hiring private detectives to hassle citizen signature gatherers and killing a people’s referendum to protect the North Woods from despoliation — all because they want to use Maine as a conduit for consumer load profit elsewhere. Check out: https://www.youtube.com/watch?v=0kWpK7IOW_k. Here Avangrid/Iberdrola want to use PNM ratepayers as a jump-off point to sell electricity to bigger markets in California and Mexico, at our expense.
Additionally, the current merger agreement violates Public Regulation Commission law and is contrary to the public interest because:
1. PRC rulings specify that mergers must not contain any recovery of transaction costs from ratepayers and must hold customers harmless from negative impacts of a transaction.
The merger agreement requires abandonment and securitization of the Four Corners Power Plant at the expense of ratepayers, a $300 million cost. It is important to note that “abandonment” does not equal closure – instead PNM is paying another company to take the Four Corners Power Plant off its hands. If approved, the climate-altering coal emissions will continue while we pay the price.
2. PRC principles dictate that merger agreements must balance the interests of shareholders and ratepayers, and rulings clarify that they should include a rate freeze to ensure rate credits offer a meaningful benefit.
The merger unjustly benefits shareholders, who will receive over $700 million in stock premiums. PNM executives will gain $80 million-plus. Meanwhile the $50 million rate credits will come to just $45 per residential customer. Fair rate credits and a rate freeze must be implemented. Without a rate freeze nothing prevents Avangrid/Iberdrola from applying for a rate increase the day after settlement is reached.
3. Precedent demands that economic development funds should equal at least $100 million.
When compared to the 2020 El Paso Electric merger agreement, in which $100 million was distributed to the community, the paltry $20 million being offered by PNM/Avangrid is grossly inadequate. A commensurate amount must include a benefit for land remediation and restoration and the health for impacted communities, help finance community and distributed solar, and provide debt forgiveness to low-income customers affected by COVID.
4. Post-merger PNM/Avangrid must be governed by a majority independent board directors.
Budget and financing decisions are the primary drivers of a utility’s cost of service, and without the oversight of independent directors who are not beholden to a foreign corporation’s priorities, ratepayers will be at risk.
5. The merger must be in the public interest.
The merger agreement lacks both regulatory and environmental stipulations to protect the public. The agreement must require independent evaluators to prevent PNM/Avangrid from rigging the procurement process for affiliates, increasing costs to ratepayers. The agreement must also guarantee immediate remediation and reclamation of coal facilities upon closure, as opposed to the currently planned “retirement in place,” an outlandish non-plan to address contamination in 25 years.
Most significantly, the merger agreement as proposed results in the burning of coal at the Four Corners Power Plant and $300M in costs for us. Any settlement must, at a minimum, close the Four Corners coal plant to protect the people and land and economic well-being of NM.
PNM’s solar generating array outside Santa Fe.