Copyright © 2021 Albuquerque Journal
PNM Resources and Connecticut-based energy giant Avangrid promised on Thursday to spend another $22.5 million on rate relief and economic development to win more support for their proposed merger.
They also agreed to new safeguards to ensure grid reliability, and to reinforce PNMR’s decision-making independence from Avangrid.
If the state Public Regulation Commission approves the merger, Avangrid would acquire PNMR and its two utility subsidiaries – Public Service Company of New Mexico and Texas New Mexico Power – in an all-cash transaction valued at $4.3 billion.
The new concessions, contained in written testimony filed with the PRC late Thursday, may convince some key parties in the case to drop their opposition to the deal during upcoming public hearings scheduled for Aug. 11-20. In particular, Bernalillo County and the New Mexico Affordable Reliable Energy Alliance – which represents large industrial and institutional electric customers – may now embrace the merger, since many of the latest PNMR-Avangrid concessions are in direct response to things those two parties requested in written testimony they filed with the PRC on July 16, PNMR Chief Financial Officer Don Tarry told the Journal.
“We’ve continued to negotiate with them over the last month or so,” said Tarry, who will become PNMR’s new CEO if the merger is approved. “In their testimony, they said they remain opposed to the merger, but that if we agree to add these things to the deal, they could support it.”
So far, 13 of the 24 organizations participating in PRC hearings have signed a “stipulation,” or settlement agreement, that contains numerous commitments by Avangrid in exchange for merger support. That includes $50 million in promised customer rate relief – to be credited on consumers’ monthly bills over three years – plus $7.5 million in spending on local economic development programs.
Now, the rate relief will increase to $65 million, and economic development funding to $15 million, Tarry said.
Other spending already contained in the stipulation will remain unchanged. That includes:
• $6 million to forgive past-due residential consumer debt accumulated during the pandemic.
• $15 million in energy efficiency to help low-income customers reduce consumption and electric costs.
• $2 million to extend electric service to more people in remote areas.
• $12.5 million to specifically benefit Indigenous community groups in the Four Corners area.
Taken together, Avangrid is now committed to spend a total of $115.5 million on rate relief and economic development after the merger.
It’s also promised to create 150 new high-paying jobs over three years, generating an estimated $200 million in local economic impact, according to the merger partners.
Other concessions announced Thursday include measures to strengthen local control of the post-merger PNMR board of directors, and to work with PRC staff and others to create new grid reliability and customer quality-of-service standards with annual reporting to measure and monitor compliance.
Regarding the PNMR board, after Avangrid takes over, only New Mexico residents will sit on the seven-member body, and three of them will be “independent and disinterested” members. The independents will have “super-majority” voting capacity to control dividend payments and policy, meaning at least two of the three must approve dividend-related decisions as part of a majority vote by the entire board, Tarry said.
“There will also be a compensation committee made up only of the three independent board members,” Tarry said. “They’re the ones who will set executive compensation.”
Beyond Bernalillo County and NM AREA, it’s unclear if any of the other half-dozen parties currently opposing the merger deal will be swayed by the concessions. But some additional promises could help. That includes:
A guarantee that the day-to-day operations of PNM – plus regulatory, operational and community engagement matters – will continue to be managed locally.
An unequivocal commitment by both Avangrid and its majority shareholder, Spanish company Iberdrola, S.A., will be subject to the PRC on all PNM regulatory matters.
The latest concessions mean more folks may now choose to at least not oppose the merger during the upcoming hearings, Tarry said.
“We’ve basically decreased the contested issues,” Tarry said. “There will be less to deal with in the hearings as a result.”
Assuming Bernalillo County and NM AREA do now drop their opposition, it means nearly two-thirds of parties in the case will support the deal going into hearings.
“The negotiations with other parties have been a successful and evolving process over the past few months,” said Avangrid President and Deputy CEO Robert Kump in a statement.
“What we have now, following our filing of testimony yesterday, are substantially greater benefits to New Mexico and New Mexicans and a consensus from the vast majority of parties in the case that this transaction is in the public interest.”