The proposed merger between Public Service Co. of New Mexico and Connecticut-based energy giant Avangrid Inc. could soon be on the Public Regulation Commission’s docket again.
The PRC has endorsed a “joint motion” that PNM and Avangrid filed Wednesday afternoon, asking the state Supreme Court to dismiss an appeal that the two utilities filed last year against a previous commission decision to reject the proposed merger.
That prior PRC decision, made in December 2021, came from a five-member elected commission in office at that time. But a new three-member commission appointed by the governor took office in January, and it now wants an opportunity to “rehear and reconsider” the proposed merger.
“It serves the public interest and conserves the resources of the court if this appeal is dismissed and the matter is remanded to the commission to allow the commission to promptly rehear and reconsider the (previous) commission order,” the joint motion states.
The joint motion follows weeks of speculation that the PRC might support a rehearing, after two of the three new commissioners held four closed-door “executive sessions” since January to discuss the case.
The third commissioner, Pat O’Connell, recused himself in late January from any commission proceedings about the merger because he testified in favor of the deal during PRC hearings in 2021 as a representative of the environmental group Western Resource Advocates, which supports the merger.
In the 2021 hearings, all of the roughly 24 parties intervening in the case either directly supported or did not oppose the merger, except for one lone wolf, Santa Fe-based New Energy Economy, or NEE.
The supporters negotiated a long list of public benefits for customers promised by Avangrid if allowed to acquire PNM in a $4.3 billion all-cash transaction. That included more than $300 million in direct rate relief, economic development funding, and new job creation.
Among other things, it also included checks and balances to ensure that PNM ratepayer interests are safeguarded against undue corporate interest by Avangrid and its parent firm, Spanish company Iberdrola, S.A., plus commitments to maintain post-merger grid reliability, with automatic penalties for violations.
But despite near unanimous support, the commission rejected the merger in a controversial decision that cited concern about potential deterioration in utility service under Avangrid, based on allegedly poor performance by the Connecticut-based company’s management of eight electric and gas utilities it operates in northeastern states.
Expedited decisions
In the joint motion, the PRC and the merger partners asked the Supreme Court to expedite its review of, and decision on, the request to remand the case back to the commission.
Normally, the court would permit 15 days for parties in the case – including nine merger supporters and the one opponent, NEE – to respond to the motion, followed by 15 days for the court to issue a final decision. But the joint motion asks that responses be limited to just five days, and that the court decide on the matter within five days after that.
Assuming the case is remanded back to the PRC, the motion says PNM and Avangrid want the commission to annul the previous commission’s rejection of the merger and issue a new decision by April 12. That likely reflects the April 20 expiration date on the companies’ agreement to merge, which their respective boards approved last year.
The PRC, however, did not commit to any specific date for completing commission proceedings if the case is remanded, nor to rejecting or changing the previous commission’s order.
The commission “has not agreed to, nor made any determinations” about whether it will reach a different decision on the proposed merger, the motion says. And, regarding the rehearing timeframe, the commission promised to “endeavor to reach a decision and issue its final order…in a timely manner.”
In any case, under their current agreement, PNM and Avangrid can extend the merger completion date by three months if approved by their respective boards.
Reactions
Most groups that previously supported the merger are likely to do so again, because the settlement, or “stipulated” agreement that supporters negotiated with Avangrid in 2021 produced “very significant benefits,” said Noah Long of the Natural Resources Defense Council.
“I think the previous commission wrongly decided against the merger,” Long told the Journal. “If the new commission can take a fresh look to reevaluate the merits of this case, then it’s in the state’s best interest to do that.”
A wholistic review of the settlement agreement is critical, because the last commission ignored many benefits, said Cydney Beadles, New Mexico Clean Energy Manager for Western Resource Advocates. That’s because settlement negotiations continued almost up until commissioners were ruling on the case, and many Avangrid concessions went unheard.
“I believe errors were made by the last commission, and if the case returns to the PRC, it gives the new commissioners an opportunity to reopen the record to look at all the benefits,” Beadles told the Journal. “And it gives PNM and Avangrid an opportunity to pull all those negotiated agreements together into a single package to present to the commission.”
NEE, meanwhile, says it will fight against reopening the case, beginning with appeals to the Supreme Court to not remand it back to the PRC.
NEE Executive Director Mariel Nanasi said the joint motion violates existing statutes.
“They don’t have the right to withdraw an appeal and just reconsider it,” Nanasi told the Journal. “We need to ask what has changed – what new information or evidence has emerged to justify reconsidering the last commission’s decision?”
NEE is also concerned about any potential expedited timeframe at the PRC, especially as a multibillion-dollar merger that could affect hundreds of thousands of consumers for decades.
“It’s absurd,” Nanasi said. “The PRC shouldn’t abide by any timeline pushed by PNM and Avangrid. That’s worrisome to me.”
Still, PNM Chairman and CEO Pat Vincent-Collawn said the company is pleased with the joint motion.
“We appreciate the commission’s willingness to join in a request to the court to remand the case to the commission,” Vincent-Collawn told the Journal. “We look forward to the court’s ruling and the possible reconsideration of our merger transaction, which provides significant benefits to our customers, employees and New Mexico’s economic future.”
