The possible return of Public Service Co. of New Mexico and Avangrid’s proposed merger back to the state Public Regulation Commission is raising questions about due process among parties intervening in the case.
If the Supreme Court does remand the case back to the PRC for a “rehearing and reconsideration,” it means that just two commissioners on the newly appointed three-member commission, which took office in January, will decide on whether to approve or reject the deal.
The third commissioner, Patrick O’Connell, recused himself in January from any proceedings in the case 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.
New Energy Economy, which opposes the merger, says that’s a significant problem, given the thousands of pages of evidence and testimony accumulated during the 2021 hearing process.
“It’s an awesome responsibility to designate all that to just two people who must uphold and safeguard the public interest,” NEE Executive Director Mariel Nanasi told the Journal. “And with all that evidence in the record, it raises questions about what exactly they will ‘reconsider.’”
Noah Long of the Natural Resources Defense Council, which supports the merger, said such situations will inevitably arise at the PRC going forward after a constitutional amendment approved by voters turned the commission from a five-member elected tribunal into a three-member body appointed by the governor.
“There will be some cases with the new commission where recusals need to happen, and that’s not a problem,” Long told the Journal. “I believe the remaining commissioners are fully capable of evaluating this case on its merits to make a decision that’s right for New Mexico.”
Cydney Beadles, New Mexico Clean Energy Manager for Western Resource Advocates, said a rehearing is essential because the 2021 hearing process was riddled with “irregularities” and “errors” made by both the hearing examiner in the case, Ashley Schannauer, and the five-member commission.
“Many aspects of the proceedings were highly unorthodox,” said Beadles, a lawyer who worked at the commission for nearly 25 years, eventually serving as Legal Division director before leaving in 2019.
“The hearing examiner and the commissioners treated the case in ways I’ve never seen before,” Beadles said.
Among other things, that included:
- A decision by Schannauer to exclude dozens of benefits offered by Avangrid from consideration when he recommended rejecting the merger because those agreements were reached with parties in the case after a deadline Schannauer imposed on submitting negotiated commitments
- Exclusion of testimony by 10 expert witnesses who supported the merger in Schannauer’s 248-page “recommended decision” against the merger
- Schannauer’s conclusion that the interlocking corporate structure of Avangrid and its parent firm, Spanish company Iberdrola S.A., made it too difficult for the commission to regulate against self-dealing among Iberdrola and Avangrid subsidiaries, despite decades-old internal PRC rules and federal regulations specifically designed to safeguard against such conflicts of interest
- A decision to submit confidential legal documents from Spain about a criminal investigation involving a top Iberdrola executive that commissioners were allowed to review, but nobody else in the case could see.
The Spanish investigation, which was dismissed by the Spanish courts in July 2020, apparently had a significant impact on commissioners. But intervenors had no chance to review the confidential report to provide a different perspective or challenge its relevance.
“I’ve never seen such a thing,” Beadles said. “This is a public agency that evaluates and regulates public utilities and transparency is critical.”
Nanasi said it “would have been better” for all parties to see the Spanish report, but Schannauer and the commission didn’t rely on it to reject the merger. Rather, they concluded that Avangrid and Iberdrola demonstrated a “patter of misconduct” based on all evidence in the case.