Editor’s note: The Journal continues its investigative series on the issues and players involved in the proposed merger of Public Service Company of New Mexico and Avangrid, a proposal that soon may resurface.
Local government control over energy generation emerged in this year’s legislative session as a potential alternative to the aging structure of private utilities dominating the state’s electric system as regulated monopolies.
But the idea earlier appeared as a backdrop to Public Service Company of New Mexico’s controversial bid to merge with Connecticut-based energy giant Avangrid Inc. Merger critics are big proponents for public control of utilities, and they acknowledge that goal was an important part of their opposition to the PNM/Avangrid deal.
In this year’s legislative session, those merger critics took the lead in supporting the Local Choice Energy Act (Senate Bill 165) — which died in committee — saying city and county governments could significantly accelerate the state’s transition to solar, wind and other renewables if allowed to take control of electric generation away from investor-owned utilities like PNM. And, as nonprofit government-run entities, the newly formed utilities could put public interest above private profit, eliminating shareholder returns to instead pump business proceeds back into local communities to benefit consumers through lower energy costs, according to supporters.
The concept is not new. It’s part of an emerging “public power” movement in the nation’s Northeast and California, where energy-market reforms have allowed some 1,800 communities to take control of their own electric generation.
Proponents call it “energy democracy.” And, in general, it’s based on an anti-monopoly approach to transitioning the grid from fossil fuels to renewable resources.
But it’s a controversial proposal that critics say could actually interfere with the transition to renewables, which requires immense capital investment and expertise that private utilities bring to the table.
In New Mexico, the movement emerged in the midst of PNM’s proposed merger with Avangrid, which the two companies submitted for approval by the state Public Regulation Commission in fall 2020.
Under that proposal, Avangrid would acquire PNM Resources and its two utility subsidiaries — PNM and Texas New Mexico Power — in a $4.3 billion all-cash transaction, impacting about 800,000 electricity customers.
The previous five-member elected Public Regulation Commission rejected the deal in December 2021, following nearly a year of public hearings. But the merger partners appealed that decision at the state Supreme Court, which is now considering a request to remand the case back for a rehearing before the newly appointed, three-member PRC that took office in January.
With public controversy heating up over that possible remand, the Journal spoke with parties directly involved in the case about the public-power movement’s influence on the Avangrid-PNM deal.
Merger opponents said their anti-monopoly goals were, indeed, a driving motivation for them against the merger, generating a broad grassroots campaign to kill the deal in 2021, and likely a similar movement again if the case returns to the PRC.
Merger supporters, however, say that political agenda led to a stream of misinformation about Avangrid and its parent company, Spanish firm Iberdrola, S.A. They contend the campaign falsely painted those companies as unmanageable corporate monopolies that emphasize profit over public interest, unfairly influencing the previous commission against the merger.
One merger supporter called it “a smear campaign” that hijacked the narrative in PRC proceedings.
Grassroots campaign
Among the 24 organizations that participated in the 2021 merger hearings, one group — Santa Fe-based New Energy Economy — opposed the deal.
NEE executive director Mariel Nanasi, an attorney, spearheaded the group’s legal opposition inside PRC hearings.
But outside the legal proceedings, NEE and another activist group, Retake Our Democracy, which Nanasi helped form about five years ago, led a grassroots campaign to defeat the merger. Those two groups joined others like Renewable Taos in 2019 and 2020 to strategize on promoting public power, leading to a new alliance called Public Power NM.
“About a dozen people began it, and it kept growing, especially during and after the Avangrid hearing,” Nanasi told the Journal. “… In the Avangrid case, from the start, we said ‘don’t go Avangrid, go public power.’”
Legally, the PRC proceedings themselves were limited to focusing on the pros and cons of the merger, including Avangrid and Iberdrola’s business practices and the PRC’s ability to effectively regulate them.
“(Public power) wasn’t the legal question at hand,” Nanasi said. “… But in terms of NEE briefing and testimony and how we communicate with our members and constituents, it was absolutely included in our messaging.”
Parallel to PRC proceedings, NEE and Retake Our Democracy guided their supporters in a vociferous lobbying effort that saturated PRC commissioners and the local media with anti-merger emails and letters to the editor.
Retake Our Democracy, for example, circulated a 22-page instruction book to guide its constituents on how to influence PRC members through customized messaging. The manual stressed public power as a “better option” for New Mexico, with detailed instruction for letter writers about Avangrid and Iberdrola’s alleged corporate misconduct and poor performance in other states and countries.
“We mounted fierce opposition with action alerts and writing to commissioners,” Retake Our Democracy co-founder Paul Gibson told the Journal. “We did research on Avangrid and compiled a litany of stories on how the company has destroyed communities.”
Gibson said the campaign’s central message focused on putting New Mexico’s communities in control of their own resources.
“It’s ours — our wind, our sun and our profit — to reinvest in our own communities … and not just hand the keys to the kingdom over to Avangrid, but keep the keys ourselves,” Gibson said.
Backing from Seth Berry
In the hearings themselves, NEE never directly introduced public power as an alternative to the Avangrid-PNM merger.
But the issue was foundational in key opposition testimony offered by former Maine House Rep. Seth Berry, who at that time chaired Maine’s House Committee on Energy, Utilities and Technology.
Berry’s testimony, introduced by NEE in May 2021, said Iberdrola and Avangrid had a “deeply detrimental impact” on his state through their utility subsidiary, Central Maine Power, or CMP.
In particular, he described extensive billing and customer service problems that affected tens of thousands of local consumers after CMP installed a new software system in 2017, plus illegal customer disconnect notices during winter months that led to significant regulatory fines against the company.
Avangrid and Iberdrola, Berry said, had demonstrated a systemic pattern of “greed and mismanagement,” making CMP the lowest-ranked utility on industry consultant J.D. Power’s annual survey of residential customer satisfaction.
Avangrid executives, however, questioned Berry’s objectivity, because he’s a leading advocate for public power, who in 2021 spearheaded a legislative initiative — later vetoed by Maine’s governor — to replace CMP and the state’s other investor-owned utility, Versant Power, with a nonprofit, community-run utility.
And, since 2021, Berry has deepened his commitment to public power through leadership in a grassroots movement in Maine called “Our Power,” which gathered voter support for a state referendum, now scheduled for November, to force CMP and Versant to sell their assets to a new community-owned utility.
Berry and Nanasi worked together to influence the PRC in merger hearings, according to presentations they made in an open online forum in January 2022.
Apart from his written testimony, Berry submitted an affidavit that helped persuade hearing examiner Ashley Shannauer to order Iberdrola to participate in PRC proceedings alongside Avangrid.
“Seth Berry was critical,” Nanasi told forum participants. “He wrote an affidavit we ended up using in our fight to bring in Iberdrola. … It was actually the affidavit — the declaration by Seth Berry — that helped win the day in court.”
Berry also wrote an op-ed opposing the merger that appeared in the Journal, and he directly phoned into an open PRC public meeting to testify against the deal.
In the online forum, Berry called the NEE partnership “incredible.”
“We’re building the (public power) movement in Maine and (throughout) the U.S,” Berry said.
Their collaborative efforts helped convince commissioners the merger’s risks outweighed the benefits, Nanasi said.
“Activists need to connect with each other nationally and internationally,” she said.
Biased arguments?
Merger supporters, however, say public power advocates magnified alleged problems faced by CMP in Maine to derail the merger by painting Avangrid and Iberdrola as unmanageable corporate monopolies that would be difficult to regulate in New Mexico if allowed to acquire PNM.
That offered a legal basis to oppose the merger while avoiding direct discussion about replacing investor-owned utilities, or IOUs, with publicly run companies, since the PRC has no statutory authority to consider public power as an alternative to regulated electric monopolies, said utility industry veteran and former PRC commissioner Doug Howe.
“You can’t make an argument at the PRC that IOUs are bad and public utilities are good — it can’t be part of the record — so NEE and public power supporters attacked the merger in a different way,” Howe told the Journal. “They basically put together a character assassination campaign against Avangrid and Iberdrola.”
That made the PRC hearing process extremely controversial and contentious, virtually converting it into political theater, Howe said.
“Frankly, NEE’s fight turned the regulatory hearings into a master class on how to steal the narrative away by steering it into a smear job where factual issues were portrayed completely out of perspective in front of a bunch of commissioners without the experience to see they were being played,” Howe said.
Nanasi said NEE focused on real issues of corporate mismanagement, misconduct and poor performance by Avangrid and Iberdrola in the hearings, presenting concrete evidence of those companies’ bad behavior demonstrated by their utility subsidiaries in northeastern states and elsewhere.
“Our questions in the case focused on whether Avangrid was a good partner for New Mexico, and we said ‘no’ for a host of reasons,” Nanasi told the Journal.
Still, the case clearly reflects two “radically different desires” for New Mexico, she added.
“One is an Avangrid/Iberdrola-controlled grid, and the other local wealth creation through community-run utilities,” Nanasi said.
Former commissioners say they ultimately rejected the merger based on Avangrid and Iberdrola’s own record.
“There is no such thing as a good deal with a bad partner,” former commissioner Stephen Fischmann said in a recent op-ed in the Santa Fe New Mexican. “That’s why I joined PRC members in voting unanimously to deny the proposed acquisition.”
But the NEE/Retake Our Democracy campaign clearly influenced commissioners, who said they were flooded with public correspondence opposing the merger.
“I’ve received hundreds of emails, all personalized, individualized messages,” former commissioner Cynthia Hall said in one open PRC meeting.
And since leaving the PRC in December, Fischmann has become a direct public power advocate who helped present the Local Choice Energy Act to legislators in February.
He called for ending “the electricity utility monopoly stranglehold on New Mexico” in a February op-ed in the Journal.
“As a PRC commissioner, I was charged to protect the public interest,” Fischmann wrote. “My support for Local Choice Energy is an extension of that effort.”
Keep reading
The Maine Effect | A closer look at how Avangrid’s problems in Maine played a role in the PRC’s deliberations
Waiting on the Supremes | High court will decide if PRC gets second chance to rule on merger
