The major concern raised by intervenors opposing the proposed sale of New Mexico Gas Co. is that Florida-based TECO Energy Inc. will find a way to tag New Mexico ratepayers with the $266 million above net book value it is paying for the company – either through higher rates over time or by way of reduction in the quality of service.
It’s a legitimate issue to raise, but officials with the Florida-based company have testified they won’t, and if the sale is approved it would be up to state regulators to make sure they don’t.
Specifically, TECO officials say in testimony they “would be willing to not seek recovery from customers, in this or in future NMPRC proceedings, of the acquisition adjustment (estimated to be approximately $266 million) and any other costs associated with goodwill or the costs of the transaction or intangible assets resulting from the closing of the transaction.”
That pledge – which is on the record and which the New Mexico Public Regulation Commission should hold TECO to – is in addition to the company testifying it will not move the N.M. headquarters or close field offices without discussing it with the PRC and will not seek a rate increase effective before July 1, 2017. TECO has also testified it will make a $30 million average annual investment in the system; maintain customer-contact employees in the state; ensure company pre- and post-sale wages, benefits and conditions of employment are comparable; and engage in economic development opportunities to draw new business to the state as well as explore growth in compressed natural gas vehicles in the service area.
Yes, jobs will be lost as the company consolidates with its Florida operation – and good jobs at that. TECO sees no need to have duplicative human resources, payroll, billing, etc. departments, and while consolidation will cost New Mexico 99 paychecks averaging about 80k a year with benefits, almost a third of the cuts have already been taken care of through attrition, the additional ones will be phased over three years, and it’s likely similar cuts would be made by any buyer with an established base in the utility arena.
And TECO has that. Unlike the current owner, a private equity firm, TECO is a publicly traded holding company that has run two electric and natural gas utilities in Florida for around a century. It has 1 million customers. And it brings that experience, has promised to split the nearly $8 million in annual payroll savings with ratepayers with two rate reductions, and will from Day One be regulated by a PRC entrusted with ensuring utility services are provided and rates are fair.
Critics – including the PRC staff, the Attorney General’s Office and New Mexico Industrial Energy Consumers – question why TECO is willing to pay so much for another gas company. With the electric market switching from coal-fired to natural-gas plants (including New Mexico’s own San Juan Generating Station, courtesy of the EPA), with a proposed liquified natural gas storage facility and potential expansion of CNG business fleets, that answer is as green as the energy policy dictating the change and the money it will make.
The current owner of New Mexico Gas Co. wants to sell and get out of the business. TECO wants to buy, is firmly in the business and is on record regarding how it will treat the company, its 650 employees and 509,000 New Mexico ratepayers. How much it is willing to pay for the opportunity should be of no concern, so long as ratepayers are protected.
Those facts – not fear of what could happen if TECO goes back on its word and the PRC forgets its responsibility to ratepayers – support the pending sale of the gas company.
This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.