3 questions with Bernhard Capital Partners, the company looking to purchase New Mexico Gas Co.

As New Mexicans focus on Blackstone Infrastructure’s recent announcement to purchase TXNM Energy Inc., the parent company of Public Service Company of New Mexico, another acquisition is unfolding for a utility just as large.

Louisiana-based private equity firm Bernhard Capital Partners recently filed rebuttal testimonies to the state Public Regulation Commission in its quest to buy out New Mexico Gas Co. for $1.25 billion from Emera, a publicly traded Canadian-based company.

Like in other utility acquisition cases, energy advocates worry the New Mexico Gas Co. deal could result in higher rates for state residents.

Jeff Baudier, senior managing director at Bernhard Capital Partners, spoke with the Journal about the acquisition and outlined the company’s vision for its role in New Mexico.

This interview has been edited for length and clarity.

Why New Mexico Gas Co.?

Natural gas is going to be an essential element of the the country’s energy future. And it’s going to be an essential part of New Mexico’s energy future. We cannot have renewables without natural gas. It’s just necessary. And especially now that the demand growth has been so great, we’re going to have to have more of a full mix of energy resources, and natural gas has to be a part of that.

The state of New Mexico drives a huge part of its economy from natural gas, and the location of New Mexico, with regard to the natural resources and its connection to other states that need energy, makes not just New Mexico a great place to invest, but New Mexico Gas Co. a really good investment.

That’s why one of the things we’re committing to (is to) stay for at least 10 years in our ownership. We have looked at the rate credit situation, and we’re going to commit to $15 million in customer rate credits.

What would that equate to for the average customer?

We said we’ll commit $15 million. We want to hear how people think is the best way across the rate base, to spread it out — whether or not you do it with each individual home, regardless of usage, businesses ... and things like that. So we’ve committed to the amount. We want to hear feedback on what interveners and the public think are the best ways to spread it out.

We’re also committing to a rate freeze or a rate case standout, as they say, meaning we will not file for another rate case for at least a year after the transaction is completed. And what that ends up amounting to, is that means rates would not change for at least two years after it’s completed, because it takes about a year. And based upon New Mexico Gas Co.’s estimates, that rate freeze — or that rate case standout — could be $30-50 million, depending on how their rate case filings have been. So that’s another economic benefit.

We’ve already talked about doing $5 million just in general economic development contribution to the state. What we’re adding to that is another $5 million dedicated to renewable energy because we’ve gotten a lot of feedback that people still want to see a commitment to renewable energy. And what might be a little unusual is we’re not limiting that to renewable natural gas. We’re wide open on any type of renewable project and or supporting efforts to reduce greenhouse gas in New Mexico.

Again, we’re purposely leaving these things at this point sort of open-ended to get feedback from people — as to whether they want that money put into specific projects, whether they want it dedicated to certain bodies who would pick the projects, whether they want it contributed to local or state entities for them to pursue.

We are still committing to half a million (dollars) a year in charitable and community contributions, and we are still looking at bringing jobs to New Mexico. That could be somewhere between 40 and 60 jobs.

A major merger case between Public Service Company of New Mexico and Avangrid in 2021 failed to get past the PRC. What are you doing differently?

Obviously, we want to learn and not make similar mistakes. But I think our approach is different from what I saw and read and observed. We want to become part of New Mexico. We don’t want to turn New Mexico Gas into something different than what it is.

We are very excited about becoming part of New Mexico, and we see it as a place that is really going to be central, especially from an energy perspective, in the future. And so we want people to ultimately see us as New Mexicans and not see us as some outsider attempting to impose a different way of thinking.

And it’s a very specific kind of place and people are very proud about being New Mexican, and if you’re not, you kind of stand out. And that’s not what we want.