Plans made for NM Gas Company to be sold in 2025

Oversight for the state’s largest natural gas utility could change hands next year, if a sale proposed on Monday is approved later by state officials.

Emera, the Canadian parent company of New Mexico Gas Co. since 2016, announced on Monday its intent to sell the utility to Bernhard Capital Partners (BCP), a Louisiana-based private equity management firm, at a cost of $1.252 billion.

Emera wants to sell partly for financial reasons and it is a strategic decision, Emera President and CEO Scott Balfour told the Journal. He said this doesn’t mean New Mexico Gas Co. isn’t a high growth market.

“That’s been a key motivation factor for us in making this difficult decision ... is looking to continue to strengthen our balance sheet, continuing to invest in growth,” he said.

The New Mexico Public Regulation Commission would first have to approve the sale. The companies expect to close on the transaction in late 2025, after Sept. 30, if approved by state regulators.

The proposed sale wouldn’t eliminate any local jobs, according to Bernhard. In fact, the company is committing to adding about 70 local jobs to New Mexico Gas Co. and providing local management, with New Mexicans making up a majority of its board of directors.

That’s what Bernhard Founder and Partner Jeff Jenkins told the Journal on Monday. He said all employees, including leadership, would remain in place.

“First and foremost, we’re guaranteeing all existing jobs,” Jenkins said. “And then, on top of that, again, excited about the opportunity to create new jobs in New Mexico.”

He said the 70 new, long-term jobs would be in back-office support, like information technology and support services. The additional jobs wouldn’t increase customers’ costs, he said.

Jenkins also said the sale wouldn’t affect rates or the regulatory process the gas company undergoes to change rates.

New Mexico Gas Co. President Ryan Shell said the utility has operated under, or as part of, many companies in its century of existence.

“A change in who owns us isn’t necessarily going to drive a change in rates,” he said.

The gas company also could revisit old plans with the parent-company transition, if approved.

Shell said trying to get approval again for a liquified natural gas, or LNG, facility in the future isn’t off the table. The PRC denied New Mexico Gas Co.’s request for an LNG facility in Rio Rancho earlier this year, after public opposition.

“We really do think there is value to storage on our system, and there’s real value for customers,” Shell said.

He also said the company is always trying to grow its customer base, which wouldn’t change under Bernhard.

The companies plan to file an application to the PRC in the next few months asking for state approval of the sale.

The climate could prove tense following a contentious merger proposal by the Public Service Company of New Mexico and Avangrid, which the PRC denied back in 2021. The matter came up again when the companies tried to appeal the decision with the state Supreme Court, but Avangrid ultimately decided not to renew its merger agreement with PNM after waiting years for resolution.

Company officials involved in the gas utility sale proposal didn’t specify if their sale agreement comes with an expiration date.

Still, New Mexico Gas Co. cases before the PRC tend to be more straightforward and agreeable than PNM cases. Shell said the PNM-Avangrid merger proposal was the only acquisition not approved in the last 20 years, and the PRC approved four other acquisitions in that time.

“I think we’ll find a path forward to approve this deal,” he said. “I think it provides benefits to the state of New Mexico, starting with potentially 70 new jobs.”

Shell said he’s not sure what to expect in terms of if environmental and advocacy groups will oppose the sale. Jenkins added that, generally, natural gas companies don’t see as much intervention as electric companies in the regulatory environment.

“We’re very optimistic,” Jenkins said.

Jenkins said Bernhard generally likes the regulatory environment in New Mexico. He said it creates a reliable space for both consumers and producers of natural gas.

“It’s a safe and reliable and clean source of energy,” he said.

The $1.252 billion purchase price represents about 23 times the amount of New Mexico Gas Co.’s earnings for the past year, and the transaction value represents about 1.42 times the rate base, according to a Monday news release.

The sale also includes about $500 million of debt New Mexico Gas Co. holds.