Avangrid dissolves major merger agreement with PNM

The Public Service Company of New Mexico’s plans to merge with the massive energy company Avangrid have fallen through.

Avangrid, a subsidiary of multinational electric utility Iberdrola, announced the termination of the merger agreement early Tuesday because the New Mexico Supreme Court still hasn’t come to a decision in reviewing whether the merger should be allowed . The end date under the merger agreement was Dec. 31.

PNM proposed extending the merger agreement, according to the utility, which the companies had done multiple times over the past two years while awaiting a Supreme Court decision.

The merger is something PNM said its customers would have greatly benefited from and would have made a renewable energy transition much more financially feasible.

PNM Resources Chairman and CEO Pat Vincent-Collawn said in a statement the utility is greatly disappointed with Avangrid’s decision.

“We had been looking forward to providing customers with the immediate benefits in our agreement and also the longer-term benefits of being part of a larger-scale entity with ties to global innovation and experience in the clean energy transition,” she said.

Vincent-Collawn said PNM alone will continue to meet New Mexicans’ future energy needs with affordable and reliable energy. The company has a goal to be emissions-free by 2040, five years earlier than New Mexico law requires.

Gov. Michelle Lujan Grisham expressed similar disappointment in a statement released Tuesday afternoon.

“The termination of the merger agreement is not the outcome we desired, but I remain confident about future investments in our state, including by Avangrid, in the wind, solar and hydrogen solutions that are powering our state’s clean energy transition,” she said.

She said PNM is a key driver in solidifying business investments. She said New Mexico is attracting top-tier energy transition companies, pointing to Arcosa, Maxeon, Pattern Energy and Star Scientific.

“New Mexico will continue to be a national leader in charting a clean energy economy through our electricity generation and transmission, onshoring of key supply chain components and cutting-edge technology development,” Lujan Grisham said.

It’s unclear if PNM will continue its pursuit to sell the company.

When the Journal asked, PNM spokesperson Ray Sandoval said, “Right now, our primary focus is on maintaining our dedication to operating as a standalone company that effectively meets the needs of our customers, communities and employees.”

Cydney Beadles, clean energy manager at Western Resource Advocates and former managing attorney for the PRC, said she believes PNM is poised to be an ideal acquisition for a number of other larger utility interests.

What could have beenUnder the merger agreement, Avangrid would have acquired PNM for $4.3 billion.

Added in later stipulations that brought on board nearly all the environmental and governmental organizations and parties that opposed the deal originally, the merger also had more than $300 million in local economic benefits, like bill credits and forgiveness, education scholarship dollars and low-income energy-efficiency programs.

The merger would’ve created 150 new jobs, with an estimated impact of more than $200 million. It also would have dedicated $12.5 million for economic development in Indigenous communities.

The New Mexico Public Regulation Commission still rejected the merger in December 2021. PNM and Avangrid appealed that decision to the Supreme Court in early 2022, hoping the decision would be overturned in their favor.

Then the PRC changed in 2023 from a five-member elected commission to a three-member governor-appointed commission. Shortly after that, PNM and Avangrid filed a joint motion to dismiss their appeal in the hopes it would go back to the PRC again, but this time before new state regulators.

Resolution didn’t come soon enough, however.

It’s now two years after the utilities’ original appeal, and Avangrid said there’s still no clear timing on a resolution from the state’s high court.

So Avangrid will file a motion to dismiss the case before the New Mexico Supreme Court, according to a company spokesperson.

“While our merger agreement with PNM has been terminated, we remain more than ever steadfast in our commitment to New Mexico in the development of wind and solar renewables, helping explore options in the new hydrogen economy, and delivering on the partnership with the Navajo Nation to achieve its clean energy future,” Avangrid said in a news release.

New Energy Economy was the only organization to maintain its opposition to the merger. Director Mariel Nanasi said in a statement Avangrid and Iberdrola have a “record of service failures and arrogance towards regulatory oversight.” She said the merger termination is a victory.

“Today New Mexicans can celebrate their narrow escape from a multinational corporate takeover of our most essential infrastructure,” Nanasi said.

Environmental advocacy organization Western Resource Advocates always supported the merger, especially when PNM and Avangrid modified the deal to accelerate clean energy progress and infrastructure improvements.

Beadles said the organization is a little disappointed, having put in so much work on the case at the PRC and Supreme Court level. However, she said, she’s still positive about the future.

PNM has a commitment to be carbon free by 2040.

“And we expect that to continue,” Beadles said, “that PNM will still be a leader.”

She said to decarbonize the western U.S., utilities probably need to take on a little more risk with things like utility-scale renewables or newer technologies. It also would help to have a corporate partner with more capacity to absorb that risk, she said.

“Utilities can generally find a way to raise sufficient capital to make the investments they need for the future,” Beadles said. “Whether they can borrow money more cheaply as part of a larger interest and ultimately benefit ratepayers is an open question.”

PNM’s stock fell about 6% on Tuesday, the day Avangrid announced the merger termination. It rose 9% in October 2020 the day the company announced its agreement to buy PNM.

PNM shareholders would have received $50.30 in cash for each share of PNM Resources common stock held at closing of the merger, according to the utility.