OPINION: New Mexico should use permanent funds to buy PNM

Imagine Public Service Company of New Mexico developing the lowest-cost, greenest-electricity grid possible instead of focusing on profits.

Imagine PNM collaborating with community stakeholders and actually listening.

Imagine fast, efficient residential and commercial solar and battery interconnections.

Imagine hundreds of millions in PNM profits funding New Mexico education and public services instead of enriching wealthy investors.

Sound impossible? Not so.

A $2.5 to $3 billion investment from New Mexico’s $64 billion Permanent Funds could buy a controlling stake in PNM parent company, TXNM Energy. The permanent fund’s directors (the State Investment Council) could then appoint TXNM board members genuinely focused on PNM’s legal requirements to charge “just and reasonable” rates while providing climate and environmental stewardship. Like all income from permanent funds, profits from PNM would fund education and various public services.

The permanent funds would enjoy unusually safe returns from a company with captive customers, limited competition and a regulatory commission (the Public Regulation Commission) that is legally required to enable fair profits. A 50% stake in TXNM would have netted $70 million in dividends in 2024. Dividends increased by 95% between 2015 and 2024. The stock price grew 150% during the same period.

TXNM/PNM’s financial future looks even brighter. Explosive growth in electricity demand from data centers, electric cars and building electrification will provide ample profit opportunities.

Is it any wonder that the world’s largest private equity firm, Blackstone, is negotiating to buy TXNM/PNM next year? What can we expect if Blackstone succeeds?

• Private equity firms like Blackstone promise investors high rates of return. After the housing bubble burst in 2008-9, Blackstone purchased distressed homes around the nation and promptly raised rents by up to 100%. Expect similar long-term behavior with your electric bill.
• Rapacious private equity profit goals can result in reckless management. Nearby private equity-owned El Paso Electric is working to connect large data center customers years ahead of its ability to add enough permanent generation to serve them. The company plans to operate with only 75% of the guaranteed generation capacity required to serve peak loads for the next five years. Blackout city here we come.
• We can expect Blackstone to sell TXNM/PNM at the first attractive profit opportunity. Private equity firms typically make hay by selling companies at a premium after they have reached peak profitability. Management continuity suffers.
• Ratepayers will potentially suffer from profiteering through sweetheart deals between TXNM/PNM and other Blackstone controlled companies. Though “ring-fencing” provisions theoretically protect against abuses, enforcement is difficult.
• We’ll lose the chance to channel PNM profits to funding New Mexico schools, childhood education and public services.

PNM ownership by distant private equity investors like Blackstone will result in higher bills and reduced quality of service. New Mexico has already seen the disastrous impact of private equity ownership of hospitals. Turning TXNM/PNM into private equity’s speculative football does not serve the public.

Purchase of a controlling interest in TXNM/PNM by New Mexico’s permanent funds provides an opportunity to combine efficient corporate style management with a public interest focus that PNM currently lacks. Greener, cheaper, more reliable electricity service is possible if New Mexico has the vision to invest in itself.

We deserve a utility that works for us, not Wall Street.