OPINION: The high cost of Blackstone’s power play

I wholeheartedly and strongly oppose Blackstone Infrastructure Partners' purchase of TXNM Energy, the parent company of Public Service Company of New Mexico, for several reasons. Most importantly, Blackstone’s motivation — as the world’s largest private equity firm — is not to provide high-quality public service at a reasonable cost — it is to maximize profits. In addition, Blackstone has very limited experience in operating electric utilities. Blackstone has also not been forthcoming with all the information needed for the New Mexico Public Regulation Commission to make an informed decision. Finally, a thorough vetting of Blackstone has not been conducted.

It is very disheartening that we allow publicly owned companies to own and operate electric and gas utilities. New Mexico is on its way to making the situation even worse as we consider the possibility of PNM being acquired by a private equity firm. Blackstone wants to purchase PNM so they can control the grid on the backs of New Mexico ratepayers, profiting from the sale of our energy resources across the West and powering their artificial intelligence data center empire. 

The downsides of private equity firms owning and operating public utilities are many. They include a focus on short-term profit, which conflicts with the long-term infrastructure planning which electric utilities require. That is, to increase returns, private equity firms may raise rates or cut operating costs in pursuit of their focus on profits. It is common practice to reduce staffing, defer maintenance and delay infrastructure upgrades in their pursue of profits. Private equity firms face also fewer disclosure requirements, thereby limiting public insight into their financial practices and operational decisions. Finally, placing critical infrastructure under firms primarily responsible to investors rather than the ratepayers is not in the public interest.

The above described downsides of private equity firms also apply to the New Mexico private equity-owned hospitals which have the highest incidence of hospitals being named in malpractice lawsuits. Private equity hospitals have no business being in the business of caring for sick people. 

I was the city manager of two cities (in Ohio and Connecticut) that both owned and operated their gas and electric utilities. The citizens took great pride in their ownership and operation of these utilities. Our rates were lower than surrounding investor-owned utilities. This should be the approach throughout the U.S. Not everything needs to be profit driven, particularly utilities that exist to provide an essential public service to the community. 

By definition as a private equity firm, Blackstone is indifferent to New Mexico in general and to the ratepayers in particular. Blackstone simply wants our electricity to power their data centers. 

Bill Tallman is a former New Mexico state senator from 2017 to January.