What’s next?

PRC can reject, approve or modify deal

Public Regulation Commissioners can accept or reject the hearing examiner’s recommendations. If they choose to approve the merger, Ashley Schannauer has proposed an array of new stipulations that he said would strengthen regulatory safeguards and lower the risks posed by the merger.

That includes mandating majority control of PNM Resources’ board of directors by local, independent members. It also calls for:

■ Reliability standards to ensure grid stability and quality of service that would be stricter than are now contained in the settlement agreement, with stringent regulatory oversight and penalties to avoid poor performance experienced in northeastern states.

■ More safeguards against Avangrid affiliate companies gaining insider advantages to win energy-related contracts with PNM when competing with independent firms.

■ A commitment by Avangrid not to file a new rate case at the PRC until December 2022, effectively adding six months to the current settlement agreement, which delays the next rate case until June 2022.

Parties in the case now have until Nov. 12 to file “exceptions” to Schannauer’s recommendations, which the commission can consider when it reviews the case for a final decision, likely in early December.

But Schannauer’s recommendations will weigh heavily on commissioners, who generally rely on the expertise of hearing examiners to help shape their positions. And Schannauer’s professional qualifications and expertise are well respected at the PRC.

“In my opinion, he got things wrong in this case, but, the bottom line is he’s a good hearing examiner and his recommendations will be taken seriously by the commission,” said Steve Michel, an attorney with Western Resource Advocates, which supports the merger. “That will be hard to overcome and I think the merger is in jeopardy because of it.”

Both Avangrid and PNM Resources said they’re still “hopeful” that the PRC will ultimately approve the merger. Both companies are now reviewing Schannauer’s recommendations and his proposed modifications to the settlement agreement if commissioners choose to pursue that route.

“PNM is evaluating these recommendations in order to find the best way to move New Mexico forward,” utility spokesman Ray Sandoval told the Journal. “We remain hopeful that the numerous benefits of this merger are realized in the commission’s final decision.”

Among the PRC’s options is the outright rejection of the merger, as recommended by Schannaeur.

Or the PRC can decide to approve the merger, in which case Schannaeur recommends it add the modifications Avangrid agreed to over the summer, in addition to his other suggestions. The PRC then would decide which modifications should be included.

PNM, Avangrid and supporters would have to weigh the PRC’s decision. They could regroup to work out a new stipulated agreement, including some of the modifications already negotiated and possibly some of Schannauer’s proposed changes. At that point, it would mean asking the commission to reopen hearings on the pros and cons of their newly modified agreement for PRC consideration.