PNM, Avangrid accept merger modifications

Companies willing to abide by all PRC examiner’s recommendations

PNM Resources and Connecticut-based energy giant Avangrid say they will accept all conditions recommended by a Public Regulation Commission hearing examiner if the five-member commission decides to approve their proposed merger.

Hearing examiner Ashley Schannauer — who oversaw eight months of evidencegathering, plus two weeks of public hearings in August with parties in the case — released a “recommended decision” on Nov. 1 that called on commissioners to reject the deal because, in his view, the potential harms outweigh the benefits.

However, if the commissioners do approve the deal, Schannauer recommended they attach a series of conditions to protect the interests of ratepayers and the state.

PNM Resources and Avangrid filed a response to Schanauer late Friday afternoon that, in short, affirms their willingness to accept all of his recommendations if the commission chooses to approve the merger under his conditions. Their acceptance reflects the merger partners’ commitment to do what’s best for New Mexico, said PNM Resources Chairman, President and CEO Pat Vincent-Collawn.

“We worked diligently to address the hearing examiner’s concerns and further mitigate potential risks,” Vincent-Collawn told the Journal in an email. “We hope we can receive approval and move forward with fulfilling the merger commitments to our customers and help New Mexico’s economy realize its potential as a renewable leader.”

The merger contains substantial benefits, said Avangrid Deputy CEO Robert Kump.

“We are hopeful the PRC will see the many

benefits and safeguards in the proposed transaction,” Kump said in a statement.

If the commission approves the merger, Avangrid would acquire PNM Resources and its two utility subsidiaries — Public Service Company of New Mexico and Texas New Mexico Power — in an all-cash transaction valued at $4.3 billion.

The merger partners negotiated an extensive settlement agreement with parties in the case that contains more than $300 million in rate relief for PNM customers, assistance for low-income consumers, and economic development programs. It also includes significant safeguards to ensure continued grid reliability and local decision-making control of PNM after Avangrid takes over.

As a result, 23 of 24 parties now either directly support the merger or don’t oppose it.

The parties involved negotiated those agreements over five months, with final commitments reached while public hearings were underway in August. But Schannauer said the negotiations were done “piecemeal” with individual organizations, with no overall consensus evident among all parties.

All settlement signatories, however, filed a joint response to Schannauer on Friday that clearly states everybody’s agreement, said Steve Michel of Western Resource Advocates.

“We all continue to support the settlement agreement, and we accept the additional modifications proposed by the hearing examiner,” Michel told the Journal. “Hopefully, that will give the commissioners the comfort they need to approve the merger.”

What’s in it for New Mexico?

The settlement agreement outlines more than $300 million in economic benefits for New Mexico. That includes:

■ $67 million in rate relief for PNM customers

■ $10 million to assist customers with pastdue electric bills

■ $2 million to connect new customers to the grid in underserved communities

■ $15 million for new low-income energy efficiency programs

■ $25 million for local economic development projects

■ $12.5 million for economic development in Indigenous communities

■ $2 million for college and high school scholarship programs

■ Creation of 150 new jobs, with an estimated local economic impact of more than $200 million

The hearing examiner recommended a series of modifications to the overall agreement, all of which PNM and Avangrid now say they will accept if the PRC approves the merger with those conditions attached. Some of the key recommendations include:

■ Independent control over the PNM Resources board of directors

■ Stricter grid reliability standards and penalties for violations than included in the current settlement

■ No new rate case until December 2022, effectively adding six months to the current agreement of no new rate case until June 2022

■ Agreement to distribute Avangrid’s promised $67 million in rate relief equally among all customers, rather than proportionately based on electric consumption, which would favor large consumers