PNM-Avangrid merger proposal falls short

My dad was a man whose actions reflected his words; a man of integrity. It took me a long time to appreciate his simple honesty and lack of contradiction. I’ve been reading about the proposed merger of Public Service Company of New Mexico and Avangrid. With all its ambiguities and contradictions, this is one Dad wouldn’t let pass.

Avangrid sounds like a great company. In a relative way, I’m sure they are. They say “their commitment creates value in a sustainable way by focusing on integrity and social responsibility in our business, with the goal of benefiting our employees, the customers we serve and the communities in which we operate.”

But what about this merger? Does it serve “the public interest”? Does it fulfill the legal standards set forth by the Public Regulation Commission’s 2020 approval of the JP Morgan-El Paso Electric merger acquisition? Let’s see:

First, there must be no adverse impact on the utility’s existing rates, and second, they can’t recover transaction costs from ratepayers.

Avangrid’s “rate credits” offer to PNM’s ratepayers is only $50 million. Each household will be paying a total of $625 over 25 years because PNM

The Energy Transition Act’s purpose is to transition New Mexico’s dependence on CO2-emitting coal to renewable energy. With this merger, the coal plant could continue to pollute on Four Corners’ residents.

also would be required to securitize the remaining undepreciated investments of $300 million as per the 2020 New Mexico Energy Transition Act. In a similar case, the Supreme Court found PNM to be “imprudent” and stipulated that ratepayers should not have to pay.

Avangrid’s proposal requires PNM to sell its 13 percent share in the Four Corners Power Plant. PNM proposes selling it to Navajo Energy Transitional Co., which plans to continue the coal-burning operation until 2031. Avangrid will have “greened” its corporate CO2 balance sheet but only passed the buck. The planet and its people lose again. The Energy Transition Act’s purpose is to transition New Mexico’s dependence on CO2-emitting coal to renewable energy. With this merger, the coal plant could continue to pollute on Four Corners’ residents.

Then there’s an issue of a rate freeze. In the past, applicants to mergers of regulated monopolies have agreed to a rate freeze for a certain amount of time. Not only are PNM and Avangrid both refusing to agree to a rate freeze, they have refused to state when they will file their next rate case and in what amount.

Another point: Standards require an independent, disinterested board of directors, something Avangrid is not accepting. Also a concern: Avangrid’s parent company, Iberdrola, is in Spain.

On top of all this, Avangrid has agreed to pay PNM $293 million, with $255 million to PNM Resources stockholders and $38 million to its nine senior executives ($4.2 million each on average).

In summary:

The residents/Indigenous people of the Four Corners area continue to be poisoned.

Our Earth, atmosphere and life as it could be continue to be sacrificed to the gods of money and “It’s just easier this way.”

Including rate credits, long-term economic development, community development and other funding, the average residential ratepayer is compensated $84 (which can be put toward the $625 we’ll each owe to cover PNM’s “imprudent” investment).

The average PNM executive receives $4.2 million.

The PNM-Avangrid merger is clearly not in the public interest as it will do economic, social and environmental harm to New Mexicans and New Mexico.

This merger does not meet the PRC’s legal standards for a merger acquisition.

We can do better.

If my dad were testifying before the PRC about this merger, he’d surely warn them that PNM and Avangrid have failed the truth test.

Claudia Pavel is an advocate for human kindness.