Two executives of the Public Service Company of New Mexico fielded some rough questions Tuesday from a legislative committee about the proposed merger with two big utility companies.
The hearing before the Legislature’s Science, Technology and Telecommunications Committee turned into more of a grilling than the simple update that might have been anticipated.
Sayuri Yamada, PNM’s executive director of public affairs, suggested to the committee it would be a session to introduce Don Tarry, who is in line to be the next head of PNM, and to briefly discuss the proposed merger with Avangrid of Connecticut and Iberdrola of Spain.
“I promise we’re not going to take the whole hour of your time,” Yamada said with a chuckle. But the session went on for about 75 minutes, and at least a couple of committee members made no effort to water down questions or comments.
A hearing examiner for the Public Regulation Commission recommended early this month the merger not be approved by the commission. The hearing examiner, Ashley Schannauer, listed a set of modifications to the proposed merger agreement if the commission is inclined to approve it.
The merger proposal, which was developed by PNM and Avangrid a year ago, has encountered questions about the reliability of Avangrid subsidiaries, a criminal investigation in Spain involving Iberdrola’s CEO and other matters.
Sen. Bill Tallman, D-Albuquerque, threw some of the toughest questions at Tarry and after one answer said, “So, I’m not buying it.”
Tallman asked why PNM and Avangrid have done so much advertising to promote the merger.
“I’m more suspicious, the more ads I see,” he said. “If it’s such a good idea, why are you spending such a huge amount of money [on ads]?”
Tarry, the chief financial officer of PNM, said it’s important to tell the public what Avangrid is and also to say PNM will continue to run the company. If the merger goes through, Tarry will take over as the head of PNM and current CEO and President Pat Vincent-Collawn will depart.
Tallman also said he didn’t care for the fact that Iberdrola or some Iberdrola executives are under investigation in Spain.
“The company itself is not under investigation,” Tarry responded. “There’s been no indictment, no nothing on the company. They’re looking at several companies in Spain, from that perspective.”
Tarry said the merger would enable New Mexico to benefit from the renewable technology and innovation of Avangrid and Iberdrola.
He also said it would come with, among other incentives, $67 million in rate credits for customers; $15 million for low-income energy efficiency programs; $10 million in forgiveness of past-due bills; $1 million in scholarships and another $1 million for apprenticeships; and 150 new jobs that will pay an average of $88,000 each.
He added, “We feel very strongly there’s a value in the merger.”
Rep. Joy Garratt, D-Albuquerque, applauded PNM and Avangrid for their willingness to contribute to education, citing the scholarship and apprenticeship programs, and a $250,000 PNM donation for school supplies.
But she and Tallman referred to separation agreements with three PNM executives if the merger goes through. The “golden parachutes” total $29 million.
“And it’s a little bit of a pet peeve of mine,” Garratt said.
Sen. William Soules, D-Las Cruces, said the reliability record of Avangrid subsidiaries in the Northeast U.S. concerned him. Three of four of those subsidiaries are at or near the bottom of 2020 customer service rankings against their peers. The other was at the top of its peers.
Tarry said the Northeast’s winter storms are hard on utility companies and the subsidiaries perform well when compared to others in that region.
Soules said he hoped New Mexico wouldn’t experience a “meltdown” in service similar to that of Texas last winter.
“We maintain a very strong grid,” Tarry said. “Because reliability is absolutely fundamental to this utility.”
At the end of the session, Tarry told the committee he was glad to have the chance to speak to the panel.
“Thank you for the questions, the tough ones,” he said. “I do appreciate that.”
