The bosses at Public Service Company of New Mexico have made it clear.
Their company is too small to compete — PNM lacks the capital or connections to make necessary investments to transform the company to renewable energy from fossil fuels. The company can’t move quickly enough to meet the needs of the market and consumers, and certainly not fast enough for the rapidly heating planet.
When that conclusion became inevitable, the New Mexico utility went looking for a buyer. Fortunately for consumers, the potential purchaser is an energy company, rather than a hedge fund with no energy expertise and a sole profit motive. Now, a proposed merger — contentious because of the enormous stakes — is before the Public Regulation Commission, with nothing less than New Mexico’s energy and economic future up for debate. Hearings concluded in August, and the full PRC should be deciding the fate of the merger sometime this month.
Should the merger between PNM Resources and Connecticut-based energy behemoth Avangrid be approved, the problem of access to cash will vanish. Avangrid and its parent company, Iberdrola of Spain, are flush with dollars. They also can borrow at lower rates than PNM and can purchase goods in bulk, saving even more money as necessary investments are made.
What’s more, Avangrid brings worldwide expertise in solar and wind energy to the deal, along with the intention of developing New Mexico’s renewable resources not just for PNM customers but for the entire Southwest.
That has been painted as a negative by some merger opponents, who raise the specter of another outside company coming to New Mexico to mine its resources, profit and leave the residents behind.
We see it differently.
The climate crisis is such that energy must transform rapidly from gas- or coal-fired plants producing electricity to solar and wind, sources of power that can be renewed daily. Time is short. New Mexico needs those resources and so does the rest of the country.
Under the proposed merger, Avangrid would acquire PNM Resources and its two utility subsidiaries — Public Service Company of New Mexico and Texas New Mexico Power. It’s a cash transaction valued at $4.3 billion.
Along with the purchase, Avangrid is offering a total of $133.5 million in direct merger benefits. These include:
- $67 million in rate relief for customers over three years.
- $10 million to forgive past-due residential consumer debt from the pandemic.
- $15 million for energy efficiency efforts to assist low-income customers in reducing consumption and thus saving money.
- $2 million to extend electric service to residents living in rural areas.
- $25 million in economic development funding.
- $12.5 million for Indigenous community groups in the Four Corners region.
- $1 million for scholarships in Albuquerque/Bernalillo County area.
- $1 million to create or improve apprenticeships.
Avangrid also is promising to create 150 new jobs — with decent salaries and benefits — over three years. That would generate an estimated $200 million in local economic impact. Company employees also would be tapped into a global job market, able to work for Avangrid at home, across the U.S. and perhaps someday in Spain or Scotland or Brazil, all places where parent company Iberdrola operates.
Yet there remains opposition, primarily from Santa Fe’s New Energy Economy, that should be taken into account. The group, for years PNM’s most ardent critic, has pointed out problems in Avangrid’s service in Maine, criticized fat payouts for PNM bigwigs, demanded better terms for ratepayers and denounced cozy relationships between merger advocates and top state officials. Interestingly, its complaints about Avangrid and Iberdrola are eerily similar to those it has voiced for many years about PNM, though the companies are very different.
The opposition, in the end, may have led to more generous benefits for PNM customers and the state. Negotiations to sweeten the deal continued even to the end of the hearing, with discussion among merger partners and the PRC staff bearing fruit, requiring new regulatory controls to ensure grid reliability. These controls will lay out initial standards Avangrid must meet, establishing hefty automatic penalties ranging from $250,000 to $500,000 for each time the company isn’t compliant.
Penalties with bite are important to ensure customers can rely on their electricity working. The final key to the merger, when all is said and done, will be oversight from the Public Regulation Commission. The commission, and at some point, future governors and legislatures, must be vigilant to ensure Avangrid follows through on its commitment — this energy giant, like PNM, will bear watching.
Approve the merger. Make sure Avangrid keeps its promises. And use this opportunity — after all these years — to fulfill the promise of renewable energy for New Mexico and the future of the planet.