A run on Blackstone?

Yesterday we filed exceptions calling out the deeply flawed Recommended Decision by the Hearing Examiners in the Bernhard Capital Partners acquisition of New Mexico Gas Company. Our filing raises again the core issue - Hearing Examiners disallowed any evidence about BCP's history and qualifications into the record and then concluded that there wasn't sufficient evidence that a BCP buyout would negatively impact NM Gas Customers. You think?

The Hearing Examiners themselves don't sound convinced of their own decision. They write:

“Although disputed, the evidence supports that the purported benefits offered by the Joint Applicants may provide some relief or value to some of NMGC’s current customers, and to the citizenry of the State of New Mexico as a whole.” (pg 77) 

As we noted, experts from NEE, NM AREA, WRA and PRC Staff are unified in their assessments that the purported benefits are largely illusory: projected IT “synergies” lack a cost-benefit analysis, cost caps or measurable commitments, job-creation claims are not guaranteed, decarbonization “evaluations” duplicate what any prudent utility should already be doing, and charitable contributions or one-time rate credits do not offset structural and financial risk. Many commitments merely prevent harm rather than create benefits. For example, maintaining current staffing levels or preserving the existing low-income assistance program simply keeps NMGC from backsliding.

All the intervenors are correct. The Hearing Examiners' conclusion that the Joint Applicants provided "sufficient" evidence that the buyout will provide "benefits" is NOT the same as convincing proof that the promised commitments will produce net public benefits for NMGC customers; their own language shows equivocation:

• “The evidence is unclear as to exactly how much some of the commitments and agreements could be quantified to be worth monetarily.”

• “[T]he shared services upgrade ... could be seen as a benefit arising out of the transaction.”

• “Additionally, some of the proposed benefits might provide some impact on New Mexico or its citizens as a whole . . . but these purported benefits do not appear to directly provide benefits to NMGC customers."

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New Energy Economy is calling on the Public Regulation Commission to reject the BCP buyout of PNM, but if they choose to approve it we propose conditions to protect customers, including:

1. Increase the Rate Credit: We proposed that the rate credit - about $3.39 per month - be extended from one year to five years to make the customer benefits closer to the Acquisition Premium that shareholders would receive. Instead of a $22.4 million rate credit, a more than $100 million rate credit.

2. Require a Meaningful Rate Freeze: A September 2026 rate delay amounts to no delay at all. Consistent with other acquisition approvals, there must be an actual rate freeze – a requirement that NMGC not file a rate case until December 2027 is reasonable, just and fair.

3. Transfer the $10M Economic Development fund to a Severe Weather Fund: These funds would much better serve NMGC customers if they are focused on climate related relief through the Severe Weather Fund, instead of a PR slush fund for pet projects that have no attached accountability criteria.

4. No sale of any NMGC real property worth over $500K without explicit PRC approval and notification to all parties in this case.

5. Require a cost-benefit alternatives analysis before adopting the billing system that caused so many problems and higher costs for ratepayers in Louisiana.

6. Require a Majority Independent Board. There is a clear contradiction between BCP Applicants professed goals of local control and their insistence on BCP control of the board. Requiring a majority of disinterested and independent Board members will reduce risks to ratepayers. 

   
   

The Commissioners can still reject the acquisition or impose reasonable conditions on the deal. A vote can be expected within a month. We need the public to join in calling on the PRC to demand protection from the significant risks that the buyout of New Mexico Gas Company poses to more than 550,000 customers in New Mexico. The next Public Comment hearing will take place in Albuquerque at 10:00AM on June 18th.

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MEANWHILE, TODAY BLACKSTONE ANNOUNCED THEY ARE CAPPING WITHDRAWALS FROM A CAPITAL INVESTMENT FUND AFTER REDEMPTION REQUESTS HIT 10% IN LAST QUARTER

As we have reported before, one of the primary risks of investment in private equity is a lack of transparency. Blackstone and its proponents repeatedly point to the financial capital that the company will bring to PNM, but without regulatory oversight those claims cannot be proven. Instead we see that investors in private equity funds are increasingly concerned about the risky behavior of private equity fund managers and have been withdrawing their funds at increasing rates, leading to todays announcement. Blackstone stock has lost 32% of its value in the last six months.

In March Blackstone announced that it would meet 100% of redemption requests after investors sought to pull 7.9% of assets from the fund. Today they announced they were limiting redemptions to 5% after redemption requests hit 10%, an about face from just a few months ago. When people show you who they are, believe them.

It is time for New Mexico to pursue a different energy future - either public power ownership, or at a minimum, state investment in our largest investor-owned utility, to ensure that the company puts PNM customers ahead of data centers and AI oligarchs.