Hearing Examiners ignore evidence of Delta Utility malfeasance and recommend private equity buyout of NM Gas Company

Today we filed our Brief in Chief in the Blackstone Show Cause hearing, making a simple argument because the law about illegal merger-related stock acquisitions is clear and the evidence is there in black and white. We conclude: 

This case does not present a sprawling or complicated inquiry. It turns on three straightforward questions that the Commission must answer in sequence. First, is the Stock Purchase Agreement (PIPE) void and of no effect under NMSA 1978, § 62-6-12? Second, if it is void, does that unlawfulness render the Merger itself unlawful and therefore subject to denial under § 62-6-13—particularly where the record demonstrates that the PIPE and the Merger were inextricably linked components of a single transaction? And third, once those determinations are made, must the Commission schedule a follow-on compliance proceeding to ensure that “void and of no effect” was followed and ratepayers are held harmless from the consequences of utility management’s unlawful and imprudent conduct. The statute provides the rule, the record provides the facts, and the result follows: the Commission must apply the law evenly and enforce its consequences. (pg 25)

You can reinforce that argument during the public comment period at the PRC's open meeting tomorrow at 10:00AM. Details available here. Blackstone is not above the law.

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RECOMMENDED DECISION ON BERNHARD CAPITAL PARTNERS BUYOUT OF NM GAS COMPANY DOES NOT SUPPORT FINDING OF "NET PUBLIC BENEFIT" OR PROVE SUFFICIENT PROTECTION FROM HARMS

Also today the Hearing Examiners issued their Recommended Decision in NMPRC Case No. 24-00266-UT, recommending that the PRC should approve the acquisition of NM Gas Company by private equity fund Bernhard Capital Partners (BCP), without the conditions that New Energy Economy and other parties suggested to protect utility ratepayers if the acquisition was approved. The only alteration to the application they suggested was some increased reporting requirements.

The Hearing Examiners’ Recommended Decision failed to prove that the acquisition adequately satisfies the six-part test to determine public interest, particularly the threshold “net public benefit” requirement that must guide the determination in this case.

The Hearing Examiners write: 

“Initially, the reality of the obvious must be observed. Joint Applicants did not enter into the proposed Transaction for the benefit of NMGC’s customers, the transaction was created to benefit BCP and Emera.” (pg. 75)

On page 76 they note that:

“There have been criticisms from the parties that the level of proposed benefits from the Joint Applicants has been non-existent because it only maintains what has been offered before thus only maintaining the status quo and therefore does not meet the net public benefit threshold to be considered to be in the public interest. Others argue that the level of proposed offerings is small or minimal and that there are no synergies to be gained from this transaction,”

But then they weakly conclude, without further explanation:

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, Emphasis added)

The issue of potential harms caused by private equity ownership, too, are dismissed as speculative. On page 178 they write:

“Other concerns assigning harm solely on the basis of the financial structure of the acquirer, private equity, like misaligned priorities, that were speculative and not supported by sufficient credible evidence in the record.”

Regarding potential harms related to the provision of safe and reliable service the Hearing Examiners conclude on pg 178:

"A year is not a long time in regulatory terms but there is no sufficient evidentiary record to support problems or difficulties that [BCP owned] Delta Utilities is having in providing service to its customers, or that the protections proposed in this case would not be sufficient to safeguard ratepayers and the provision of safe adequate and reliable service." 

There is “no sufficient evidentiary record” in this case because the Hearing Examiners refused to hear it. 

In January 2026, New Energy Economy wanted to bring in evidence that Delta Utility customers saw bill increases of somewhere between 300 to 1000% in a single billing cycle, but that request was denied. Those issues continue. A March 2nd, 2026 news article reports that a Public Service Commissioner in Louisiana said there is no evidence that Delta Utilities was gouging customers, but is quoted saying “a lot of what people are feeling is a new billing system.” 

That billing system was a specific issue in this case. 

BCP claimed the adoption of this new cloud based billing system used by Delta Utilities was a synergy that would benefit ratepayers, but failed to provide any evidence of quantified savings or service improvements, or that BCP had conducted a cost-benefit analysis to determine if it was the most cost effective solution. Instead of addressing that issue directly, the Hearing Examiners recommended that the PRC kick that can to the next rate-case, paving the way for similar billing debacles to hit New Mexico Gas Company customers.

Billing failures, governance deficiencies, and profit-driven management decisions can metastasize into years-long customer harm. Rather than address these issues, the Hearing Examiners chose to deny expert testimony from being heard and evidence from being presented.

New Energy Economy proposed the following conditions be adopted to provide actual public benefit and protect the public interest if the PRC should decide to approve the buyout of New Mexico Gas Company:

1. Increase the Rate Credit: We proposed that the rate credit be extended to five years to make the customer benefits commensurate with the Acquisition Premium shareholders would receive. As Commissioner Aguilera stated “I don't think it’s farfetched to consider the benefits that should be provided to customers in comparison to the Acquisition Premium that would be paid to the seller.” (TR. Vol. 2 (Chair Aguilera) at 507.)

2. Actualize a Meaningful Rate Freeze: A September 2026 rate delay amounts to no customer benefit. 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 Vague/Ambiguous Economic Development to the Severe Weather Fund: The revised commitments will not necessarily benefit NMGC customers. PRC Staff made a convincing case that these funds would much better serve NMGC customers if they are focused on climate related relief through the Severe Weather Fund.

4. No sale of any NMGC real property worth over $500K without explicit PRC approval and notification to all parties in this case. The “horror story” of Toys “R” Us real estate involves a private equity and real estate investment group that used a leveraged buyout to extract value from the company’s real estate assets, saddling the retailer with massive debt and ultimately contributing to its demise.

5. No automatic shared services for Information Technology (“IT”). Within six months NMGC to conduct a benefit cost analysis re: IT services. See, 22-00309-UT, 2024-03-14, Final Order (“failure to quantify benefits versus costs is contrary to the public interest”).

6. Reject Joint Applicants’ commitment to, at a minimum, maintaining NMGC’s current five-year capital investments plan. This commitment proposes the Commission approve issues not currently before it, i.e., whether the capital expenditures set forth in NMGC’s plan is prudent, reasonable, and will result in just, fair, and reasonable rates. Further it invites the Commission to improperly bind future Commissions, and raises notice and due process issues.

7. Require a Majority Independent Board. There is a clear contradiction between BCP Applicants professed goals of local control and their imposition of control as seen in this case via BCP’s requirement to house IT with BCP’s affiliated company, Delta Utilities. Requiring a majority of disinterested and independent Board members will reduce risks to ratepayers. 

Without these conditions the Recommended Decision fails to provide any meaningful “net public benefits” or to protect New Mexico Gas Company customers from harm. New Energy Economy will file exceptions to the Hearing Examiner’s recommendations to advocate for the public interest and continue to advocate for the PRC to make the right decision in this case.

After the refusal to allow testimony from our expert witness, or to admit new evidence of Delta Utility billing problems into the record when it arose, we were not surprised by this outcome. It was clear that the Hearing Examiners would "see no evil."

The Recommended Decision underscores the importance of public engagement at this moment in time. The Commissioners may accept, reject or modify the recommendations before voting to approve or deny the acquisition. Now is the time to raise your voice to oppose private equity takeovers of essential services that we all rely upon.