PNM Avangrid Merger: A Bad Deal for New Mexico

Last week we filed our opposition (summarized below) to the initial and the recently amended merger agreement because the agreement violates PRC principles, practices, and precedent, and continues to be contrary to the public interest. We continue to fight alongside other consumer advocates and environmental groups to oppose the current settlement agreement. Our partners, Citizens for Fair Rates and the Environment, have launched a petition so that PRC Commissioners can hear from you and other New Mexicans who will be directly impacted by the issues in the case. Sign and share the petition.


PAST ACTIONS ARE THE BEST PREDICTOR OF FUTURE BEHAVIOR

Our objections to Avangrid are not only specific to this merger, but also informed by past actions of the company. In Maine, where Avangrid owns Central Maine Power, Avangrid and Iberdrola have engaged in strong-arm tactics to push their agenda to the detriment of Maine ratepayers and environment, using back room deals, paying off legislators, hiring private investigators to hassle signature gatherers and killing a people’s referendum to protect the North Woods from despoliation. Knowing that, do we want to give this corporate energy giant control over our energy future?



SUMMARY OF OUR CONCERNS

1. PRC rulings specify that mergers must not contain any recovery of transaction costs from ratepayers, must hold customers harmless from any negative impacts of a transaction, and must not have any adverse impacts on existing rates.

The merger agreement requires abandonment and securitization of the Four Corners Power Plant at the expense of ratepayers, a $300M transaction cost that is contrary to law and will certainly impact existing rates. It is important to note that "abandonment" does not equal closure - instead PNM is simply paying another company to take Four Corners off its hands. If approved, the climate altering emissions will continue for years to come, while New Mexicans pay for PNM’s imprudent decisions.

2. PRC principles dictate that merger agreements must balance the interests of shareholders and ratepayers.

As proposed, the merger unjustly benefits shareholders, who stand to receive over $700M+ in financial benefits just for owning stock. Additionally, six individual executives will gain approximately $80 million in benefits for themselves. Meanwhile the proposed ($50 million) rate credits for 480,000 PNM customers will come to just $45 per residential customer. Hardly balanced!

3. PRC rulings clarify that merger agreements must include a rate freeze to ensure rate credits offer a meaningful benefit.

We argue that a rate freeze of at least three years must be implemented to make the offered rate credits meaningful to ratepayers. Without a rate freeze there is nothing to prevent Avangrid from applying for a rate increase the day after settlement is reached.

4. PRC precedent demands that economic development funds should equal $100M plus.

When compared to the most recent El Paso Electric merger agreement (Case 19-00234-UT), in which $100M in economic development funds was distributed to the community, the paltry $20M being offered by PNM/Avangrid is grossly inadequate and inconsistent with the public interest. A commensurate amount must be included in the agreement to benefit impacted communities and New Mexico ratepayers. We respectfully request that half of this be specifically designated for rooftop or community solar projects statewide, the rest to be put to remediation and to cover arrearages accumulated during covid.

5. PRC rulings specify that utilities should be governed by a majority Independent Board of Directors.

Without a majority independent Board of Directors, the governing body of PNM/Avangrid will likely prioritize the financial goals of its 81.5% owner, global energy giant Iberdrola. Budget and financing decisions are the primary drivers of a utility’s costs of service, and without the oversight of independent Board directors, who are not beholden to a foreign corporation’s directives, ratepayers will be at risk.

6. PRC principles dictate that merger agreements must be in the public interest.

  • Without Independent Evaluators to supervise all generation and transmission Request for Proposals, there is no guarantee that PNM/Avangrid will not rig the process to control all energy generation and transmission through their own affiliates, giving them control over energy generation and increasing costs to ratepayers.

  • Without immediate remediation and reclamation of all coal mining and generation facilities upon coal plant closure, the merger is contrary to the public interest. Planned “retirement in place” for coal plants and mines represents an unacceptable environmental and economic risk and passes these costs on to future generations.

  • Finally, and most importantly, preventing the reduction or cessation of coal burning is a detriment to the public interest. The merger agreement as proposed, and the abandonment application filed as a direct result of the merger agreement, will result in the extension of the life of the Four Corners Power Plant and therefore a significant increase in climate altering emissions as a result. Any agreement must instead encourage closure of the Four Corners Power Plant as soon as possible to protect the people and land of NM.

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