PRC Finds Blackstone and TXNM violated the law! Penalties ordered, and ratepayers to be held harmless

Today the PRC issued an order affirming the findings of the Hearing Examiners in the Blackstone/TXNM acquisition case: Blackstone and TXNM intentionally and knowingly violated NMSA § 62-6-12, completing a $400 million stock transaction without first obtaining the approval required by the Public Utility Act. The Commissioners further upheld the Hearing Examiners recommendation that maximum penalties will be levied against TXNM, Troy TopCo, and Troy ParentCo, $300,000 ($100,000 each) for that violation, and ordered that the Joint Applicants appear within 45 days to explain how they unwound the stock transaction and demonstrate how PNM ratepayers will be protected from any costs that stem from their illegal transaction. 

At the hearing today the public showed up in force. The venue had to be changed when crowds filled the hallway outside. When Commissioners asked for a show of hands opposing the Blackstone acquisition of PNM, hundreds raised their hands. When they asked who was present in support not one hand went up.

We are eternally grateful to all those who showed up to care for their community, to care for their state and to care for the earth.  

As reported in the Santa Fe New Mexican:

Nibert proposed an alternative order Thursday that would have granted approval for the stock sale retroactively and allowed the companies to essentially redo the transaction and reissue the stock shares following the Thursday vote. Nibert argued ordering the companies to undo the stock transaction would result in unavoidable harm to PNM customers and that the statute the companies were accused of violating was "not as clear as parties have argued." O'Connell and Aguilera, however, countered the law was clear, and that their order will ensure PNM ratepayers are "held harmless" in the process of the utility paying back the money from the financing transaction. 

Ultimately the law prevailed and Blackstone and PNM were held accountable for their knowing and intentional violation of NM law.

The Commission voted 2-1 to adopt the Hearing Examiners’ findings that Blackstone and TXNM violated New Mexico law and that the unlawful $400 million stock transaction must be unwound at shareholder—not ratepayer—expense.

However, the Commission should also have denied the merger application. The Hearing Examiners found that the unlawful stock acquisition was inextricably linked to the proposed merger, and a merger built upon an unlawful transaction should not be approved. TXNM must now unwind the illegal transaction, fully protect ratepayers from every financial consequence, report back in 45 days how this was accomplished and explain how this process affects the pending merger. It is difficult to see how the current merits proceeding can realistically remain on schedule while the Commission simultaneously oversees the unwinding, compliance filing, and any resulting investigation or audit. 

The order itself states on pg 25-26:

The Commission recognizes that the transaction at issue has created legal and procedural questions that may materially affect the pending Application and that the interests of administrative efficiency, procedural integrity, and fundamental fairness may require withdrawal, amendment, supplementation, or refiling of the Application so that it accurately reflects the current posture of the transaction and any steps taken to address the unauthorized stock acquisition. The Commission does not, however, order withdrawal or refiling in this Final Order.  It is Joint Applicants’ responsibility, as applicants, to determine in the first instance whether the pending Application and record remain complete, accurate, and sufficient in light of this Final Order and any corrective actions undertaken. If Joint Applicants elect to proceed on the pending Application, they bear the burden of supplementing or amending the filing as necessary to provide a complete and current record for the Commission’s consideration.

New Energy Economy will continue to fight for denial of the merger application.

Read more:

New Mexico regulators order Blackstone, TXNM to unwind $400 million stock sale - Abq Journal

New Mexico Utility Regulator Finds Blackstone Purchase of TXNM Stock Illegal as Focus Turns Again to Merger Review - Capital Forum