We filed our testimony calling for Blackstone acquisition to be dismissed with prejudice

On March 11th Hearing Examiners at the New Mexico Public Regulation Commission (PRC) granted a motion requiring the Joint Applicants in PRC Case No. 25-00060-UT - PNM, TXNM Energy, and Blackstone’s Troy Parentco - to show cause why a $400 million Financing Transaction made in connection to the proposed merger without PRC approval was not unlawful under New Mexico law. That ruling followed a motion filed by Prosperity Works and supported by multiple intervenors, including New Energy Economy and the New Mexico Department of Justice. 

In their Order, issued March 11th, the Hearing Examiners found that the motion raised a “colorable and material statutory question” regarding whether the stock acquisition required prior approval from the Commission under NMSA 1978 § 62-6-12 and directed the Joint Applicants to show cause why the stock purchase should not be deemed unlawful and void under New Mexico law, which states that a merger related stock acquisition without prior PRC approval “shall be void and of no effect.” 

A hearing on the matter to determine whether the transaction violated this statutory requirement and whether the legality of the merger itself is affected is set to begin April 30th.

Yesterday New Energy Economy and the Center for Biological Diversity filed a joint brief, along with the expert testimony of Attorney Bruce Throne. We argue that:

1. The testimony of Joint Applicant’s expert Suedeen Kelly, in which she argues that the prohibition against stock acquisitions in the context of a merger agreement without prior permission of the PRC applies only if such a transaction results in the purchaser acquiring “control” (as that word is defined in the PUA) of a public utility is flatly contradicted by the letter of the law in Section 62-6-12, and by its legislative history. The Kelly testimony appears to rely on an article published in the Abq Journal that refers to an original version of SB 157 (1989), a bill in which the stock percentage "control" language was rejected and amended before the law was adopted. This law was expressly for the purposes of "economic development" and protecting the public interest. 

2. The argument that the transaction in question is separate from the merger agreement is patently false. Statements from Joint Applicant’s experts, as well as considerable documentary evidence, prove that the Financing Transaction was a conditioned precedent of the acquisition contract - a requirement that TXNM imposed in order for any party to engage in the acquisition bidding process. For example:

Letter on behalf of TXNM to prospective bidders, March 28, 2025:

“On behalf of TXNM Energy, Inc. (“TXNM” or the “Company”) and Wells Fargo Securities, LLC (“Wells Fargo”, financial advisor to the Company), we would like to thank you for your continued interest in the Company.We are writing to inform you of the timing and instructions for submitting a final proposal (the “Final Proposal”) to purchase (1) 100% of the outstanding shares of TXNM via merger (the “Merger”) and (2) $400 million of TXNM common stock (the “PIPE” and together with the Merger, the “Transaction”). The Merger and the PIPE will be consummated by the same buyer (the “Potential Buyer”) and will be signed and announced simultaneously. (Emphasis added.)

And in response on behalf of Blackstone to TXNM/PNM, April 8, 2025:On behalf of Blackstone Infrastructure Advisors L.L.C. and its affiliates (collectively, “Blackstone Infrastructure”, “we” or “us”), in furtherance of our previous non-binding proposal submitted on February 18, 2025, we are pleased to submit this final proposal (this “Final Proposal”) to acquire (i) 100% of the outstanding shares (the “Merger”) of TXNM Energy, Inc. (“TXNM”, the “Company” or “you”) and (ii) $400 million of TXNM common stock (the “PIPE”) and, together with the Merger, the “Transaction”). (Emphasis added.)

The merger agreement could not have taken place without the Financing Transaction.  

3. The remedy that Joint Applicant experts Mr. Tarry and Mr. Sherman describe in their testimonies, a proposed “Exchange” and “Option” Agreement that they request the Commission approve if it determines that the Financing Transaction was “void and of no effect” essentially asks the Commission to circumvent the plain meaning of Section 62-6-12 A and B to accomplish indirectly what the mandatory statutory language of the Public Utility Act prohibits. Joint applicants suggest a private contractual “remedy” that would “place the Financing Transaction outside the scope of Section 62-6-12(A)(3)." This proposed remedy asks the Commission to join Blackstone and TXNM in breaking the law to move the acquisition forward. 

There is no administrative or legal precedent supporting the Joint Applicant’s arguments that the Commission has authority to retroactively “or otherwise” approve the unsanctioned stock acquisition, or to approve a “remedy” for the effects of such a violation to protect the public interest. 

4. If the stock transaction was merger related then the merger agreement itself is “void and of no effect.” If the Commission determines that the Financing Transaction violated the Public Utility Act, then all subsequent actions undertaken by TXNM and Blackstone based on the consummation of that transaction are necessarily invalidated. That includes the negotiation of the Merger Agreement, the approval of the Merger Agreement by TXNM’s shareholders based on the information in TXNM’s Proxy Statement, and the validity of the subsequent FERC and Texas PUC approvals of the Acquisition obtained by the Joint Applicants. 

We further argued that if the Commission determines that the Financing Transaction between Topco and TXNM was “void and of no effect,” PNM ratepayers must be held harmless from any adverse ratemaking or other effects resulting from their unlawful stock transaction. 

Together New Energy Economy and the Center for Biological Diversity have called on the Public Regulation Commission to dismiss Blackstone’s acquisition with prejudice. 

This case goes beyond a single transaction. It raises a fundamental question about whether powerful financial actors can bypass regulatory safeguards designed to protect the public interest. If this maneuver is allowed, it would gut New Mexico’s utility oversight laws and signal that private equity firms can structure deals to evade review, then ask for forgiveness later. That is not how the rule of law works.

Evidence shows that a Blackstone acquisition will lead to significant rate increases for PNM customers. Contrary to oft repeated talking points, PNM has no difficulty accessing the capital necessary to provide reliable renewable energy resources to New Mexico residents and small businesses. PNM executives sought $400 million from bidders to invest in new opportunities for “rate base growth” - translation - new data centers - which will cause significant rate increases, fossil fuel emissions and water consumption without providing New Mexicans anything in return. 

If, as the evidence shows, Blackstone and PNM ignored the law and unlawfully executed a stock transaction that required prior approval, the consequences are clear: the transaction, and consequently the acquisition itself, “shall be void and of no effect.” Electric utilities must serve the public interest, not the profit margins of private equity investors or data center developers.