New Mexico Gov. Michelle Lujan Grisham, D, in December announced the appointment of three members to the state’s Public Regulation Commission, potentially breathing new life into a utility merger rejected last year.
The PRC unanimously denied Connecticut-based Avangrid’s proposed $8 billion acquisition of PNM Resources, the state’s largest electricity provider. Grisham supports the deal and observers expect it will be reconsidered by the new slate of regulators.
The merger would “provide additional relief for New Mexico ratepayers while continuing to transition to a clean energy future for all New Mexicans,” Grisham said in 2021.
The utilities appealed the PRC’s denial to the New Mexico Supreme Court last year, but experts say the appeal could be withdrawn and the merger refiled before the new commission. Five elected officials previously comprised the PRC, which a 2020 ballot initiative changed to three members appointed by the governor.
The new slate of commissioners took over Jan. 1, according to the governor's announcement, though they must be confirmed by the New Mexico Senate. Grisham’s appointees include:
- Gabriel Aguilera, who spent about 15 years at the Federal Energy Regulatory Commission, most recently serving as senior policy advisor in the Office of Energy Market Regulation for the western region;
- Brian Moore, a former state legislator who now runs a supermarket in Clayton, New Mexico;
- Patrick O’Connell, an engineer and former Clean Energy Program Interim Director at Western Resource Advocates.
“These appointees are experienced professionals who have the skills needed to oversee an energy transition that is affordable, effective and equitable for every New Mexico community,” Grisham said in a statement.
The PRC denied the Avangrid-PNM merger in December 2021 after a hearing examiner warned of reliability risks, the potential for higher electricity prices and slower development of renewable resources. Analysts say a new slate of regulators is likely to see things differently.
“We maintain that the odds favor this transaction being approved,” Washington Analysis, which conducts economic and political legislative and regulatory analysis, said in a Dec. 31 research note. Grisham supports the merger, the firm said, “and her new appointments to the PRC will thus likely augur favorably for this transaction.”
“We do not foresee any issues getting these nominees confirmed,” Washington Analysis said.
The Albuquerque Journal in a Thursday editorial called for the Senate to closely vet Grisham’s appointees, noting that changes at the commission could tee up another merger review.
“The two utility companies obviously remain committed to the controversial merger and continue to work together to gain community support,” the paper’s editorial board noted.
Neither Avangrid nor PNM commented on the potential for the merger to be refiled at the PRC.
“The case is still on appeal with the New Mexico Supreme Court,” PNM spokesman Raymond Sandoval said in an email.
A fresh consideration of the merger would also come as new analysis commissioned by the 5-member elected PRC concluded the deal raises anti-competitive issues.
"There is economic rationale for the denial of Avangrid & PNM merger,” according to the report, which was presented to the PRC on Dec. 28.
The deal “may create an absolute monopolistic market structure in [the] New Mexico electricity market,” wrote Tamer Cetin, economics advisor to the PRC. “If the Commission approves this merger between Avangrid and PNM, Avangrid can completely dominate all the segments from generation to transmission, distribution, wholesale and retail in [the] New Mexico electricity market.”
The analysis’ conclusion is stark, focusing on concerns around competition, said Mariel Nanasi, executive director of New Energy Economy, which opposes the deal. “The merger seems unlikely to gain ground," she said in an email.
"The parting gift of the old PRC to not only confirm the wisdom of the merger's rejection but caution that the competitive renewables economy, which has been a bright spot in New Mexico, would be crushed by an Avangrid/PNM merger is instructive and illuminating," Nanasi said.
Critics of the deal have pointed to a spotty track record by Avangrid in the Northeast and New England, where it owns several electric and gas utilities. One of its utilities, Central Maine Power, was ranked worst in the nation in a J.D. Power study of business customer satisfaction last year.
The merger rejection was unexpected, however, as 23 of two dozen intervening parties, including customer and clean energy advocates, supported an agreement for the deal to proceed. PRC staff also agreed not to oppose the merger. That settlement included reliability standards and penalties, should service degrade.