The PNM Avangrid Merger must benefit the people of New Mexico

Public Regulation Commission

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The PNM Avangrid merger represents a watershed moment in New Mexico's energy future. The merger agreement as written does not benefit PNM ratepayers or other residents of New Mexico. The PRC must ensure that any merger agreement protects our rights to affordable clean reliable energy, environmental protection and reparations, and protection from international corporate interference in our utility regulations. Sign this petition to demand these protections be included in any merger approved by the PRC.

To: Public Regulation Commission
From: [Your Name]

On November 23, 2020, Public Service Company of New Mexico (PNM) and Avangrid, Inc. (Avangrid) applied to “merge” their companies. PNM is the largest investor-owned utility in New Mexico, providing electricity to over 530,000 customers who fall within their monopoly-controlled service territory. Avangrid is a publicly traded worldwide energy conglomerate with approximately $36 billion in assets and operations in 24 U.S. states. Iberdrola (located in Spain), owns 81.5% of Avangrid’s stock. The “Wealth Fund” of Qatar owns 9%.

Approximately two dozen entities including indigenous, environmental, and consumer advocacy nonprofits, government agencies, and businesses have intervened in the merger case which is being presided over by the New Mexico Public Regulation Commission (PRC). In order to receive approval for the merger, PNM and Avangrid must prove that the merger is in the “public interest”; a majority of the entities that have filed testimony in the case have provided evidence that the merger IS NOT in the public interest.

As proposed, the merger unjustly benefits shareholders, who would receive a 20% premium on the pre-announcement stock price (totaling $735 million). Additionally, top PNM executives will receive more than $80 million. In all, Avangrid’s "goodwill" payments (the amount paid above fair market value) will total $2.355 billion; they undoubtedly expect to recover this somehow. Will they recover this from ratepayers through anti-competitive resource procurement from their subsidiaries or by some other means? Ratepayers need not be exposed to these costs.

Meanwhile the proposed ($50 million) rate credits will come to just $45 per residential customer. PNM executives and shareholders want to sell their monopoly-controlled customer base to this multinational conglomerate for private profit. Legally, any merger agreement must fairly balance benefits between utility shareholders and the ratepayers. Benefits to New Mexican ratepayers must be commensurate with the benefits that private shareholders and company executives will enjoy.

As a resident of NM, I urge the PRC to deny PNM's merger request. I do not think that it is in the best interest of New Mexicans to have a multinational conglomerate decide what is best for New Mexicans. However, should the PRC allow the merger, I urge the PRC to ensure that the following requirements are met to help minimize the negative impact of this merger on New Mexicans and to help to protect the public interest:

RATEPAYER BENEFITS:
Currently Avangrid is offering an insufficient $50 million; we are demanding that the rate credit be increased to at least $100 million. Additionally, the merger should include a rate freeze for at least three years to ensure that rate credits offer a meaningful benefit.

The PRC must ensure that economic development funds are at least $100 million, as would be consistent with PRC precedent. We respectfully request that half of this be specifically designated for rooftop or community solar projects statewide, the rest to be put to land remediation near the coal plants and to cover arrearages accumulated during COVID.

CORPORATE ACCOUNTABILITY FOR PNM’S FOUR CORNERS POWER PLANT (FCPP) INVESTMENTS:
NM law requires that ratepayers must not bear the cost of merger transactions. Because the merger requires abandonment and securitization of $300 million of undepreciated investments in FCPP, the merger agreement does not hold ratepayers harmless for transaction costs. PNM, not ratepayers, must pay for their imprudent and short-sighted reinvestments in the Four Corners coal-fired power plant.

PNM has profited from its operation at the FCPP for more than 50 years. PNM must take responsibility to close the polluting plant as soon as possible, pay the cost of its imprudent investments in the plant and ensure that impacted communities receive compensation for the economic, health and environmental harms that they have suffered. The merger must include stipulations that promote earlier closure of FCPP and PNM shareholders must assume 100% responsibility for the $300 million of irresponsible reinvestments that they want to unjustly offload onto ratepayers.

TIMELY COAL PLANT CLEANUP:
The merger must include full remediation and reclamation of all coal mining and generation facilities at the San Juan Generating Station, the San Juan Coal Mine and the Navajo Coal Mine. “Retirement in place” (which allegedly means postponing clean-up until 25 years from now) represents an unacceptable environmental and economic risk and passes these costs on to future generations.

COMPETITIVE PROCUREMENT AND FAIR MARKET PRICES:
The merger must require an independent monitor paid by Iberdrola/Avangrid to evaluate the competitive bidding process for procurement of all energy and transmission. These commitments are necessary to ensure ratepayer interests are protected against anti-competitive dealmaking between Avangrid/Iberdrola and affiliates.

LOCAL OVERSIGHT:
Iberdrola, Avangrid’s parent company, must be added to the merger agreement as a party and affirm that it will operate under PRC jurisdiction and that it will agree to a PNM board that is majority NM residents, independent of Iberdrola/Avangrid. Without these stipulations NM interests will prove secondary to the demands of a multinational corporation seeking to expand its market growth to Mexico, Arizona and California.