Home New mexico economy PRC says it followed its own guidelines in rejecting merger

PRC says it followed its own guidelines in rejecting merger

0

June 20—Saying it’s not a “flank” to others, the state’s Public Regulatory Commission argues in a court filing that it was required to act independently during the examining a merger of New Mexico’s largest electric utility with other major power companies.

A PRC brief submitted by legal staff last week to the New Mexico Supreme Court says the commissioners made the right decision in denying Public Service Company of New Mexico’s application to merge with Avangrid of Connecticut and its parent company, Iberdrola of Spain. The unanimous decision of the five commissioners in December went against the recommendations of the attorney general’s office and many environmental groups.

The proposal to merge with the two large companies and be virtually taken over by them has implications for the state’s ability to convert to electricity powered by renewable energy sources such as solar and wind. . PNM says merging with big business would give it access to money, equipment and innovation.

PNM and its potential partners appealed the PRC’s rejection to the state Supreme Court, and the commissioners’ final comments came in a roughly 70-page document and request for oral argument. The document said there was “substantial evidence before the Commission of the potential downsides of the proposed merger”.

A joint statement Friday from representatives of PNM and Avangrid said “the PRC understated the benefits of the merger and overstated the alleged risks, resulting in an incorrect application of the merger standard.”

The state Supreme Court does not have a deadline to schedule oral arguments or rule on the matter. PNM, Avangrid and Iberdrola benefit from a new commission taking over in January and potentially obtaining a new examination of their file.

The current five-member elected commission will be replaced in 2023 with a three-person governor-appointed commission after state voters accepted the change two years ago.

In continued counterpoint to legal filings, the commission’s brief is a response to claims filed by PNM, Avangrid and Iberdrola. The commission stands by the companies’ argument that the PRC “poorly balanced the pros and cons of the proposed merger … leads to a dead end.” Protecting the public in such transactions is one of its main functions, says the PRC.

“The proposed merger was not designed to benefit PNM’s customers,” the document said. Instead, the business mix would give Avangrid and Iberdrola a “beachhead” in the southwest from which to pursue other projects, according to the PRC.

Further, the primary beneficiaries of a merger would be PNM’s shareholders, the brief states, not customers.

The companies, however, argue that the PRC ignored the fact that nearly all environmental organizations supported the merger.

The commission says that claim was also a dead end. “This argument is mind-boggling and implies that the Commission is a stooge, his memoir reads.

Representatives from PNM and Avangrid said the merger won the green light from organizations and other state and federal entities, such as the Attorney General’s Office and the Federal Energy Regulatory Commission. “Each of these agencies concluded that the merger met all regulatory standards and should be approved,” they said.

One organization that disagreed with the companies was Santa Fe’s New Energy Economy. A recent brief filed by that organization, led by Mariel Nanasi, said the companies’ arguments were “out of touch with reality.”

The commission’s brief recalls some sticking points found in the merger proposal. One was the performance record of Avangrid’s subsidiaries in the northeastern United States, which the commission and others have described as poor. Another was the committee’s concern over a Spanish investigation into some current and former Iberdrola executives. Yet another was the role played by Albuquerque attorney Marcus Rael, a friend and colleague of Attorney General Hector Balderas who does contract legal work for Balderas’ office.

Various details indicate that Avangrid and Iberdrola are using “business methods that should raise concerns for the Commission,” the brief states, quoting a line from PRC hearing examiner Ashley Schannauer’s recommendations at the end of the essay. ‘last year. Schannauer generally released a report criticizing the proposed merger.

Balderas said in a brief statement on Friday that the PRC “violated the rule of law” by ignoring the proposed agreement reached by 23 organizations. He also noted that the state Supreme Court Disciplinary Board had ruled that there was no conflict of interest involving Rael. Schannauer ordered Rael to stop working for Iberdrola, and he did.

Balderas also said he was “very concerned that the PRC is misleading the Court by misrepresenting the timing” of its interactions with merger candidates.

Iberdrola hired Rael early last year to broker the merger proposal. Balderas signed the agreement with the candidates in the spring. The commission says “the plausible inference … is that the AG was improperly influenced by Mr. Rael, who represented the AG and Bernalillo County at the time he was hired by Iberdrola.”

The commission adds: “The AG ridiculously stated that a benefit of the merger was the lessons Avangrid learned from the experience of dealing with severe storms in the North East, although any lessons that ‘Avangrid may have learned resulted from his own incompetent preparations for the storms.

The commission also points out that Scott Hempling, an expert witness used by Balderas in the merger case, criticized the merger proposal in the spring of 2021.

Balderas spokeswoman Jerri Mares wrote in an email Friday that Rael was hired by Iberdrola before Balderas opposed the initial merger request. “It was only after securing significant concessions through negotiations that significantly altered the transaction that the AG joined” the agreement in April, Mares wrote.

The three power companies said the benefits of a merger outweigh the risks. They agreed to give customers rate credits totaling $67 million over three years and create at least 150 jobs in the state if they were allowed to merge.

They also said they would allocate $25 million to economic development efforts in the state, allocate $12.5 million to indigenous communities in the northwest of the state, and offer $15 million to community programs. efficiency and weather protection for low-income people.

Representatives for PNM and Avangrid said in a statement on Friday, “Had the benefits and risks been properly considered and applied, the transaction would have been approved.”

They said the investigation in Spain into Iberdrola executives contained “simple allegations”. The PRC’s use of this situation against merger candidates, they said, “is contrary to New Mexico law and principles of fairness and does not provide grounds for assuming that PNM will not continue to provide quality service if the merger is approved”.