Avangrid terminates PNM merger

Amid the uncertainty of an appeal to the New Mexico Supreme Court, utility giant Avangrid chose to terminate its merger agreement with the Public Service Company of New Mexico.

The merger agreement expired on Dec. 31 with the option to renew.

While PNM Resources — the parent company of PNM — sought to renew the contract, Avangrid declined.

That decision came after previous renewals of the merger agreement. The companies originally entered into a merger agreement in October 2020, though the merger faced immediate opposition from conservation groups and others.

The merger agreement included various benefits including customer rate credits which were increased during the regulatory process in 2021.

In a statement, PNM highlighted that the customer and community benefits of the merger would have totaled more than $300 million in the form of rate credits, forgiveness of past-due bills, new job commitments, economic development funds, scholarship and apprenticeship training programs and low-income energy efficiency programs.

“We are greatly disappointed with Avangrid’s decision to terminate the merger agreement and its proposed benefits to our customers and communities,” Pat Vincent-Collawn, PNM Resources Chairman and CEO, said in a statement. “We had been looking forward to providing customers with the immediate benefits in our agreement and also the longer-term benefits of being part of a larger-scale entity with ties to global innovation and experience in the clean energy transition. As a standalone company, we will continue our work of meeting the future energy needs of our customers and communities with affordable and reliable energy.” 

Gov. Michelle Lujan Grisham said in a statement that the termination of the merger agreement "is not the outcome we desired, but I remain confident about future investments in our state, including by Avangrid, in the wind, solar and hydrogen solutions that are powering our state’s clean energy transition."

She further highlighted recent investments by major companies focused on the energy transition including Maxeon, Pattern Energy, Arcosa and Star Scientific. Lujan Grisham said PNM is a "key driver in solidifying these investments."

While Avangrid has ended its agreement with PNM, the governor said that the state "will continue to be a national leader in charting a clean energy economy through our electricity generation and transmission, onshoring of key supply chain components and cutting-edge technology development.” 

However, not everyone was on board with the idea of the two companies merging.

Customer advocacy groups including New Energy Economy fought against it and alleged that the merger would lead to worse customer service and higher rates.

New Energy Economy celebrated the news and executive director Mariel Nanasi compared it to slaying a corporate giant that was "bent on exploiting New Mexico."

"This is a great way to celebrate the new year for all New Mexicans," she said.

Activists like Nanasi pointed to Avangrid-owned utilities in New England as evidence that customer service worsened and rates increased after the utility giant took ownership.

In Maine, for example, voters entertained the idea of transforming the Avangrid-owned Central Maine Power into a publicly owned nonprofit utility. That measure failed during the 2023 election. The supporters of the measure argued that Avangrid is distant and unresponsive and that the revenue the company collects from customers goes out of state. Avangrid itself is owned by an international company based out of Spain called Iberdrola that has been embroiled in controversy, including alleged price manipulation.

In a statement, Avangrid highlighted that the two companies had received “all the necessary regulatory approvals for the closing of the merger by the end of 2022 except the approval of the New Mexico Public Regulation Commission.”

PNM Resources also owns a utility in Texas and the Texas utility regulators had approved the merger. 

The New Mexico Public Regulation Commission, however, denied the stipulation for the merger in 2021, resulting in an appeal to the state Supreme Court. The court heard oral arguments in the case in September but has not issued a ruling. It did, however, reject a motion to remand the case to the PRC to hear again.

In its statement, Avangrid said there is no clear timing on when the court might issue a ruling on the PRC’s denial. The company also pointed to uncertainties about subsequent regulatory actions.

At the same time, Avangrid stated that it remains “more than ever steadfast in our commitment to New Mexico in the development of wind and solar renewables, helping explore options in the new hydrogen economy, and delivering on the partnership with the Navajo Nation to achieve its clean energy future.”

NM Political Report is a non-profit news outlet based in New Mexico, and can be found at nmpoliticalreport.com.