The private equity takeover of New Mexico’s only gas utility is part of a larger trend towards private ownership, a practice that was curtailed by strict regulations enacted in 1933 after the stock market crash triggered the Great Depression, but those regulations have been eroded so significantly that assets in private funds reached $28 trillion in 2023, compared to $31 trillion in publicly traded funds. In a 2023 article titled “The Secretive Industry Devouring the U.S. Economy” the Atlantic reported:

“One-fifth of the market has been made effectively invisible to investors, the media, and regulators. Information as basic as who actually owns a company, how it makes its money, or whether it is profitable is “disappearing indefinitely into private equity darkness,” as the Harvard Law professor John Coates writes in his book The Problem of Twelve. This is not a recipe for corporate responsibility or economic stability. A private economy is one in which companies can more easily get away with wrongdoing and an economic crisis can take everyone by surprise.”

This trend is expected to continue and to accelerate under the incoming administration, which is populated by wealthy investors who are seeking to make a final assault against the last guardrail protecting against another Great Depression - the rule against marketing and selling shares of private equity companies to the public directly through our 401k’s and brokerage firms.

NM Gas Company is currently owned by Emera Holdings, a Canadian Energy Services firm that owns multiple utilities, pipelines and other energy related businesses, and has announced plans to reduce emissions 80% by 2040. Unfortunately many energy companies have a practice of offloading their dirtiest businesses to private equity firms so that they can tout their progress on climate, but under the new private ownership arrangements those dirty plants continue to operate.

What are the risks to NM Gas Company customers if BCP gets permission from the PRC to buy out NM Gas Company?

• Lack of transparency
• Higher rates to pay off debts incurred in the leveraged buyout
• Potential impacts to reliability and service quality as BCP seeks to cut costs and puts off necessary repairs and investments in infrastructure and efficiency.
• A short term, profit driven ethos that precludes the kind of long term planning necessary to transition a company based entirely on the burning of methane into a sustainable one. Instead under Bernhard Capital Group we suspect the utility’s motto will be “Burn Harder, Burn Faster.”

WHAT CAN YOU DO??

Governor MLG is already being courted by BCP, so we need you, the public, to demand rigorous oversight from the PRC.

Because BCP has so little experience operating utilities, it is incumbent upon the Commission to ensure that NM Gas Company customers will not suffer higher costs or unreliable service as a result of the buyout. The law provides the PRC authority to require a Management Audit before approval of a utility buyout. New Energy Economy has petitioned the PRC to require such an audit in this proceeding.

An Audit in this case (24-00266-UT) could allow the Commission to obtain detailed information about board composition and compensation, corporate history and relevant experience, potential risks including financial risks and affiliate relationships that could lead to self-dealing, and importantly, BCP's plans for NM Gas Company, including:

1) Financial Hedging Practices
2) Operation and Management
3) Capital Plan: the use of debt financing
4) Methane Leakage
5) Hydrogen Investment Analysis
6) Climate Related Policy and Business Risks

All of these are critical to understanding how the proposed buyout will affect NM Gas Company customers.

Side Note! Iberdrola is now seeking to privatize Avangrid, and rewrite its legal history in NM.

On Monday New Energy Economy filed its response to Avangrid’s frivolous petition to the NM Supreme Court for a Writ of Mandamus to override the PRC’s Order denying the company’s buyout of PNM. Avangrid wants to reopen the case after it voluntarily dismissed the merger appeal for the sole purpose of striking the Final Order from the record. 

Why did Avangrid petition for this Writ now after failing to file an appeal the PRC’s updated Final Order on the case within 30 days? One of the concerns raised by the Hearing Examiner in the case was the structure of the company, which is owned primarily (82%) by Iberdrola, a Spanish company. A regulatory report found that Avangrid was insufficiently insulated from interference by Iberdrola’s Spanish management. That finding was prescient. 

Iberdrola now seeks permission to buy out the remaining 18% shares of Avangrid and take the company private, which would put control of the publicly regulated utilities it owns in CT, NY and Maine under the control of a private equity company. Fearing an inevitable lack of transparency, CT regulators are seeking to open a case to determine if such a buyout would be in the public interest, while Iberdrola and Avangrid argue that the utility regulators in CT have no jurisdiction. As one CT lawmaker put it, Avangrid and Iberdrola are “trying to bully lawmakers and regulators.”

This is precisely the kind of corporate behavior that the Hearing Examiner and the PRC in New Mexico feared, and the hearing in CT would certainly rely on the New Mexico Hearing Examiners findings and the PRC’s Final Order in the Avangrid/PNM merger case. Avangrid does not seek to revive the merger, but only to whitewash the company’s record so that other communities cannot learn from the exhaustive evidence and expert testimony the PRC relied upon when it denied the Avangrid/PNM merger.

We are stronger than we’ve ever been. Our relationships, expertise, and determination have grown over the years, but so too have the challenges. 

We need your support to continue this fight. Today, we’re asking for your help to reach our $100,000 goal by the end of the year. We have a donor offering $25,000 to match our first $25,000, which would take us halfway to our goal. We are at $20,105 so we are almost there!

These funds will allow us to employ the expert witnesses who strengthen our legal arguments, organize public demand for accountability and action and continue empowering communities to defend themselves and their futures.

Your gift, of any size, is critical to our work.