In the US, the Public Service Company of New Mexico and Avangrid have filed a stipulation with regulatory authorities and consumer representatives to highlight how consumers will benefit from the planned merger between the two utilities.
Avangrid and the Public Service Company of New Mexico (PNM) have filed the stipulation with the New Mexico Attorney General, Western Resource Advocates, International Brotherhood of Electrical Workers Local 611, Dine Citizens Against Ruining Our Environment, Nava Education Project, San Juan Citizens Alliance, and To Nizhoni Ani.
As the two energy companies await for the New Mexico Public Regulation Commission to approve their planned merge, the stipulation highlights how their integration will benefit the state’s energy transition. To date, Avangrid has managed to get clearance from the Committee on Foreign Investment to acquire PNM.
The $8.3 billion merger and acquisition will create one of the largest companies in the US utility industry and the third-largest renewable energy operator with operations in 24 states.
Avangrid CEO Dennis Arriola said, said: “We remain optimistic that all necessary approvals can be obtained to finalise the merger within the second half of 2021.”
Avangrid is acquiring PNM as part of efforts to expand its customer base and utility business.
Avangrid and PNM claim that if approved and implemented, their merge will bring over $250 million in benefits to New Mexico.
In addition, the merge will bring environmental, economic and social benefits including:
Customer rate benefits of $63 million
- Benefits include $50 million in rate credits over 3 years, $6 million in COVID arrear reliefs, $5 million for low-income energy efficiency assistance and $2 million to improve the access that low-income New Mexicans have to electricity, particularly in remote areas.
Economic development benefits approximating $200 million
- 150 new full-time jobs will be added to New Mexico over 3 years, which will remain for at least 5 years afterwards (conservatively valued between $150 million and $200 million in economic benefits to the state).
- In addition, the agreement increases the commitment to economic development fundings to $7.5 million along with a separate, additional $12.5 million contribution to community groups in the Four Corners region.
Enhanced Environmental Benefits
- Other commitments aim to enhance energy efficiency and solar programmes, perform environmental studies and create a Carbon Reduction Task Force to ensure that PNM will not only meet but exceed its zero carbon goals by 2040.
- PNM will hire a Chief Environmental Officer with significant environmental and climate change experience with responsibility for meeting PNM’s carbon reduction goals. Executive compensation will be linked to carbon-reduction targets.
Maintenance of current jobs, low-income programmes, and charitable leadership
- The stipulation commits to maintaining PNM jobs, with no reduction of wages or benefits to union or non-union employees, for a minimum of 3 years following the transaction. Avangrid will honor PNM’s current collective bargaining agreement.
- The merger commitments ensure that the benefits PNM currently provides to its customers and communities in the past through its PNM Good Neighbor Fund or charitable giving will not be reduced, with a similar expectation for the PNM Resources Foundation’s separate charitable activities.
- PNM will work with the Attorney General to initiate a program designed to increase the contract opportunities for minority and women-owned businesses in New Mexico with PNM for procurement of its goods and services.
- Avangrid states that it will keep the management of PNM locally in New Mexico. PNM’s Board of Directors will comprise majority of local leaders from New Mexico, with forty percent qualifying as “independent directors” as defined by the rules of the New York Stock Exchange.
Financing and Ownership
- None of the merger costs will come from customers, and PNM and PNM Resources will not take on any new debt in conjunction with the proposed transaction.
- Avangrid will not sell its controlling interest in PNM for a period of not less than10 years.
- Avangrid will pay off all existing PNM Resources debt.
PNM serves approximately 800,000 homes and businesses in New Mexico and Texas and has a total of 2.8GW of operating generation assets and agreements. The company plans to achieve 100% emissions-free energy by 2040.