Opinion: New Mexico PRC utility oversight faces scrutiny

Public Service Company of New Mexico power lines stretch toward Albuquerque from the area near Arroyo Vista and Ladera NW. Journal file photo New Mexicans are being asked to place enormous trust in the Public Regulation Commission. New Mexico is facing the possibility of a major shift in utility ownership. The PRC has approved Bernhard Capital Partners' purchase of New Mexico Gas Co., while Blackstone's proposed acquisition of TXNM Energy, the parent company of Public Service Company of New Mexico, remains under review. These two companies provide essential services, make long-term infrastructure decisions and collect their revenues from customers who have no choice about whether to pay their monthly utility bills. That makes strong, independent regulation essential. Gov. Michelle Lujan Grisham recently made exactly that case. Writing about Blackstone's proposed acquisition of PNM, she argued that New Mexicans can rely on the PRC to provide independent oversight, protect consumers and impose enforceable conditions when private investors seek control of our utilities. We hope she's right. But the commission's recent 2-1 vote to approve Bernhard Capital Partners' $1.25 billion purchase of New Mexico Gas raises serious questions about what that oversight will look like in practice. Commissioner Gabriel Aguilera cast the lone dissenting vote, concluding that the transaction was inconsistent with the public interest because its modest benefits were outweighed by its risks and uncertainties. The majority also rejected additional conditions recommended by intervenor experts and the PRC's own staff, including measures addressing financial transparency, governance and severe weather protections. That should concern every New Mexican who pays a utility bill. The purpose of regulatory oversight isn't simply to determine whether a deal can legally proceed, as commissioners Patrick O'Connell and Greg Nibert indicated when they announced their decision. The commission should be asking whether customers will actually benefit, whether financial risks have been adequately addressed and whether protections are strong enough to ensure ratepayers aren't left holding the bag years from now. Those questions become even more important when private equity is involved. Bernhard's acquisition uses a multilayered ownership structure involving investment funds and intermediate companies. The company has not publicly disclosed the investors in those funds. The deal also includes hundreds of millions of dollars in debt. That is precisely the kind of transaction that demands rigorous financial scrutiny and meaningful, enforceable protections for customers. We know the PRC is capable of providing strong oversight. Just weeks ago, the commission found that PNM and Blackstone violated New Mexico law by completing a $400 million stock transaction without required approval. Thanks to advocacy by Prosperity Works, it ordered the companies to reverse the transaction and demonstrate that ratepayers would not bear the cost. The governor herself pointed to that decision as evidence that this PRC "will use its teeth." New Mexicans should expect that same rigor when regulators evaluate whether a utility acquisition actually serves the public interest. And this matters beyond either transaction. If utilities move from publicly traded companies into increasingly complicated private ownership structures, transparency and accountability become more important, not less. New Mexicans deserve to know who owns essential infrastructure, how it is financed, what risks customers are being asked to assume and what enforceable benefits they receive in return. The Blackstone-PNM acquisition is still before the commission. The governor has said the PRC must determine whether that deal serves the public interest and has emphasized the commission's power to impose enforceable conditions to protect ratepayers. She's right. Private equity investment does not eliminate the need for strong public oversight. It makes that oversight essential. If strong regulation is New Mexico's answer to the risks that come with private ownership of our utilities, then strong regulation cannot be optional. Don Hancock has participated in New Mexico Public Regulation Commission proceedings for more than 25 years and serves as steering committee chairperson for the Coalition for Clean Affordable Energy.