A state senator has a different idea for the future of New Mexico’s largest electric utility: Have the state buy it.
Sen. Harold Pope introduced Senate Memorial 9 Friday asking the New Mexico Public Regulation Commission (PRC) to pause Blackstone Infrastructure’s proposed $11.5 billion purchase of TXNM Energy, the parent company of Public Service Company of New Mexico (PNM). Pope said the pause would give state leaders time to study buying a controlling stake instead of approving the private equity deal.
“I think the real focus is, do not allow this buyout to occur and then I think the discussion is, why aren’t we doing it as a state?” Pope told NM Political Report.
According to PNM spokesperson Eric Chavez, the company quickly dismissed the idea of a state buyout. “We believe the proposed long-term financial investment by Blackstone Infrastructure is the most effective way to make the investments necessary to provide PNM’s customers with reliable, affordable, clean energy,” Chavez said.
He also addressed concerns about ownership and rates: “Both rates and profits are established by the PRC, not the utility, regardless of ownership. In New Mexico, these state regulations ensure that any excess profits are returned to customers.”
The legislative curveball
As PRC hearings continue, a group of lawmakers from both the House and Senate has stepped in.
Pope filed SM 9, and Rep. Patricia Roybal Caballero filed House Memorial 6, both co-sponsored by members of the other chamber. The House memorial focuses on the risks of private equity ownership, directing a study of its effects on rates and reliability.
Pope proposed the State Investment Council use permanent fund dollars to purchase a majority stake, saying, “If private equity wants to buy it, it sounds like probably a good investment for us… It would make us money.”
However, the state-ownership idea faces a major complication: the investment council, which Pope suggested could buy PNM, already holds significant stakes in Blackstone funds.
Testimony shows the council invested $100 million in 2018 in Blackstone Infrastructure Partners, the fund attempting to acquire PNM, and $175 million in 2022 in Blackstone real estate funds.
Legislative analysis flagged this as a potential conflict of interest, a fact Pope said he was unaware of: “I didn’t know that… There could be a conflict.”
Overwhelming public opposition
The proposal comes as New Mexicans flooded PRC hearings this month, overwhelmingly opposing the sale. The Feb. 5 in-person hearing and the Feb. 12 virtual hearing drew the bulk of public comment.
The Feb. 5 crowd at the Commission’s office was so large it spilled into the hallways, prompting a nearly four-hour virtual overflow hearing on Feb. 12. Residents said they worry about handing local control to a New York-based firm.
“We need to prioritize protecting our communities, environment and future from Blackstone billionaires,” said Alicia Gallegos with Pueblo Action Alliance.
Opponents raised technical concerns about vertical integration, arguing Blackstone’s heavy investment in data centers could create a conflict of interest that prioritizes its industrial assets over residential customers, according to community organizer Arman Alex from Corpus Christi, Texas.
“This acquisition would create a closed loop for-profit system for Blackstone,” Alex said, arguing that the company’s utilities would sell power to its data centers and energy systems while ratepayers absorbed the costs and risks.
Addressing public opposition at the PRC hearings, Chavez said, “We have heard from many stakeholders throughout the state who recognize the benefits this partnership will provide… It is important to note that PNM will remain a locally run and fully regulated utility. We believe the concerns raised at the public meetings are addressed in the regulatory filing.”
The business case for capital
Despite the public opposition, the deal has strong support from New Mexico’s business community.
“A utility of PNM’s size would find it difficult to attract the level of investment capital required without straining its financial position and ultimately passing those costs on to customers,” said Terry Cole, president and CEO of the Greater Albuquerque Chamber of Commerce.
Del Esparza, founder of Esparza Digital and Advertising, said the $11.5 billion transaction provides “financial stability that the public markets cannot consistently offer,” fully funding PNM’s $3.4 billion five-year capital plan without exposing customers to volatile markets.
What’s next?
Texas regulators approved Blackstone’s acquisition of Texas-New Mexico Power Company, the Texas portion of TXNM Energy, on Feb.?6. The New Mexico Public Regulation Commission must separately approve the acquisition of PNM, with formal hearings scheduled in May and a decision expected later this year.
The merger also requires federal approval from the Federal Energy Regulatory Commission and the Nuclear Regulatory Commission.
Acknowledging public interest, the PRC has scheduled an additional in-person comment session: Tuesday, Feb.?17, 1?7?p.m. at the University of New Mexico Student Union Building, Ballroom C. Written comments can also be submitted online at e360.prc.nm.gov.