Dive Brief:

• New Mexico regulators have recently held several closed-door sessions to discuss Connecticut-based Avangrid’s proposed $8 billion acquisition of PNM Resources, company officials said Friday during PNM’s Q4 2022 earnings call.
• The merger was rejected by the New Mexico Public Regulation Commission in 2021 but a new slate of commissioners was named by Gov. Michelle Lujan Grisham, D, in December, opening the door for possible reconsideration.
• PNM Resources saw its 2022 net earnings decline about 13% to $169.5 million, in part due to losses on investment securities for decommissioning and reclamation trusts. Increased electricity demand served by Public Service Company of New Mexico and Texas-New Mexico Power utility subsidiaries helped offset the earnings decline.

Dive Insight:

The PNM-Avangrid merger is on appeal with the New Mexico Supreme Court, but there has been some action among state regulators, said Pat Vincent‐Collawn, PNM Resources chairman and CEO.

“Over the last month, we have been pleased to see the commission post notice of three closed sessions with the case on the agenda,” Vincent‐Collawn said. The newly-appointed commissioners took their seats in January.

For the PRC to reopen consideration, PNM and the commission would have to request the Supreme Court to remand the decision back to regulators, she said.

The PRC unanimously denied the merger proposal in December 2021 after a hearing examiner warned of reliability risks, the potential for higher electricity prices and slower development of renewable resources. But Vincent‐Collawn said more than half of the company’s resource portfolio is now carbon-free, “with additional renewable and storage resources slated for 2023.”

Both of PNM’s utility subsidiaries saw increased electricity sales in 2022 due to load growth and the effects of weather in 2022, while PNM also advanced its decarbonization efforts.

“We have plans to exit coal and reach carbon-free electricity by 2040, five years ahead of the New Mexico mandate,” PNM President and Chief Operating Officer Don Tarry said during the company’s earnings call. “The closure of San Juan Generating Station [in 2022] was a significant step in achieving these goals, reducing the amount of coal in our portfolio and advancing us to 55% carbon-free capacity.”

The company’s “next big step” on decarbonization is the exit of PNM’s ownership stake in the Four Corners coal-fired power plant “and to completely eliminate coal generation from our portfolio, which we are still pursuing for the end of 2024,” Tarry said.

Among other accomplishments last year, Vincent‐Collawn said, PNM “continues to add more electric vehicles to our fleet, we continue to work to expand customer energy efficiency programs, collaborate with industry experts to address physical climate risks and partner with stakeholders to bring awareness to environmental concerns impacting our communities.”

Public Service Co. of New Mexico is also waiting on the PRC to consider a six-year, $344 million grid modernization plan that includes rolling out smart meters to all of its 530,000 customers alongside investments in physical security and cybersecurity. 

Those investments will “lay the groundwork for future improvements and provide our customers with a more resilient grid,” Tarry said. ”When we look ahead, we see the need for expansion of our system ... new transmission capacity will be needed to facilitate additional resources across the state.”