Considering the latest PNM Purchase Proposal
Details of the latest proposed purchase of PNM have been outlined with the Albuquerque Journal having the details. As a reminder the Rio Grande Foundation did not take a position on the proposed Avangrid merger. This time around the purchaser is Blackstone, a private equity firm.
Here are some points to be considered:
- One reason PNM is looking for a merger is due to the need to borrow money more cheaply. It’s bond rating is “BBB” which is not great making borrowing expensive. Being part of a bigger company will enable them to borrow at a lower cost;
- This is the 2nd merger effort for PNM. Whatever you may think of private equity another denial for PNM by the Public Regulation Commission will give New Mexico yet another black eye with the business world. Not being able to be sold due to political pressure is a problem for other businesses looking to come to New Mexico.
- Thankfully (at least to date) we know of no special interest “stipulations” in the Blackstone deal aside from a pledge to lower rates. We’d rather have a “clean” sale and let the new company do business in a way that is as reliable and affordable as possible.
- The utility market is changing quickly with plans being discussed to extend the life of the coal powered “Four Corners” plant beyond 2031 (not to be confused with the shuttered San Juan Generating Station) due to rising electricity usage. The growth of AI and other electricity demands makes New Mexico’s absurd plan to eliminate CO2 emissions all the more problematic. Will New Mexico change direction? Will we simply miss out on the AI boom (which we’d be otherwise ideally suited to benefit from)?
There are a lot of fascinating questions to be answered at the PRC in the next several months.