Iberdrola-PNM merger rejected by regulators; notice of appeal filed with state Supreme Court


Public Service Company of New Mexico’s (PNM) parent company, PNM Resources, announced in October 2020 that it had entered into a definitive agreement with Avangrid, Iberdrola’s subsidiary in the U.S., under which Avangrid would acquire PNM Resources, including PNM.

The agreement, which was unanimously approved by both companies’ Boards of Directors, intended to create a leading U.S. regulated utility and renewable energy platform. New Mexico utility regulators, however, recently rejected Avangrid Inc.’s proposed $8 billion acquisition of PNM Resources Inc., saying the deal’s risks outweighed its promised benefits to state ratepayers.

Avangrid disclosed to the Securities and Exchange Commission that it has agreed with PNM Resources to extend the longstop date of their merger agreement until 20 April 2023, which may be extended with the consent of both parties under certain circumstances for a further three-month period.

The companies have also filed a notice of appeal before the Supreme Court of New Mexico against the order issued by the New Mexico Public Regulation Commission dated 9 December, 2021 rejecting the agreement entered into by Avangrid, PNM, certain of their respective affiliates, and certain intervenors in the approval process with respect to the proposed merger of Avangrid and PNM.

Iberdrola, Avangrid and PNM thus begin to defend their interests, as they consider the decision taken by the NMPRC to be “unfair”. In this regard, it should be noted that the transaction, which was amicable and recommended by PNM Resources’ board of directors, had the backing of stakeholders and had received the approval of various state and federal agencies during the merger approval process, which lasted more than a year.

The stipulated agreement would have provided more than $300 million in benefits to New Mexico customers and communities, while implementing safeguards to ensure continued local control of utility operations and reliable service to customers. Additional community supporters voiced their opinions, including the New Mexico Attorney General, the International Brotherhood of Electrical Workers Local 611, environmental advocates and organizations representing tribal interests. In total, 23 of the 24 intervening parties supported or did not oppose the agreement.

The affected companies will have 30 days to file a Statement of Issues outlining the argument for appeal against the NMPRC’s decision. There is no statutory time frame for the New Mexico Supreme Court to act on the appeal.

Avangrid is headquartered in Orange, CT and has approximately $39 billion in assets and operations in 24 U.S. states. The company has two primary lines of business: Avangrid Networks and Avangrid Renewables. Avangrid Networks owns and operates eight electric and natural gas utilities, serving more than 3.3 million customers in New York and New England.

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