Legal decision on Avangrid-PNM merger still pending
Kevin Robinson-Avila , Albuquerque Journal, N.M.
5 min read
Sep. 16—The state Supreme Court said it will continue reviewing a Public Regulation Commission decision to reject Public Service Co. of New Mexico and energy giant Avangrid's proposed merger after listening to oral arguments in the case Friday morning.
The five court justices could have immediately ruled in a bench order on whether to uphold the PRC's December 2021 rejection of the merger, or instead remand the case back to the PRC for reconsideration. But the court said it will consider the evidence presented in Friday's oral arguments before reaching a final decision.
"The arguments were well done by all parties," Chief Justice C. Shannon Bacon told the court at the close of discussion. "We'll get you a decision as soon as possible."
That likely means a final court order won't be released for another three months or more, possibly by late December or early 2024, according to lawyers familiar with Supreme Court proceedings.
PNM and Connecticut-based Avangrid appealed to the Supreme Court in early 2022 to overturn the merger rejection by the previous five-member elected commission that ruled on the case in 2021. Those commissioners concluded that the deal was not in the best interest of New Mexico ratepayers. They said customers could face a deterioration in service based on allegedly "poor performance" by Avangrid utilities operating in some northeastern states.
Confidential reports submitted to the PRC about a criminal investigation in Spain involving one top-level executive at Avangrid's parent firm, Spanish company Iberdrola S.A., also heavily influenced the commissioners against the merger.
Avangrid and PNM, however, say the PRC based its conclusions on "hearsay" from out-of-state witnesses the merger partners never got a chance to cross-examine in PRC hearings, and on third-party reports submitted into the regulatory record by merger opponents.
Avangrid attorney Tom Bird told the justices that such "hearsay" is impermissible as evidence, and its influence on PRC commissioners merits remanding the case back to the PRC for rehearing.
In addition, Bird said the commissioners dismissed out of hand a broad number of merger benefits for ratepayers — plus structural agreements to hold Avangrid accountable regarding service performance — that were written into a settlement, or "stipulation" agreement, negotiated with many parties in the case. That stipulation led 23 of the 24 intervening parties to either directly support the merger or not oppose it.
Only one party, Santa Fe-based New Energy Economy, actually opposed the merger in the end, and it's now a party in the appeal before the Supreme Court.
"The commission decided that the risk of service deterioration outweighed the benefits, but there must be enough 'competent evidence' on risk to actually show that the risks outweigh the benefits," Bird told the justices. "... The commission's reliance on (inadmissible evidence) didn't account for the stipulation's safeguards, performance guarantees and structural agreements. They needed to account for that and they did not."
Meanwhile, reliance on the Spanish investigation — which was only in its preliminary stages in 2021 — also violated Avangrid and Iberdrola's legal right to "presumption of innocence," Bird said. That criminal case was dismissed in mid-2022.
"The overriding point of this appeal is that the commission's rejection was not a reasonable, lawful exercise of authority," Bird told the court.
New Energy Economy attorney and Executive Director Mariel Nanasi responded that the reports about poor performance and customer service issues at Avangrid's northeastern utilities are permissible, and that Avangrid itself entered some of that information into the record without any initial objections after the PRC hearing examiner ordered Avangrid to do so during case proceedings.
In fact, one particular report in question — an audit of Avangrid subsidiary Central Maine Power Company, or CMP — was prepared by a third-party consultant, but under contract with the Maine Public Utilities Commission, making it an official government report, Nanasi said. In addition, although that audit detailed significant performance-related problems faced by CMP customers, Avangrid itself praised the report for also citing CMP efforts to improve operations.
"Avangrid itself touted that report and put it into evidence here," Nanasi told the justices. "...They said it showed things were improving in Maine."
As for the Spanish criminal investigation, there's no evidence that the commission actually based its decision on that, only that it influenced the commission against the merger, Nanasi said. And, in any case, she added, "The PRC can take 'judicial notice' of a criminal proceeding as long as there's not a 'presumption of guilt.'"
PRC Attorney Erin Lecocq argued as well against remanding the case back to the commission, affirming that the previous commissioners did carefully weigh both the potential benefits and the risks of the merger.
"They based their decision on substantial evidence," Lecocq told the justices.
Still, if the court does remand the case, the new governor-appointed, three-member commission that took office in January might welcome that decision. Two of the three current commissioners filed a joint request with Avangrid and PNM early this year asking the Supreme Court to dismiss the appeal and allow the PRC to "rehear" and "reconsider" it. The court dismissed that request in May.
The third commissioner, Pat O'Connell, has recused himself from any commission proceedings about the merger because he testified in favor of the deal during the 2021 PRC hearings as a representative of the environmental group Western Resource Advocates.
