New Mexico governor's top regulatory recruit recuses self from energy merger

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One of the governor’s picks for a powerful regulatory commission has recused himself from any decisions involving a proposed multibillion-dollar merger between a U.S. subsidiary of global energy giant Iberdrola and New Mexico’s largest electric utility.

Commissioner Patrick O’Connell's recusal came just weeks after he was appointed to the Public Regulation Commission under a new structure in which the governor appoints members from a list of candidates vetted by a nominating panel. Previously, voters elected the commissioners.

O'Connell in a filing Friday cited the reason for his voluntary recusal as previous testimony he gave on behalf of a proposed settlement related to the merger while he worked for an environmental group. O’Connell also had previously served as a resource planner for Public Service Co. of New Mexico.

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The merger case is pending before the state Supreme Court after the elected members of the previous Public Regulation Commission rejected the $8 billion acquisition. The commission had shared the concerns of a hearing examiner who warned of reliability risks and the potential for higher prices in a state with one of the nation’s highest poverty rates.

Critics also pointed to the track record of the Iberdrola subsidiary, Connecticut-based Avangrid. The company owns utilities in the northeastern U.S.

Democratic Gov. Michelle Lujan Grisham and nearly a dozen other groups have supported the merger, suggesting that Avangrid and Iberdrola's capital could help speed up New Mexico's pursuit of zero-carbon emissions for electricity generation over the next two decades.

A top regulatory official in New Mexico has recused himself from decisions regarding a public utility merger with energy giant Iberdrola. (AP Photo/Susan Montoya Bryan, File)

Western Resource Advocates, the group O'Connell used to work for, said Monday it will continue to advocate for the merger.

"We’re confident that our position, and that of our supporting partners, will be given fair and thoughtful consideration," said Cydney Beadles, Western Resource Advocates' New Mexico clean energy manager.

Mariel Nanasi, executive director of the group New Energy Economy and an outspoken critic of PNM and the merger, said O'Connell did the right thing as the law is clear when there is a conflict of interest involving a judge or commissioner.

That leaves two appointees on the commission to consider the case if it comes up again — Gabriel Aguilera, who worked for the Federal Energy Regulatory Commission, and James Ellison Jr., a principal analyst from Sandia National Laboratories.

The outgoing Public Regulation Commission members had ordered an economic analysis that was completed in December. It raised anti-competitive and consumer welfare issues.

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Iberdrola and Avangrid executives have said acquiring PNM will be strategic and would help the companies further their growth in both clean energy distribution and transmission.

Tamer Cetin, economics advisor to the Public Regulation Commission, noted in the report that the merger may create a monopolistic electricity market in New Mexico in which Avangrid could "dominate all the segments from generation to transmission, distribution, wholesale and retail."

Transmission, wholesale and distribution currently are under PNM control, with generation being the only competitive segment in the New Mexico market. Cetin notes that Avangrid has plans to make multibillion dollar investments as the third largest renewable energy company in the U.S. and that would push out other developers who could supply electricity.

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Another pivotal case the new commission will have to hear over the next year includes a billion-dollar rate case that would affect hundreds of thousands of PNM customers.