Avangrid moved one step closer to completing its acquisition of PNM Resources on Tuesday as FERC approved the deal, turning aside protests by the city of Farmington, N.M. (EC21-25).
The Connecticut-based Iberdrola subsidiary will pay $8.3 billion ($50.30/share) in the all-cash purchase, which still needs approval from the Nuclear Regulatory Commission and New Mexico regulators. (See Avangrid to Acquire PNM Resources for $4.3B.)
It has been approved by the Federal Communications Commission, and the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act also has expired. In March, Avangrid reached a settlement with the Public Utility Commission of Texas over the deal. (See Avangrid, Texas PUC Agree to TNMP Purchase.)
PNM’s utilities provide electricity to nearly 800,000 homes and businesses in New Mexico and Texas. With the acquisition, Avangrid will have 10 regulated utilities in six states and the nation’s third largest renewables company, operating in 24 states.
FERC said it agreed with Avangrid and PNM, which said the transaction would not harm competition because none of the generation owned or purchased by the companies and their affiliates overlap in any markets where Avangrid has uncommitted capacity. FERC said Avangrid “is affiliated” with 604 MW of existing and planned generation capacity in the PNM market that is all committed under long-term contracts.
Farmington and Enchant Energy protested the deal, telling FERC that it would diminish competition and interfere with their bid to acquire the San Juan Generating Station, an 847-MW coal-fired plant that previously announced it would retire in 2022. PNM, which operates San Juan, owns 66% of the plant, and Farmington owns 5%.
The city wants to acquire the power plant and transfer a portion of the asset to Enchant, retrofitting the existing coal-fired units with carbon capture and sequestration technology.
Farmington and Enchant asked FERC to convene a hearing to determine whether the merger applicants “intend to cause PNM, despite its legal obligation to negotiate in good faith, to fail to reach agreement with Farmington and force the San Juan Generating Station to retire.”
FERC said the dispute over San Juan is outside the scope of its merger review under Federal Power Act Section 203 and that Farmington and Enchant have “not demonstrated that the proposed transaction creates the incentive or ability to engage in behavior harmful to competition.”
“The 2022 scheduled retirement of the San Juan Generating Station predates the announcement of the proposed transaction, and Farmington-Enchant has not shown that the proposed transaction provided any incentive for retirement plans that did not exist prior to the merger agreement,” the commission added.
Avangrid committed to hold customers harmless from costs related to the merger, which it hopes to close in the second half of 2021.
