Consumer Groups Join Justice Department and PRC In Motion to Dismiss Bernhard Capital Partners Effort to Acquire NMGC
New Energy Economy, Western Resource Advocates, the Coalition for Clean Affordable Energy, and the New Mexico Affordable Reliable Energy Alliance Joined NM AG and PRC Motion to Dismiss Bernhard Capital Partners Application to Acquire the NM Gas Company.
Organizational Press Release – From Consumer Organizations
Santa Fe, NM – On Tuesday, May 27, 2025, New Energy Economy joined the New Mexico Department of Justice, the Utility Division Staff of the New Mexico Public Regulation Commission (“Staff”), Western Resource Advocates and the New Mexico Affordable Reliable Energy Alliance (Joint Movants) in a motion to dismiss without prejudice the October 28, 2024 application filed by Bernhard Capital Partners to acquire New Mexico Gas Company.
Mariel Nanasi, Executive Director of New Energy Economy, stated, “Timeliness matters. This isn’t the sandbag game. This is serious business and the lack of competence exhibited throughout this process is a harbinger of things to come.
“We hope that the Commission dismisses this case without prejudice and if in two years when the private equity firm has earned some experience and it can offer meaningful customer benefits at that time we will review the matter.”
This motion follows a late Friday filing on May 16th by Bernhard Capital Partners (“BCP”), Emera and NM Gas Company (Joint Applicants), that, under the guise of rebuttal testimony, sought to make substantive changes to the initial application.
This attempt to amend the deal one month before the scheduled hearing is contrary to PRC Rules of Procedure, the November 27, 2024 Procedural Order, and is an attempt to deprive the intervenors of their fundamental due process rights in this case.
Parties to the case have already conducted multiple rounds of extensive discovery, attended five depositions, hired experts and filed testimony on the proposed transaction as was presented in the initial Application and the supporting testimonies of four witnesses.
Testimony was filed on April 18th, and proper rebuttal testimony should “explain, counteract, repel, or disprove evidence submitted by another party or by staff.” Instead on May 16th Joint Applicants introduced entirely new acquisition terms that intervenors are now seeing for the first time.
Going forward with a hearing in less than one month on a substantially different proposal deprives the intervenors of the opportunity to conduct adequate discovery and prepare testimony that is responsive to these new proposals.
Many of the substantive changes are belated attempts to make the Application somewhat consistent with the precedents established by the PRC in prior acquisition cases that define the factors to be considered when determining whether a buyout is in the public interest.
BCP’s lack of experience operating utilities of any significant size, the lack of synergies that could produce savings for customers, and the failure to include other important customer benefits like a rate freeze, a rate credit and corporate governance measures to protect ratepayers belied any claims that the deal was in the public interest.
Three of these Joint Applicants, NMGC, TECO and Emera, were parties to those prior applications, and therefore knowingly filed an Application that was deficient on its face. Simply, the initial Application was incomplete and the Applicants were unprepared.
The Applicants’ filing belatedly made the following substantive changes to their initial Application:
- A $15 million rate credit over 12 months after closing, instead of no rate credit, p. 8; (a sum that amounts to a whopping $2.27 per month per customer for one year.)
- A rate freeze until the end of 2027, instead of no rate freeze, (but includes a regulatory asset for claimed under-recoveries that negates any benefit from the freeze), pp. 10, 29;
- A commitment to hold NMGC for at least 10 years, instead of 5 years, p. 11;
- An increase of shareholder funded economic development to $10 million over 7 years, instead of $5 million over 5 years, pp. 13-14;
- Shareholder funding of educational and apprentice training focused on engineering, management, finance and other workforce skills at an unspecified level, instead of no such funding, p. 14;
- Maintaining current shareholding funding of assistance to low income for payment of heating bills up to a total of $190,000 annually, p. 17;
- Adopting “most of the ring-fencing and corporate governance provisions approved in Case No. 19-00234-UT”, pp. 18-19;
- An entirely new shared services plan operated by the recently acquired Delta Utilities, instead of shared services during a transition period, p. 21-22;
- The extension of the current shared services agreement from 18 months to 2 years; p. 23;
- A reduction in new the hires needed to replace shared services with TECO from 51-61 to 20 full-time employees, p. 22;
- An agreement to maintain NMGC’s current level of employees for 36 months following closing instead of the 18 months stated in the Joint Application, p. 22;
- New claims of BCP utility operating expertise based on the purported expertise of a number of employees at the newly acquired (as of March 2025) Delta Utilities, pp. 34-37.
While an improvement, none of these changes make up for the risks inherent in the transfer of critical public infrastructure to a private company with no experience operating a gas utility.
In addition to using their rebuttal testimonies to improperly amend their initial Application, the Joint Applicants filed rebuttal of two new witnesses that attempted to argue why private equity ownership of a public utility is in the public interest.
Our motion argues that there is not enough time before the start of the scheduled hearing on June 23rd for Staff and other parties to propound written discovery on the Joint Applicants’ new proposals, to depose the new witnesses, to re-depose the original witnesses on their changed positions and to potentially hire new experts and file new testimony in support or opposition.
Hearings before the PRC should not be trial by sandbag, with one party withholding information for their own benefit, but a fair opportunity to raise issues and present facts so the Commission can adequately weigh the issues and determine if there is a net public benefit or not. Joint Applicants’ posture in this case instead will “encourage sandbagging and gamesmanship” among litigants.
Together we, the Joint Movants, moved that the case be dismissed, or in the alternative, that the Hearing Examiner:
a. Place the current case schedule in abeyance;
b. Require the Joint Applicants to refile their October 28th Application with terms, conditions and customer benefits and protections that are, at minimum, consistent with the Final Orders in Case Nos. 13-00231-UT, 15-00327-UT, and 19-00234-UT; and
c. After the filing of an amended Application, establish a date for a prehearing conference to set a schedule for the case going forward.
- a. Place the current case schedule in abeyance;
b. Require the Joint Applicants to refile their October 28th Application with terms, conditions and customer benefits and protections that are, at minimum, consistent with the Final Orders in Case Nos. 13-00231-UT, 15-00327-UT, and 19-00234-UT; and
c. After the filing of an amended Application, establish a date for a prehearing conference to set a schedule for the case going forward.
The Joint Motion can be read and downloaded below:
About The Author
