ENERGY
State regulators approve New Mexico Gas Co. sale to private equity firm
Commission voted 2-1 to allow Bernhard Capital Partners to purchase the utility for $1.25 billion
State regulators voted 2-1 Thursday to let Louisiana-based Bernhard Capital Partners take control of New Mexico Gas Co., a $1.25 billion deal that has become a flashpoint in a broader fight over private equity ownership.
Commissioner Gabriel Aguilera cast the lone dissenting vote, telling fellow members of the state Public Regulation Commission that the deal鈥檚 risks outweighed its benefits. Aguilera presented an order that would have rejected the merger application.
鈥淚鈥檝e concluded that the proposed transaction is inconsistent with the public interest,鈥� Aguilera, whose appointed term ends this year, said at Thursday鈥檚 hearing. 鈥淎t the highest level it comes down to this: The modest benefits offered by the joint applicants are outweighed by the inherent risk and uncertainty tied to the transaction.鈥�
But his argument did not prevail. Commissioners Patrick O鈥機onnell and Greg Nibert 鈥� the commission鈥檚 sole Republican 鈥� voted in favor of the deal.
Emera Inc., the Canadian energy company that has owned NMGC since 2016, first proposed selling the gas utility to Bernhard in 2024. Hearing examiners recommended in May that the Public Regulation Commission approve the sale.
鈥淩eally the one thing that鈥檚 changing is who has the ownership,鈥� Nibert said at Thursday鈥檚 hearing. 鈥淚s it a Canadian company? Or is it another entity? In this case, a private equity entity. To me, that makes no difference. The form of business relationships don鈥檛 move the needle for me.鈥�
Commissioners debated what standard to apply in evaluating the case. Nibert asserted that state law requires the commission to approve such deals unless they are unlawful. Aguilera said he was using the PRC鈥檚 standard that utility mergers provide a net benefit to the public.
O鈥機onnell, a Democrat, said he believed that the gas company is currently 鈥渙n a good track鈥� and that he could effectuate more change via rate cases.
鈥淚 believe the recommended decision is reasonable,鈥� O鈥機onnell said. 鈥淚 also think it is what aligns best with what the law tells me to do.鈥�
In a statement released following the decision, New Mexico Gas Co. President Ryan Shell said Bernhard鈥檚 ownership 鈥渆nsures we have access to the needed capital for investments in our system.鈥�
Under the deal, Bernhard would acquire NMGC through a multilayered ownership structure common in private equity transactions. The firm鈥檚 investment funds would own interests in the utility through a series of intermediate companies. Bernhard did not disclose the funds鈥� investors, but the company said they include institutional investors such as pensions.
Bernhard would also assume $550 million in NMGC鈥檚 debt, as well as an additional $250 million in debt from creditors. The rest would be financed through equity through Bernhard鈥檚 investment funds. In December, New Mexico Attorney General Ra煤l Torrez filed a motion in the case raising concerns about those debt commitments 鈥� and whether the PRC would have proper jurisdiction to oversee Bernhard.
The deal includes $22.4 million in rate credits to be distributed among the gas company鈥檚 553,000 customers, $15 million in economic development and workforce initiatives and $7 million to NMGC鈥檚 existing customer bill assistance program.
鈥淓xisting NMGC employees continue to serve customers, and all existing offices across the state remain in place,鈥� Bernhard and Emera said in a joint statement.
Justin Horwath covers tech and energy for the Journal. You can reach him at jhorwath@abqjournal.com.
