Advocacy group wants audit of NM Gas buyout

A New Mexico consumer and environmental advocacy group is requesting that state regulators order a management audit of the parent company of the firm trying to acquire New Mexico Gas Co., which serves Tucumcari.

New Energy Economy, a frequent utility critic, filed a request in early December asking the New Mexico Public Regulation Commission to investigate Bernhard Capital Partners.

Bernhard Capital Partners is the parent company of Saturn Holdco, which is asking to acquire New Mexico Gas from Emera.

“A management audit will aid the parties, the public, the Hearing Examiner and the Commissioners in understanding whether the private equity buyout proposed herein, and a review of the motives of the proposed purchaser, and an examination of how those motives will likely influence private and public interests and how they will affect the operations of NMGC, rates, reliability and performance of NMGC for customers,” New Energy Economy wrote in its request.

New Energy Economy argues the management audit is important because if the merger is approved, New Mexico Gas no longer will be required to file certain regulatory documents with the U.S. Securities and Exchange Commission.

Additionally, New Energy Economy highlights concerns with Bernhard Capital Partners Senior Managing Director Jeffrey Baudier, who served as CEO of the Petra Nova carbon capture project in Texas.

The Petra Nova project was designed to capture carbon from a coal-fired power plant and sell that carbon to the oil fields for use in enhanced oil recovery. When demand for carbon in the oil fields dropped in 2020, the Petra Nova project was mothballed.

New Energy Economy argued that Petra Nova captured less carbon than promised, experienced technical issues and extended periods of inoperation.

Petra Nova was one of two utility-scale coal-fired generation carbon capture projects. Operations resumed at Petra Nova in 2023.

New Mexico Gas and Saturn Holdco, referred to as joint applicants in the docket, stated in a response the PRC does not have the authority to initiate the management audit because Bernhard Capital Partners is not regulated by the PRC and is not an applicant in the case.

New Energy Economy also requested a management audit of Avangrid in 2021 when the utility giant was attempting to acquire the Public Service Company of New Mexico. The advocacy group cites the 2021 order in its filing, though the joint applicants say the order only required Avangrid to answer a set of questions and did not require a management audit.

Furthermore, the joint applicants say a management audit would take nearly two years to complete. They say a lengthy delay would “constructively reject the application, without legal, precedential, or evidentiary support.”

This 23-month timeframe for conducting a management audit is based on the time it took to conduct a management audit when the New York Public Service Commission ordered one looking into Avangrid-owned gas utilities.

New Energy Economy cites the New York audit in its filing, but the joint applicants argue the New York regulators opened a docket specifically to audit two utilities. They further argue the New York audit focused on a utility regulated by the Public Service Commission rather than an affiliated company.

The joint applicants also say that no other merger or acquisition case in New Mexico has required a management audit of a parent company.

After New Energy Economy requested the audit, around 20 New Mexico residents submitted letters to the PRC urging an audit or opposing the acquisition.