New Mexico Attorney General Raúl Torrez on Thursday filed a brief with the state Public Regulation Commission to oppose the proposed sale of New Mexico Gas Company to a subsidiary of a Louisiana-based private equity firm.
The gas company filed an application last year to be sold for nearly $1.3 billion to private equity firm Bernhard Capital Partners. If approved, Bernhard subsidiary Saturn Utilities Holdco would take over New Mexico Gas Company, which serves more than 500,000 customers in 27 of New Mexico’s 33 counties.
In his PRC filing, Torrez argues that Bernhard’s reliance on short-term investments and private debt could lead to rate hikes; that its “layered corporate structure” poses a threat to transparency; and that its “complex web” of holding companies could thwart regulators’ oversight.
“The proposed acquisition raises real risks of higher rates, reduced transparency, and long-term financial instability for customers across the state,” Torrez said in a statement. “We are urging regulators to deny this application unless there are significant changes made to safeguard ratepayers from unnecessary costs and hidden liabilities.”
If the deal proceeds, Torrez contends that PRC members must enact restrictions on selling utility assets without PRC approval; offer rate credits for low-income customers; require competitive cost analyses before implementing new IT systems; and require funding for a “severe weather reliability fund” to protect ratepayers during hazardous weather.
A spokesperson for Bernhard Capital Partners in an email to Source NM said the firm has been “committed to active participation throughout the regulatory process.”
“Our application includes nearly $87 million in direct benefits to local communities, employees, and organizations. These commitments have been informed by feedback from these same stakeholders throughout the regulatory process,” the spokesperson wrote. “This includes $22 million in rate credits for customers, $7 million to assist families who need help paying their utility bills, and more than $2 million in charitable giving to local nonprofits. We’ve also committed $15 million to advancing community priorities, like economic development, workforce training, and renewable energy projects.”
Torrez is the latest public official to oppose the proposed sale. In November, state Sen. Harold Pope Jr. (D-Albuquerque) and Rep. Matthew McQueen (D-Galisteo) spoke before the commission and took exception to the exclusion of information relating to other companies previously owned by Bernhard Capital Partners’ founder.
Specifically, a 2008 U.S. Department of Homeland Security’s Office of Inspector General report said FEMA wasted millions by awarding no-bid contracts to the Shaw Group — a firm previously run by Bernhard’s founder — and others. A 2011 report commissioned by state leaders in Louisiana alleged that Shaw appeared to overbill the state by nearly $500,000 for building sand berms along the coastline to prevent oil from the infamous BP spill from washing onto the land.
“Right now, central evidence about Bernhard Capital Partners’ regulatory compliance history including violations, fines, audits and settlements involving their affiliates and formerly owned companies has been withheld from the record,” Pope told commissioners in November. “You cannot reliably weigh benefits against risk when the most relevant facts are kept from the public.”
The companies initially had a deadline to finalize a sale agreement in November, but recently extended it to Feb. 5.
