New Mexico utility regulators approve NM Gas Co sale to private equity firm

The New Mexico Public Regulation Commission approved the sale of New Mexico Gas Company to an affiliate of a Louisiana-based private equity firm in a 2-1 vote Thursday.

The controversial, nearly $1.3 billion sale carries several requirements, including a freeze on base rates through early 2028, $22.4 million in bill credits in the year following the sale’s close and a $10 million economic development investment in New Mexico Gas Company’s service territory. 

Environmental advocates and several elected officials had vocally opposed the sale, citing reports that Bernhard Capital Partners’ founder previously operated a firm that Louisiana accused of overbilling the state for work done related to the infamous BP oil spill. 

New Mexico Attorney General Raúl Torrez similarly opposed the deal, arguing that Bernhard’s reliance on short-term investments and private debt could lead to rate hikes and that its “complex web” of holding companies could thwart regulators’ oversight.

Public Regulation Commissioner Gabriel Aguilera seemed to agree with the critics’ objections when casting Thursday’s lone “no” vote.

“I’ve concluded that the proposed transaction is inconsistent with the public interest,” he said during Thursday’s meeting. “There is risk associated with BCP’s ownership of this currently well-managed company.”

PRC staff in May recommended that the commission approve the sale. Although its new owner is based in Louisiana, a PRC announcement noted that New Mexico Gas Company will maintain its New Mexico headquarters, leadership team and workforce.

In a statement, company President Ryan Shell said the new ownership guarantees that New Mexico Gas Company has access to the money needed to invest in its infrastructure.

“Our team at New Mexico Gas Company remains committed to providing safe, reliable, affordable service to our fellow New Mexicans,” Shell wrote.

Bernhard Senior Managing Director Jeff Baudier in a statement wrote that Thursday’s vote “reflects a shared confidence in New Mexico Gas Company’s future” and referred to the sale as an “investment in exceptional people, a strong utility and the communities it serves.”

State Rep. Matthew McQueen (D-Galisteo), who unsuccessfully ran to be the Democratic nominee for the Commissioner of Public Lands in June’s primary election, had previously criticized the deal at PRC meetings.

In a phone call with Source NM Thursday, he said he had not yet closely reviewed the terms of the sale, but echoed Aguilera’s concerns.

“I question selling a public utility to an inexperienced operator,” he said, adding that he thought the requirements of a $10 million economic development investment and base rate freezes were too small. “Given the size and the importance of the transaction, those don’t seem very meaningful.”