New Mexico is the fifth-largest state by landmass. With its abundance of sunshine and wind, the Land of Enchantment is “a natural location for renewable energy production and clean energy jobs,” the New Mexico State Land Office explains on its website.
This ample renewable generation capacity has positioned New Mexico well to supply clean energy to Western states. According to Mariel Nanasi, executive director and president of New Energy Economy (NEE), “New Mexico can not only meet all of its energy needs through renewables and storage but could also produce electricity for the highly consumptive and populous states of Arizona and California.” Using transmission interties and wholesale market arrangements, it often does just that.
But Nanasi and her organization have sounded the alarm on a bid by Blackstone, the world’s largest private equity firm, to acquire TXNM Energy for $11.5 billion. Announced in May, the deal would give Blackstone control of TXNM subsidiaries Texas-New Mexico Power and the Public Service Company of New Mexico (PNM), which serve 800,000 customers. Unlike a leveraged buyout, the acquisition would be fully funded with equity.
For Nanasi, the proposed acquisition threatens to harm ratepayers by enabling the construction of data centers across New Mexico, rather than supplying affordable power to those who need it. “Blackstone sees this purchase as a very important strategic foray into the West,” she told the Prospect.
Before obtaining TXNM, Blackstone must secure regulatory approval from the Public Utility Commission of Texas and the New Mexico Public Regulation Commission, or PRC. Blackstone also finds itself at the center of an ongoing Federal Energy Regulatory Commission (FERC) proceeding, the outcome of which will determine whether the world’s largest alternatives asset manager can acquire TXNM without undermining wholesale competition or transmission service, causing undue cross-subsidization, or adversely impacting consumers. NEE has intervened in the PRC proceeding.
The proposed acquisition threatens to harm ratepayers by enabling the construction of data centers across New Mexico, rather than supplying affordable power to those who need it.
Blackstone is not the only private equity player carving up New Mexico’s utility infrastructure. Bernhard Capital Partners, a smaller private equity firm based in Louisiana, has been seeking regulatory approval for its proposed acquisition of New Mexico Gas Company (NMGC), the state’s largest natural gas utility. Bernhard reached an agreement with Emera, the utility’s parent company, to acquire NMGC for approximately $1.3 billion last year. The firm also owns traditional energy assets in Louisiana and Mississippi, after acquiring CenterPoint Energy and Entergy’s natural gas distribution businesses earlier this year.
For its part, Blackstone has a 5 percent stake in the embattled Ohio-based electric utility FirstEnergy, and 20 percent of the Northern Indiana Public Service Company, which is reportedly planning to expand its natural gas power plants to meet electricity demand from data centers. Acquiring TXNM would be a first for Blackstone, as the $1 trillion private markets manager has never owned a regulated utility outright.
A spokesperson for Blackstone told the Prospect the firm is “the right partner to support PNM’s long-term growth” and that PNM would operate as a stand-alone business with its own leadership, with strictly regulated rates from the PRC.
But the Center for Biological Diversity, an intervenor in the FERC case, recently argued that Blackstone’s application neglects the anti-competitive effects of acquiring TXNM on customers, as the company could leverage its ownership of the utility in its continued pursuit of data center investments. Sens. Elizabeth Warren (D-MA), Bernie Sanders (I-VT), and Richard Blumenthal (D-CT) acknowledged as much in their December 4 letter to Blackstone CEO Stephen Schwarzman.
“Private equity’s money-extracting playbook isn’t anything new, and the consequences that usually follow aren’t either,” the senators wrote.
BLACKSTONE HAS OFFERED TO PAY a 23 percent acquisition premium, or about $2 billion more than TXNM’s book value at the time the agreement was announced. The firm has proposed a $105 million rate credit to be distributed over a four-year period, equating to $3.51 a month for the average residential ratepayer. But NEE argues the rate credits on the table “are highly likely to prove illusory,” in large part because of the rate shock customers could face if the deal goes through.
Blackstone has also announced a $10 million Good Neighbor Fund to assist low-income ratepayers over a ten-year period. The firm has demonstrated its willingness to lay out $25 million in investments for innovative technologies related to grid modernization, as well as $35 million to support economic and workforce development.
“As part of the regulatory process, which includes further engagement with parties to the case, there will be opportunities for further discussions around the different ways affordability can be addressed with the benefits proposed in the application,” a TXNM spokesperson told the Prospect.
The PRC and most state-level utility commissions have made it clear that customers cannot be charged any acquisition-related transaction costs, but critics say Blackstone could try to recover those costs indirectly by requesting a higher return on equity (ROE) in future rate cases, or by increasing capital spending, both of which are part and parcel of the investor-owned utility financial model.
Blackstone disputes this, stating that the PRC and FERC “determine returns on equity and have oversight over capital spending; Blackstone Infrastructure and PNM do not control the authorized return on equity and PNM cannot recover capital spend in customer rates without commission approval.” (Bernhard Capital, in its attempted takeover of NMGC, has explicitly stated that customers “will not, directly or indirectly,” bear the costs of the acquisition.)
Apart from customer benefits, there’s also the question of whether Blackstone would allow the PRC to preserve its jurisdiction over TXNM. Nanasi asserts it would not.
“Blackstone has more money than the state of New Mexico,” she said. “They’re paying $2 billion more than the company’s worth because their plan is to get that back and then make some more money on it, so that’s how confident they are that they’re going to sweep us clean.”
The thrust behind her concern is the potential for affiliate transaction risk. Blackstone could leverage its ownership of PNM to benefit its investments in data centers and other businesses throughout the state. The firm owns data center developer QTS, which does not yet have a presence in New Mexico. Under the PRC’s six-part test, Blackstone must demonstrate that it will not use PNM to give preferential treatment to its portfolio companies or cross-subsidize non-utility businesses like data centers. As a regulated utility, PNM has a monopoly on the delivery of electricity in its service area, which is why the burden is on Blackstone to prove that the company will not force ordinary ratepayers to pay more for electricity as a result of its non-utility activities. NEE has suggested that “Blackstone’s opaque corporate structure and history of self-dealing through affiliate transactions undermine transparency and regulatory oversight.”
Conversely, Blackstone argues that “any interactions between affiliates are subject to adherence to local and federal regulations that focus specifically on avoiding unfair advantages or disadvantages.”
But private equity firms should be expected to use every tool in their arsenal to influence regulatory decisions. One example comes from the Bernhard-NMGC case, which is further along in the PRC process than the Blackstone bid.
On October 20, Bernhard and NMGC filed a motion to exclude the direct testimony of NEE witness Jesse George. In addition to his work as an attorney focusing on utility regulation in Louisiana, he serves as New Orleans policy director at the Alliance for Affordable Energy. The PRC hearing examiners disqualified George as an expert witness, based on the apparent lack of evidence for his qualifications to “testify on New Mexico regulatory law or policy,” per the November 3 ruling.
“Blackstone is offering a Trojan horse to ratepayers;
it’s a deceptive gift.”
George’s testimony focused on utilities Bernhard has owned, including National Water Infrastructure (NWI), one of the largest sewer utility companies in Louisiana. According to the Energy and Policy Institute, an inspection by the Louisiana Department of Environmental Quality “revealed a large amount of sludge build-up, with bloodworms observed throughout the sludge—indicative of stagnant water containing organic matter often associated with sanitary waste.” Bernhard denied any wrongdoing, though it paid a small settlement to the department. In his testimony, George urged the PRC to consider Bernhard’s track record at NWI in its application of the six-factor test.
“I think this sort of reducing of his status is pretty unusual,” said Keriann Conroy, research associate at the Energy and Policy Institute. “The only detail that we get from the hearing examiners [is that George] is not qualified because they couldn’t find evidence that he has other significant regulatory experience, so that seems sort of like a denial of his experience in Louisiana in some ways.”
At a November 25 hearing, numerous public commenters expressed opposition to Bernhard’s proposed acquisition of NMGC. Among them was Patricia Brown, a longtime Sante Fe County resident and member of the New Mexico Energy Policy Research Advisory. She argued the PRC’s constitutional duty to regulate the state’s public utilities “was effectively subordinated when the hearing examiners barred from the record the history of fines, violations, audits, investigations and settlements associated with Bernhard Capital Partners and its affiliates.” Brown said that information “is directly relevant to whether the firm can be trusted to operate New Mexico’s gas systems safely, prudently and honestly.”
These types of maneuvers were also seen the last time TXNM tried to sell itself. In November 2021, the New Mexico PRC rejected the company’s proposed merger with Avangrid, an energy services company and subsidiary of the Spanish multinational electric utility conglomerate Iberdrola. The ruling concluded nearly two years of regulatory proceedings that exposed the prospective buyers’ “record of poor service, high rates, safety violations, bad faith contracts and market manipulation,” according to NEE.
The following year, PNM and Avangrid appealed the PRC’s decision to the New Mexico Supreme Court. NEE described the move as “an effort to circumvent the authority and oversight of the Commission in their failed attempt to establish a ‘beachhead’ for domination of the energy generation potential in New Mexico at the expense of New Mexico electricity customers.” The group also alleged that “Avangrid and Iberdrola engaged in back door ex-parte communications” to convince the PRC to remand the case. The prospective buyers also threatened legal action against NEE, the only intervenor in the proceeding to oppose the deal, before abandoning their acquisition bid in January 2024.
While that had a favorable outcome from NEE’s standpoint, the persistence shows the disadvantage of public-interest organizations relative to private buyers.
PUBLIC UTILITY COMMISSIONERS in New Mexico are appointed by the governor to serve six-year terms. In 2020, voters approved a constitutional amendment that restructured the PRC to be governed by three appointees rather than five elected commissioners, who previously served four-year terms. New Mexico has since counted itself among states like Minnesota where the governor is responsible for appointing public utility commissioners. The Prospect previously chronicled BlackRock-owned Global Infrastructure Partners’ efforts to manufacture support for its ultimately successful acquisition of ALLETE, detailing how the Minnesota Department of Commerce consulted with local environmental groups that came out in support of the deal. A similar saga is playing out in New Mexico.
As The Candle reported, Dominic Gabello, a former senior adviser to Gov. Michelle Lujan Grisham (D-NM) and independent consultant, arranged a meeting between his clients at Bernhard and Grisham to “talk about their vision for the company and how the acquisition is progressing.” Both Gabello and Grisham have been silent on the meeting, which reportedly occurred on the morning of October 11, 2024. The Candle also observed that Gabello has yet to register with the New Mexico secretary of state as a lobbyist for Bernhard.
NEE has been leaning on its twofold outreach strategy to educate New Mexicans about the implications of taking New Mexico utility companies private. “We have a legal strategy, and we have a political strategy, and we at all times try to marry those,” Nanasi told the Prospect. “Our jobs are to be translators.”
As part of its political strategy, NEE has taken to highlighting the inherent irony of the name Blackstone gave to the holding company it will use to acquire PNM: Troy ParentCo.
“The mission of the Trojan horse, a ruse, was to destroy Troy from the inside,” Nanasi said. “Blackstone is offering a Trojan horse to ratepayers; it’s a deceptive gift, and one that will ultimately dominate and destroy us if we allow them to enter New Mexico.”
Correction, December 11, 2025 9:46 am: This article has been updated to reflect the fact that NEE has only intervened in the PRC proceeding.