PNM's Vincent-Collawn: Still in 'deep breaths phase' after failed merger
Feb. 6—More than a month after global power giant Avangrid announced it no longer was interested in a long-sought merger with Public Service Company of New Mexico, the local utility's leader told investors Tuesday she and other executives were "still in a deep breaths phase" from the failed deal.
CEO Pat Vincent-Collawn and other executives from PNM Resources — which owns PNM as well as a Texas subsidiary — held the company's first earnings call with investors since Avangrid backed out of the proposed merger Jan. 2 and state regulators a few days later issued what PNM executives described as a "disappointing" ruling on a major rate case.
When the potential deal with Avangrid was announced, PNM officials said it was important to the future of the utility. Vincent-Collawn on Tuesday did not provide details about whether the company is actively seeking to merge with another company, though she said PNM's leadership still believes "bigger is better" and that such a deal has "always been kind of an ongoing effort."
"We reassess every year the market outlook — the landscape of the industry, our position, the board of directors," Vincent-Collawn said. "If the time is right, it's right and if it's not right it's not right, but you always look."
She told an investor during a call the logic for some kind of merger still exists as it did in 2020 when the Avangrid deal was announced, noting there is the potential for access to cheaper capital and materials, plus employee opportunities.
After the merger with Avangrid and its Spanish owner Iberdrola was unanimously rejected by state regulators in December 2021, the companies appealed the decision to the state Supreme Court, where the case was dismissed in recent weeks after Avangrid's announcement.
PNM's stock price dropped two points immediately following Avangrid's announcement in early January. In the month since, it has dropped more than four points.
On Jan. 3, the Public Regulation Commission ruled on a rate case the utility filed in late 2022, allowing PNM to impose a rate increase but limiting what it collects from customers to nearly $50 million less than the company requested for 2024. Commissioners disallowed PNM from collecting for some past "imprudent" investments in the coal-fired Four Corners Power Plant and required the utility to issue credits for overcollecting on leases for the Palo Verde Nuclear Generating Station in Arizona.
Vincent-Collawn reiterated Tuesday that PNM executives were hoping for a different outcome in the rate case.
"While some pieces of our recent PNM rate decision were disappointing, the questions of recovery around our legacy assets were resolved, and we now have a clear path going forward," she told PNM investors.
The company plans to request a rate increase this summer for a change in electricity rates that could come in the second half of 2025, PNM Chief Operating Officer Don Tarry told investors.
After that rate case, Tarry said, the company expects to file more frequent requests — every few years — for smaller increases.
The recently decided case from 2022 was the first rate increase PNM had requested since 2016.
Tarry said the company is expecting rulings this year from commissioners on a few proposals, including PNM's proposed 2026 power resources, which include 350 megawatts of purchased solar power and battery storage and 60 megawatts of utility-owned battery storage.
A pending grid modernization case, which would include commission approval for investments like smart metering, should have a ruling from regulators by the third quarter of the year, Tarry said.
PNM spokesman Ray Sandoval in an interview echoed Vincent-Collawn's "bigger is better" theme for a company looking at large investments for a clean energy transition.
"But right now we're focused on running our company as a standalone," Sandoval said, "with investments into the grid, keeping it affordable, and clean energy investments.
"We're not actively seeking anybody right now," he said.
