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Federal Energy Regulatory Commission Approves Merger Between Iberdrola and PNM Resources

Strategic Insights

— 2 min read

The Federal Energy Regulatory Commission (FERC) has authorized the merger between Spanish energy company Iberdrola and New Mexico-based PNM Resources, a move that will make Iberdrola the parent company of PNM Resources and its subsidiaries. The proposed transaction, which was filed on November 23, 2020, will see Avangrid, a subsidiary of Iberdrola, merge with and into PNM Resources, with PNM Resources being the surviving entity.

This merger is a significant development in the energy sector, with Iberdrola set to expand its presence in the US market. PNM Resources, on the other hand, will become a subsidiary of Iberdrola, with its assets and operations being integrated into the larger company.

Key Takeaways:

  • The merger was approved by FERC on April 20, 2021, after a thorough review of the proposed transaction under the Commission's Merger Policy Statement.
  • The transaction involves Iberdrola's subsidiary Avangrid merging with and into PNM Resources, with PNM Resources being the surviving entity.
  • The merger will make Iberdrola the parent company of PNM Resources and its subsidiaries, including New Mexico Public Service Company and New Mexico Renewable Development.
  • The transaction was filed on November 23, 2020, and involved a number of other parties, including Avangrid Networks, Inc., NMRD Data Center II, LLC, and New Mexico PPA Corporation.
  • The Commission's analysis of the proposed transaction considered three factors: the effect on competition, the effect on rates, and the effect on regulation.
  • FPA section 203(a)(4) requires the Commission to approve proposed dispositions, consolidations, acquisitions, or changes in control if the Commission determines that the proposed transaction will be consistent with the public interest.
  • The Commission must consider the effect on competition, the effect on rates, and the effect on regulation, as well as whether the proposed transaction will result in cross-subsidization of a non-utility associate company or the pledge or encumbrance of utility assets for the benefit of an associate company.

Statistics:

  • The merger involves Iberdrola's subsidiary Avangrid merging with and into PNM Resources, with PNM Resources being the surviving entity.
  • Iberdrola owns 81.5% of Avangrid's stock, according to the Application.
  • PNM Resources is a holding company that owns PNM, a public utility engaged in the generation, transmission, and sale of electricity at wholesale in New Mexico.
  • PNM owns approximately 2,150 megawatts (MW) of generation and owns or leases approximately 3,200 circuit miles of electric transmission lines in New Mexico and Arizona.
  • The Commission's Merger Policy Statement requires the Commission to analyze the effect on competition, the effect on rates, and the effect on regulation.

Sources:

  • Application for Authorization Under Section 203 of the Federal Power Act, Docket No. EC21-25-000 (Nov. 23, 2020)
  • Federal Register, 85 Fed. Reg. 77,205 (Dec. 1, 2020)
  • FERC Stats. & Regs. P 31,044 (1996)
  • 16 U.S.C. § 824b(a)(1) and (a)(2)
  • 18 C.F.R. pt. 33 (2020)

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