Touting the deal as a means of strengthening its finances and operating efficiencies, PNM Resources filed its plans to acquire Texas-New Mexico Power’s parent, TNP Enterprises, with state regulatory commission in New Mexico and Texas on Thursday. Rate decreases for both natural gas and electric utility customers in the merged company are proposed by PNM for next year.
In addition to the two state regulatory approvals, PNM is seeking federal approvals from the Federal Energy Regulatory Commission, Securities and Exchange Commission and Justice Department.
The TNP utility, based in Fort Worth, TX, serves 48,000 customers in southern New Mexico and 205,000 in Texas’ competitive electricity market. PNM, the parent of Public Service Company of New Mexico in Albuquerque, agreed last July to buy TNP. Ultimately, the two utilities may merge, PNM said in its regulatory filings.
A cost-of-service utility rate reduction of less than $1/year for PNM gas customers immediately after the acquisition is final, PNM said in its filing. PNM electric customers, whose rates were cut 4% last year, and whose rates will go down another 2.4% next year, will receive a rate credit from the acquisition savings in January 2008 when an existing statewide moratorium on electric rate changes expires, PNM said.
“This transaction will provide a very real opportunity to return TNP Enterprises to a healthier financial condition with no adverse effect on PNM Resources or PNM’s utility,” said Bill Real, PNM Resources senior vice president for public policy, adding that the acquisition should result in overhead and administrative cost savings.
Real said administrative savings would come from what he called “consolidating administrative and overhead costs, such as computer systems, licensing, software, insurance costs, bill printing, etc.” PNM committed in the regulatory filing to look at combining the two utilities’ operations, and it “might propose” such a combination when it files its next electric general rate case.
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