Residents speak out during public meeting on proposed New Mexico Gas Co. sale

Terri Cole, president and CEO of the Greater Albuquerque Chamber of Commerce, believes Bernhard Capital Partners’ proposed purchase of New Mexico Gas Co. would only enhance the utility’s foundation and long-term success.

“Their track record demonstrates a commitment to excellence, customer service and long-term capital investment — exactly what New Mexico needs as we face the challenges of aging infrastructure and growing energy demands,” Cole said.

In contrast, Elisabeth Holland, a Santa Fe resident and research director for United Kingdom-based Island Power, argued the sale is not “worth the risk.” She claimed Bernhard fails the transparency test, as the company goes back and forth on promises outlined in its application.

“What assurances from the analyses that have been done do we have that (Bernhard) will keep its word?” Holland asked.

The comments, made during a public hearing for Bernhard’s proposed $1.25 billion takeover of the gas utility, reflected a divide between how residents and industry view the transaction. The meeting comes a week before evidentiary hearings with state regulators for the sale are set to begin, one of the final steps in getting a deal through.

Emera, NMGC’s Canadian parent company, revealed last August its plans for Bernhard, a Louisiana-based private equity firm, to take control of the utility.

Michael Policastro, an NMGC customer, urged the commission to deny purchase approval. He said Bernhard has extremely limited experience when it comes to running a regulated utility, where the only company “remotely comparable” to NMGC is the National Water Infrastructure, a Louisiana-based sewer utility the firm acquired in 2020.

Policastro cited a document filed by the Louisiana Department of Environmental Quality, where, in 2022, it found the National Water Infrastructure “failed to properly operate and maintain” its treatment facility. In the same document, the company allegedly “allowed the presence of sludge” in its receiving stream, which was found to contain bloodworms — indicative of organic matter commonly associated with sanitary waste.

Managing a gas utility requires sustained investment, strict adherence to public service and compliance with safety standards, Policastro said. Bernhard’s track record in this sector, specifically with National Water Infrastructure, raises concerns over costs, deferred maintenance and rate changes, he added. If the firm has issues running a utility servicing around 20,000 people, he said, it is not up to running NMGC, which serves more than 500,000 customers.

“As an engineer, I have a couple of catchphrases I like to live by. One is, ‘trust but verify,’ another is, ‘bring the receipts,’ and a third one is, ‘identify risk, mitigate risk, and avoid risk at all costs,’” Policastro said. “I see no clear benefit to New Mexico customers from this proposed sale.”

The PRC saw similar pushback on the potential sale in May, when energy advocacy groups and the New Mexico Department of Justice requested the sale’s dismissal. According to previous Journal reporting, intervenors argued the firm lacks the experience needed to run a utility like NMGC. The motion claimed that rather than filing rebuttal testimony that counteracts or disproves the staff and parties’ criticisms, Bernhard “filed testimony that proposes substantive changes to their initial application.”

In response, the applicants, which include NMGC and Bernhard, refiled a revised application with state regulators over the summer.

Jeff Baudier, senior managing director for Bernhard, said the firm typically invests in infrastructure, meaning it owns companies that provide services to major projects — a portion of those being utility-related.

In July, Bernhard’s portfolio company, Delta Utilities, a regulated natural gas utility, completed an acquisition of two more natural gas utilities serving communities throughout New Orleans and East Baton Rouge Parish from Louisiana-based Entergy. In 2023, a Bernhard subsidiary successfully acquired BHI Power Delivery, a Massachusetts-based utility transmission and distribution services provider.

Compared to its original application, which outlined around $10 million in bill credits, Bernhard’s proposal now offers $22 million. The company has also guaranteed no rate increases before 2028, which officials estimate will save customers up to $40 million.

After speaking with Attorney General Raúl Torrez, Baudier said Bernhard also tagged on $7 million for financial assistance to low-income households and $5 million for workforce training. Another $10 million is allocated to economic development priorities and advancements in renewable energy projects, he said.

The investment firm will retain all 800 employees working for NMGC and estimates that dozens of new positions will be created if the sale is approved. The utility’s headquarters and call center will remain in New Mexico.

Baudier said while he felt the company’s initial application was adequate, Bernhard knew it would need to go back to the drawing board at some point. Through discussions with stakeholders and intervenors, he said the firm wanted updates to the package to address concerns — like low-income customer awareness and utility familiarity — while still making sense for Bernhard.

Casey Anglada DeRaad, NewSpace Nexus CEO and the incoming chair for the Albuquerque Hispano Chamber of Commerce’s board, said some commenters had a broad idea of how a private equity firm operates — many feeling these groups lack transparency. However, she has had plenty of positive experiences where investors actually support the companies they fund.

“I believe New Mexico is a state with immense potential, and I view this investment as a contribution furthering that growth,” Anglada DeRaad said. “This transaction will bring significant benefits to customers, employees and the communities that New Mexico Gas Co. serves, including myself and my family.”

The proposed sale of NMGC follows a failed merger between Avangrid and the Public Service Company of New Mexico in 2024, and comes as PNM looks to be acquired by Troy ParentCo LLC, a subsidiary of Blackstone Infrastructure, in a $11.5 billion deal.

Baudier acknowledged the concerns about the PNM merger, saying the failure stemmed from beliefs that the sale would mean an outside company would completely change utility operations. Baudier, however, wants Bernhard to be part of the “fabric of the community” and pledges to own NMGC for at least a decade.

“Utilities are local,” Baudier said. “They’re basically coming into someone’s house every day, and that’s the way we’ve always looked at the business — we want that to maintain.”

Editor’s note: This story has been updated to include correct information on New Mexico Gas Co. customer Michael Policastro.