24-00266-UT

Key events and submissions in this New Mexico Public Regulation Commission proceeding (Case No. 24-00266-UT) include:

- November 8, 2024: NMGC to email the proposed notice to customers to the hearing examiner and others 1.
- November 13, 2024: Deadline for staff or others to propose revisions to the notice 1.
- November 15, 2024: Deadline to request invitation to the prehearing conference 1.
- November 18, 2024: NMGC to email the proposed procedural schedule and positions of parties 1.
- November 20, 2024: Prehearing conference held 2.
- November 27, 2024: Procedural order issued, changing case caption and setting schedule 2.
- December 3, 2024: Notice of proceeding published in the Albuquerque Journal 3.
- December 6, 2024: Joint applicants to publish notice in newspapers in every county NMGC serves and file affidavit of publication 2.
- December 19, 2024: Deadline for joint applicants to file any additions or revisions to the application, including NMGC’s cost allocation manual 2.
- December 20, 2024 & January 9, 2025: NMGC files affidavits confirming notice requirements 3.
- February 3, 2025: Deadline for intervention in the proceeding 3.
- March 19, 2025: Motion for amendment of procedural schedule filed by joint applicants 4.
- March 21, 2025: Parties notified regarding availability for new proposed hearing dates; joint applicants request to withdraw motion to extend deadlines 4.
- March 31, 2025: Proposed meeting date for settlement discussions 4.
- April 8–15, 2025: Deadlines set for briefing and replies on a motion for interlocutory appeal 5.
- May 2, 2025: Any stipulation and supporting documents may be filed 2.
- May 7, 2025: Deadline for opposition to any stipulation 2.
- May 16, 2025: Deadline for rebuttal testimony or testimony in support of a stipulation 2.
- May 30, 2025: Testimony in opposition to any stipulation due 2.
- June 11, 2025: Prehearing and status conference held via Zoom at 2:00 p.m. MST 6, 6.
- June 18, 2025: Tentative date for prehearing conference at 10:00 a.m. MT 2.
- June 23–27 and June 30–July 3, 2025: Public evidentiary hearing scheduled via Zoom, beginning at 9:30 a.m. on June 23 2.
- July 1, 2025: Proposed new prehearing date (if schedule amended) 4.
- July 7, 2025: Proposed commencement of hearing under amended schedule 4.

This timeline summarizes key scheduled filings, hearings, and procedural developments in the proceeding.

Docket No. 24-00266-UT before the New Mexico Public Regulation Commission concerns the proposed acquisition of New Mexico Gas Company, Inc. (NMGC) by Saturn Utilities Holdco, LLC. The joint applicants include NMGC, Saturn Utilities Holdco, and affiliated entities, seeking regulatory approval for the acquisition and any necessary related authorizations.

Key procedural details:
- NMGC must provide notice of the case to its customers by mail or with billing statements and post relevant documents on its website.
- Motions for leave to intervene must be filed by February 3, 2025; dispositive motions (e.g., motions to dismiss) must be filed by February 17, 2025.
- Direct testimony from staff and intervenors is due by April 18, 2025.
- An evidentiary hearing is scheduled for June 23, 2025, to be conducted via Zoom, with oral public comments accepted at the beginning of the hearing and written comments accepted prior to final commission action.
- All filings are to be made electronically unless otherwise ordered, and procedural timelines are subject to further order of the commission or hearing examiner.

The proceeding allows for public participation and comment but specifies that public comments will not be considered as evidence. Interested persons can access the application and supporting documents at NMGC’s office or online. The case will address, among other things, regulatory, operational, and procedural aspects of the proposed utility acquisition 1, 2.

The docket identifies several financial and timeline risks and concerns:

Financial Risks and Concerns:
- There is concern that the new owner, BCP, lacks sufficient experience managing regulated natural gas utilities, which introduces uncertainty and risk for customers and the state. BCP has only recently acquired two gas utilities and has limited experience in regulated utility management, potentially exposing NMGC and ratepayers to risk if key personnel depart or if BCP's broader investment portfolio, which includes less financially secure industries, affects stability 1.
- There are concerns about the loss of executive and administrative (shared services) experience at NMGC post-transaction. Both BCP and NMGC lack experience in critical administrative areas (IT, finance, HR, etc.), meaning that outside training will be necessary and will be a significant added cost. This deficit could lead to quality of service risks and additional financial exposure for ratepayers during and after the transition 2.
- Additional financial issues identified include the possibility of BCP attempting to recover the acquisition premium by including it in NMGC’s capital structure, and planning to use double leverage to increase profits at ratepayers’ expense 2.

Timeline Risks and Concerns:
- Implementation delays are a key risk due to the complexity of configuring, integrating, and preparing users for new systems. The transition is being managed by cloning an existing Oracle Fusion Cloud ERP and WACS instance to avoid lengthy design and configuration processes typical in new (greenfield) deployments 3.
- Specific procedural deadlines are set: parties wishing to intervene must file by February 3, 2025; dispositive motions must be filed by February 17, 2025; and direct testimony by staff or intervenors is due by April 18, 2025. Late filings, especially those impacting supplemental testimony, are impermissible and will be rejected 4.
- Risks related to the transition include data migration/integration challenges, potential data loss or corruption, operational disruptions, and employee resistance to new systems and workflows. Comprehensive training and change management programs are required to mitigate these risks and ensure adoption of new systems 3.

In summary, the docket highlights concerns about the buyer’s lack of regulated utility management experience, potential cost increases for ratepayers, risks from loss of administrative expertise, timeline delays due to system transitions, and procedural deadlines that must be strictly observed.

The docket identifies several areas of growth for New Mexico Gas Company (NMGC):

1. New Distribution Facilities and Service to New Customers
- NMGC forecasts significant capital expenditures on new distribution facilities (mains and service lines) to serve new customers, especially large industrial parks, data centers, clean energy manufacturing facilities, and other expanding businesses. Specific potential customers mentioned include Manna Capital (11,500 mcf/d), Albuquerque Sunport Data Center (7,000 mcf/d), and McKinley Paper (2,500 mcf/d). There are also potential projects with renewable natural gas (RNG) facilities, a wind tower manufacturer, and solar PV manufacturers. However, these specific projects are not yet included in the official growth forecast 1.
- Considerations: These projects are evaluated for future customer growth but are not guaranteed. Additional spending is anticipated for decarbonization projects (such as RNG production and hydrogen blending) beginning in 2032, making up 6% of the forecasted capital expenditure.

2. Economic Development and Job Creation
- NMGC has experience supporting economic development grants that create jobs at a relatively low cost per job. For example, a prior grant supported by Emera achieved a cost of $2,300 per job for 217 jobs. Development grants are considered to have a higher economic multiplier effect than direct rate credits to customers, potentially leading to more significant long-term economic benefits for both the local economy and NMGC customers 2.
- Considerations: While direct credits provide immediate, predictable benefits, well-targeted economic development grants can generate employment and sustained economic activity, offering greater long-term value.

3. Capital Expenditure Growth Versus Demand Growth
- NMGC’s capital expenditure (capex) spending has been growing much faster than customer demand. From 2016 to 2024, capex grew at an average annual rate of 9.44%, which was more than 2.5 times the rate of non-weather-adjusted demand growth. From 2020 to 2024, capex growth was more than 5 times the growth in weather-adjusted demand. Forecasts suggest this mismatch will continue, with capex expected to grow at over 6% annually from 2025 through 2029, while total sales volumes are projected to grow only 0.3% per year 1.
- Considerations: This creates concern for ratepayers because increasing fixed costs are spread over flat or declining gas demand, likely resulting in higher rates. The growth mismatch is particularly problematic during periods of flat or declining demand.

4. Decarbonization and Clean Energy Projects
- NMGC is planning investments in decarbonization, including RNG production facilities and pipeline hydrogen blending, starting in 2032. These projects are anticipated to account for a modest portion (6%) of the future capex 1.
- Considerations: These investments are part of a broader strategy for environmental compliance and modernization but may also present regulatory, operational, and financial challenges.

Key considerations across these growth areas include the alignment of capital expenditures with actual demand, the economic benefit of development grants versus direct customer credits, the risk of increasing customer rates due to capex outpacing demand, and the uncertainties around the realization of potential large customer and decarbonization projects.

The stakeholders in New Mexico Public Regulation Commission Docket No. 24-00266-UT (regarding the acquisition of New Mexico Gas Company (NMGC) by Saturn Utilities Holdco, LLC and affiliates from Emera and affiliates) include:

- New Mexico Gas Company, Inc. (NMGC)
- Emera Inc. and affiliates (the current owner/seller)
- Saturn Utilities Holdco, LLC and affiliates, including BCP Infrastructure Fund II (the buyer group)
- New Mexico Public Regulation Commission (NMPRC) Utility Division Staff
- New Energy Economy (NEE), an intervenor
- Other parties that may file to intervene by the deadline

Positions of Stakeholders:

1. NMGC, Emera, Saturn Utilities Holdco, BCP Infrastructure Fund II, and affiliates (the applicants):
- These parties jointly support the acquisition proposal, arguing that the sales process was competitive and transparent, and asserting benefits such as cost savings and synergies for customers 1, 2, 3.

2. NMPRC Utility Division Staff:
- Staff has raised concerns about aspects of the acquisition, particularly regarding the relocation of positions to New Mexico due to potential rate increases, and about IT shared services costs. Staff recommends disapproval of certain requests unless reasonable solutions are found that do not harm ratepayers, prioritizing direct customer and utility interests over broader economic development arguments 4, 2.

3. New Energy Economy (NEE):
- NEE has moved to intervene, stating that the outcome will impact its constituents and all people of New Mexico. The provided excerpt does not explicitly state NEE's support or opposition, only that it seeks to participate in the proceeding due to the importance of the issues at stake 5.

4. Other Intervenors:
- Other parties may file motions to intervene by the set deadline. Their positions are not specified in the provided excerpts 6.

Summary:
- The applicants (NMGC, Emera, Saturn, BCP) are in favor of the acquisition.
- NMPRC Staff is critical or recommends modifications to certain aspects of the proposal, especially where customer rates or IT costs are concerned.
- NEE's specific stance is not detailed but it is participating due to potential impacts.
- Additional stakeholders may join as intervenors, with positions yet to be determined.