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Utility Co. Gets Assistance for Continued Transition From Fossil Fuels
An old farmer, rocking in his front porch swing, might feel a touch of arthritis in his bum knee as indication of a change in the weather. Pat Vincent-Collawn, chairman, president and CEO of PNM Resources, might be feeling a similar twinge as a result of some expected changes at the electric utility. On Oct. 21 PNM Resources, which owns Public Service Company of New Mexico (PNM) as well as Texas-New Mexico Power Company (TNMP), announced that it has entered into an agreement with Avangrid, a leading, sustainable energy company with $32 billion in assets and operations in 24 U.S. states.
In a press release Vincent-Collawn said, “We are excited to be part of this transaction that provides so many benefits to our customers, communities, employees and shareholders.” The deal will indeed help PNM to achieve clean energy milestones. These milestones were put in place by the Energy Transition Act, which passed last year. Under the act New Mexico utilities must reach 50 percent renewable energy by 2030 and provide completely carbon-free energy by 2045.
Avangrid, a Connecticut based company and subsidiary of Spanish energy conglomerate Iberdrola, is the third largest wind operator in the U.S. and is a leading sustainable energy company with more than 7.4 gigawatts of installed wind and solar capacity. For anyone keeping track, that’s enough for six DeLorean time jumps with Marty McFly. As a part of the deal, PNM would sell its outstanding shares to Avangrid for $4.3 billion with shareholders receiving $50.30 per share of common stock held at closing of the transaction.
During an investor call on Wednesday, Pat Vincent-Collawn helped to identify some motivations of the deal. She mentioned that the transition away from coal and the stepping away from coal-fired power plants, such as the San Juan and Four Corners plants, mean that major financial investments would need to be made in grid infrastructure. Without the financial support of a large company like Avangrid, PNM would be forced to pass these expenses on to its customers.
The company also hopes to increase green energy jobs with the merger. According to the Environmental Defense Fund, clean energy jobs saw an increase of 10 percent between 2015 and 2019 and employed nearly 3.5 million people—three times more than the number working in fossil fuels. PNM also states that they plan to exit the coal business sooner than planned. [ ]