PNM Resources : Joint Applicants' Brief in Chief

Filed

Supreme Court of New Mexico 4/7/2022 4:15 PM Office of the Clerk

IN THE SUPREME COURT OF THE STATE OF NEW MEXICO

NO. S-1-SC-39152

AVANGRID, INC., AVANGRID NETWORKS, INC.,

NM GREEN HOLDINGS, INC., IBERDROLA, S.A.,

PUBLIC SERVICE COMPANY OF NEW MEXICO, and PNM RESOURCES, INC.,

Appellants,

v.

NEW MEXICO PUBLIC REGULATION COMMISSION,

Appellee. and

NEW ENERGY ECONOMY, and WESTERN RESOURCE ADVOCATES,

Intervenors-Appellees.

In The Matter of The Joint Application of Iberdrola, S.A.,

Avangrid, Inc., Avangrid Networks, Inc., NM Green Holdings, Inc., Public Service Company of New Mexico And PNM Resources, Inc. For Approval of the Merger of NM Green Holdings, Inc. with PNM Resources, Inc.; Approval of a General Diversification Plan; and All Other Authorizations and Approvals Required to Consummate and Implement this Transaction, NMPRC Case No. 20-00222-UT

JOINT BRIEF IN CHIEF OF

APPELLANTS AVANGRID, INC., AVANGRID NETWORKS, INC.,

NM GREEN HOLDINGS, INC., IBERDROLA, S.A.,

PUBLIC SERVICE COMPANY OF NEW MEXICO, and

PNM RESOURCES, INC.

JENNINGS HAUG KELEHER	PUBLIC SERVICE COMPANY OF
McLEOD LLP	NEW MEXICO
Thomas C. Bird, Esq.	Patrick V. Apodaca, Senior Vice
Brian J. Haverly, Esq.	President and General Counsel PNM
Gary J. Van Luchene, Esq.	Resources, Inc.
Julianna T. Hopper, Esq.	Stacey J. Goodwin, Associate General
P. O. Box AA	Counsel
Albuquerque, NM 87103	PNMR Services Company
Telephone: [phone]	Corporate Headquarters - Legal
Facsimile: [phone]	Department
[e-mail]	Albuquerque, NM 87158-0805
[e-mail]	Telephone: [phone]
[e-mail]	Facsimile: [phone]
[e-mail]	[e-mail]
[e-mail]
and
MILLER STRATVERT P.A.
Richard L. Alvidrez
500 Marquette NW, Suite 1100
P.O. Box 25687
Albuquerque, New Mexico 87125
Telephone: [phone]
[e-mail]

Attorneys for Appellants Avangrid, Inc., Avangrid Networks, Inc.,

NM Green Holdings, Inc., Iberdrola, S.A.,

Public Service Company of New Mexico, and

PNM Resources, Inc.

ORAL ARGUMENT REQUESTED

TABLE OF CONTENTS

Page

STATEMENT OF COMPLIANCE .......................................................................... iv

TABLE OF AUTHORITIES ..................................................................................... v

• I. INTRODUCTION ........................................................................................... 1

• II. SUMMARY OF THE PROCEEDINGS ......................................................... 1

  • A. Nature Of The Case ............................................................................... 1

  • B. Course Of Proceedings .......................................................................... 1

  • C. Summary Of Argument ......................................................................... 2

  • D. Summary Of Proceedings Relating to Proposed Merger ...................... 3

a. Parties, Transaction Background ................................................ 4 b. Application for Approval of Mergers, Progress Toward

Stipulation ................................................................................... 4

c. May 11th Status Conference ...................................................... 6

d. June 4, 2021 Stipulation ............................................................ 7

e. Evidentiary Challenges .............................................................. 8

i. Updates on Avangrid Management Audits .......................... 8

ii. Notice of Investigation in Spain ........................................... 8

iii. Attorney Marcus Rael ........................................................... 9

f. Motions to Strike, in Limine ................................................... 10

g. Hearing ................................................................................... 11

h. HE's Recommendations ......................................................... 11

i. Exceptions .............................................................................. 12

i

j.

Commission Deliberations, Decision ..................................... 13

• E. Summary Of Evidence Commission Relied On In Rejecting

  Merger ................................................................................................. 14

• F. Facts and Proceedings Related to Discovery Sanction ....................... 22

III.

ARGUMENT ................................................................................................. 24

A.

THE COMMISSION'S REJECTION OF THE MERGER DOES NOT PASS WHOLE RECORD SUBSTANTIAL

EVIDENCE REVIEW ........................................................................ 24

STANDARD OF REVIEW ................................................................ 24

STATEMENT OF PRESERVATION ................................................ 27

• 1. The Commission Unlawfully and Unreasonably Discounted

  the Benefits of the Merger ............................................................. 28

  a. Rate Benefits for PNM Customers ........................................... 29

  b. Economic Development Benefits ............................................. 32

  c. New Environmental Benefits .................................................... 35

  d. Financial Benefits ..................................................................... 36

  e. Enforceability of Benefits ......................................................... 41

• 2. The Commission Unlawfully and Unreasonably Exaggerated

  the Risks ......................................................................................... 42

  a. Spanish Criminal Investigation ................................................. 43

  b. Maine "Liberty Audit." ............................................................. 45

  c. Rael's Representation of Iberdrola ........................................... 47

  d. Hempling Testimony ................................................................ 50

  e. Berry's Testimony and Comments ........................................... 51

  f. Imputed Dishonesty, "Failure to Disclose" Penalties ............... 53

ii

g. Renewable's "Compliance" Issues ........................................... 56

h. Inability to Regulate .................................................................. 58

i. Improved Performance .............................................................. 60

j. Disregard of Safeguards ............................................................ 61

• B. THE COMMISSION UNREASONABLY IGNORED THE

  NEAR UNANIMOUS SUPPORT OF THE MODIFIED

  STIPULATION ................................................................................... 63

• C. THE COMMISSION'S PUBLIC INTEREST ANALYSIS IS INTERNALLY INCONSISTENT AND THEREFORE

  ARBITRARY AND CAPRICIOUS ................................................... 66

• D. THE DISCOVERY SANCTION IMPOSED ON APPELLANTS

  IS UNSUPPORTED AND VIOLATES DUE PROCESS .................. 68

• IV. CONCLUSION .............................................................................................. 73

• V. STATEMENT REGARDING REQUEST FOR ORAL ARGUMENT ....... 73

iii