PNM Resources : Rebuttal Testimony of Lisa Quilici

BEFORE THE NEW MEXICO PUBLIC REGULATION COMMISSION

IN THE MATTER OF THE JOINT APPLICATION	OF	)
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		) Case No. 20-00222-UT
		)
AVANGRID, INC., AVANGRID NETWORKS, INC.,		)
NM GREEN HOLDINGS, INC., PUBLIC		)
SERVICE COMPANY OF NEW MEXICO AND PNM		)
RESOURCES, INC.,		)
		)
JOINT APPLICANTS.		)
		)

JULY 29, 2021 REBUTTAL TESTIMONY

OF

LISA QUILICI

July 29, 2021

	TABLE OF CONTENTS
I.	INTRODUCTION AND PURPOSE ..................................................................................	1
II.	OVERVIEW AND KEY CONCLUSIONS .......................................................................	2
III.	RATE BENEFITS ..............................................................................................................	4
IV.	JOB CREATION AND ECONOMIC DEVELOPMENT..................................................	9
V.	GOVERNANCE ...............................................................................................................	14
VI.	CONCLUSIONS...............................................................................................................	16
SELF-AFFIRMATION

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JULY 29, 2021 REBUTTAL TESTIMONY

OF LISA M. QUILICI

NMPRC CASE NO. 20-00222-UT

1	I. INTRODUCTION AND PURPOSE

2 Q. PLEASE STATE YOUR NAME, AFFILIATION, AND BUSINESS ADDRESS.

3	My name is Lisa M. Quilici. I am Senior Vice President and member of the Board of

1. Directors of Concentric Energy Advisors, Inc. ("Concentric"), located at 293 Boston Post
2. Road West, Suite 500, Marlborough, Massachusetts 01752.
3. Q. HAVE YOU PREVIOUSLY FILED TESTIMONY IN CASE NO. 20-00222-UT?

7	Yes. On April 21, 2021, I filed Rebuttal Testimony on behalf of Public Service Company

1. of New Mexico ("PNM"), PNM Resources, Inc. ("PNMR"), Avangrid, Inc. ("Avangrid"),
2. Avangrid Networks, Inc. ("Networks") and NM Green Holdings, Inc. (collectively, with

10 Iberdrola, S.A., the "Joint Applicants") in the application regarding the proposed

1. acquisition of PNMR by Avangrid (such acquisition and associated corporate organization
2. steps as described in the application filed in this proceeding being the "Proposed
3. Transaction" or the "Transaction"). On June 18, 2021, I filed Testimony in Support of the
4. Second Amended Stipulation.
5. Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY?

16	The purpose of my testimony is to respond to the testimony of certain parties in opposition

1. to the Second Amended Stipulation entered into among PNM, PNMR, Avangrid,
2. Networks, NM Green Holdings, Inc., the Attorney General of the State of New Mexico
3. ("Attorney General"), Western Resource Advocates, the International Brotherhood of
4. Electrical Workers Local 611, Dine Citizens Against Ruining Our Environment, Nava
5. Education Project, San Juan Citizens Alliance, To Nizhoni Ani, the Coalition for Clean
6. Affordable Energy, Interwest Energy Alliance, Walmart, Inc., Onward Energy Holdings,
7. LLC, M-S-R Public Power Agency, and the Incorporated County of Los Alamos
8. (collectively, the "Signatories") (the "Stipulation") filed on June 4, 2021. The Stipulation
9. includes 56 Stipulated Regulatory Commitments ("Stipulated Regulatory Commitments").
10. In particular, I respond to the testimonies of John J. Reynolds on behalf of New Mexico
11. Public Regulation Commission ("Commission") Utility Division Staff ("Staff"), Mark E.
12. Garrett on behalf of Albuquerque Bernalillo County Water Authority ("ABCWUA"),

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JULY 29, 2021 REBUTTAL TESTIMONY

OF LISA M. QUILICI

NMPRC CASE NO. 20-00222-UT

1. Maureen L. Reno on behalf of Bernalillo County, Christopher K. Sandberg on behalf of
2. New Energy Economy, and Michael P. Gorman on behalf of New Mexico Affordable
3. Reliable Energy Alliance ("NM AREA"). I respond to testimony regarding rate credits
4. and other customer benefits, the economic development benefits of the Joint Applicants
5. job creation commitment, and management and governance, the same topics I addressed
6. in my Rebuttal Testimony and Testimony in support of the Second Amended Stipulation.

7	II. OVERVIEW AND KEY CONCLUSIONS

8 Q. PLEASE PROVIDE A BRIEF OVERVIEW OF YOUR TESTIMONY IN

9 RESPONSE TO OPPOSITION TO THE SECOND AMENDED STIPULATION.

10	As I stated in my testimony in support of the Stipulation, the benefits of the Transaction

1. are broad and substantial. I understand that since the Stipulation was filed, settlement
2. discussions have continued with Staff and other non-signatories and in some cases
3. testimony in opposition to the Stipulation is intended to reflect consensus positions on
4. amendments to the Stipulation which non-signatory(ies) would find acceptable. In
5. response, the Joint Applicants state that they are agreeable to many of the modifications
6. and enhancements proposed to the Stipulated Regulatory Commitments.

17	My testimony here addresses the increase in rate credits proposed by the Joint

1. Applicants in response to opposition testimony. As discussed by Mr. Pedro Azagra
2. Blazquez, the Joint Applicants propose to increase the rate credits committed to in the
3. Stipulation by $15 million, to a proposed total rate benefit of $88 million, made up of $65
4. million in rate credits, $6 million in residential customer arrearages forgiveness, $2 million
5. in funds for assisting in providing electricity to customers in remote areas and $15 million
6. for low-income energy efficiency. The Joint Applicants proposed increase to rate credits
7. is identical to that proposed by NMAREA witness Mr. Gorman and Bernalillo County
8. witness Ms. Reno.

26	ABCWUA witness Mr. Garrett and New Energy Economy witness Mr. Sandberg

1. continue to argue that utility customer rate benefits should be linked to the holding
2. company control premium. As I discussed in my Rebuttal Testimony, there is no basis for
3. this argument. The Transaction's control premium is not analogous to a gain on the sale of

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JULY 29, 2021 REBUTTAL TESTIMONY

OF LISA M. QUILICI

NMPRC CASE NO. 20-00222-UT

1. a utility asset as asserted by Mr. Garrett. The pre-transaction market price of the holding
2. company's common stock reflects the market value of all of the company's assets and
3. liabilities as well as investors' expectations about the company's performance, dividends
4. and the opportunity for gain or loss on the disposition of that stock. The control premium
5. is the premium paid to acquire the majority control of the holding company stock and has
6. no relation to the asset value of the company. The fact that shareholders will receive a
7. premium for the acquisition of a controlling interest in PNMR, the holding company, does
8. not mean that customers and the public interest will not benefit, or will not benefit enough,
9. from the transaction.

10	While the Transaction should be assessed on its own merits and not in comparison

1. to other transactions, the rate benefits of the Transaction nonetheless compare very
2. favorably to those committed to in other transactions. The Joint Applicants' proposed rate
3. credit of $65 million equates to approximately $123 per PNM customer1,nearly twice that
4. of any other transaction in New Mexico2 and in the upper decile of the transactions
5. approved and closed over the past five years.

16	My testimony also addresses the increase in economic development benefits

1. proposed by the Joint Applicants in response to the opposition and the important other
2. benefits created by the Joint Applicants' jobs creation commitment. As discussed by Mr.
3. Azagra in his testimony, the Joint Applicants proposed to (1) increase their commitment to
4. shareholder-fundedcontribution to economic development projects or programs in New
5. Mexico, disbursed through a fund administered independently of the Joint Applicants from
6. $7.5 million over three years to $15 million over five years, and (2) include a monetary
7. penalty if they do not fully satisfy the new jobs commitment. The Joint Applicants
8. proposed increased economic development funding is identical to what was proposed by
9. NM AREA witness Mr. Gorman and the proposed penalty is responsive to Mr. Gorman's
10. proposal.

1. $65 million rate credit/530,000 customers
2. Sun Jupiter Holdings, Inc.'s ("Sun Jupiter") purchase of El Paso Electric Company ("EPE") (the "EPE Transaction") included a $86.14/customer bill credit. TECO Energy Inc.'s ("TECO") purchase of New Mexico Gas Company ("NMGC") (the "NMGC Transaction") included a $27.53/customer bill credit and EMERA Inc.'s purchase of TECO (the "TECO Transaction") included no bill credit. Please see Table 1 of my testimony.

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