Bill Gates + PNMR = power play.
It's good to have friends. Someone who will lend you a car, let you crash on their couch or write you a check for $100 million when you're in a pinch. PNM Resources has a friend like that.
His name is Bill Gates.
On Nov. 3, PNMR (parent company of Public Service Company of New Mexico) announced a joint venture with Cascade Investment, a private investment firm owned by Gates, to form a new, unregulated energy company temporarily named EnergyCo.
PNMR spokesman Frederick Bermudez says the move is intended to buttress the financial viability of PNMR while increasing its capacity to supply an insatiable energy demand.
"The demand for power is growing exponentially," Bermudez says. "In New Mexico, for example, our projections for next year will exceed what we originally thought were going to be the projections for 2011."
But the proposal has also caused tremors among opponents of energy deregulation. David Bacon, a candidate for the state Public Regulation Commission (election results were not available at press time), says the infusion of big money is of concern.
"Gates coming in strikes me as that much more ominous," Bacon says. "He's not exactly a man who's known for his philanthropic business dealings. Clearly, if Gates is sniffing around this, there's big money in it."
Indeed, PNMR and its subsidiaries made $2.1 billion in consolidated revenues in 2005. That figure will likely grow with the creation of EnergyCo, whose primary function will be the wholesale sale of electricity and the "acquisition of assets" such as power plants and competing utility companies.
"You've got power plants that are dedicated to serve customers like you and me," Bermudez says. "Then there are other assets we own called merchant plants or unregulated plants which are not part of that rate base."
PNMR has a stake in at least four such power plants in New Mexico and Texas that are unregulated to sell wholesale electricity to clients such as other utility companies, industrial customers and municipalities.
But critics say the joint venture will allow EnergyCo to help PNMR consolidate its power in the Southwest.
"This is a straight-up anti-trust issue," Bill Althouse, president of the Santa Fe alternative energy company Althouse Inc., says. "If Gates is coming in heavy, this could be step one toward getting major capital in play to move PNM across the Western grid."
Bermudez acknowledges PNMR is looking to expand EnergyCo operations across the West but isn't plotting a stranglehold over energy resources.
"Our intent is not to be the biggest player of energy in the Southwest," Bermudez says. "We can gradually grow the company and still be successful."
Bermudez estimates it will take six to 12 months before EnergyCo is fully functional. In the meantime, Bacon says there are a lot of unanswered questions remaining about the venture.
"There needs to be an accounting of what's going on," he says. "We need to know what the bottom line is, and we need it in black and white."