Consumer Advocates Could Derail Blackstone’s Utility Acquisition
The statute governing utility acquisitions in New Mexico is unmistakably clear: stock of a utility or utility holding company may only be acquired “with the prior express authorization” of the New Mexico Public Regulation Commission (PRC). Whether regulators overseeing Blackstone’s proposed acquisition of the Public Service Company of New Mexico (PNM) enforce this statute remains an open question, but the law itself dictates that they should.
TXNM Energy, the utility holding company that owns PNM, agreed to be acquired by private equity giant Blackstone in May 2025. In a filing that was released earlier this month, TXNM announced plans to issue $800 million in new equity prior to the closing of the acquisition, which must be approved by the PRC. Of that total planned equity issuance, $400 million in TXNM shares were purchased by Blackstone through a private placement. The transaction closed in June 2025, just a month after the acquisition was disclosed. The New Mexico PRC did not authorize this purchase.
“This was not a technical oversight,” Mariel Nanasi, senior attorney and executive director at New Energy Economy, told the Prospect. “It was reckless disregard for New Mexico law and for the commission’s exclusive jurisdiction and authority.”
A spokesperson for Blackstone told the Prospect: “We strongly disagree with the positions taken in the motion and will refute them in a formal response at the earliest opportunity.”
The revealed transaction is the latest twist in the saga of Blackstone’s attempted purchase of a utility that will serve 800,000 customers in New Mexico and Texas, and which has run into vociferous opposition from consumer groups, amid broader consternation about rising utility rates and private takeovers of power companies.
Both Nanasi and Prosperity Works, another intervenor in the case, have asserted that since the transaction was explicitly tied to and executed as part of the merger agreement itself, it rises to the level of an acquisition step rather than an incidental investment. In the utility M&A space, routine equity financing amounts to a contractual obligation. Funding doesn’t come until regulators offer their seal of approval.
State utility commissions generally prohibit prospective buyers from jumping the gun in this manner. Perhaps one of the clearest examples of why comes from the Hawaii Public Utilities Commission. In 2014, regulators shut down a bid by NextEra Energy to acquire a majority stake in Hawaiian Electric Industries, for reasons unrelated to equity financing. Critically, no equity unwind or divestiture was needed when the deal eventually fell through.
In addition to Hawaii and New Mexico, utility commissions in states like New York and California require prior authorization for equity transactions tied to a pending merger or acquisition. The Minnesota Public Utilities Commission also requires prior authorization for equity transactions, but its governing statute focuses more narrowly on inter-utility stock acquisitions that may result in a change of control.
For her part, Nanasi has suggested that if the equity transaction at the center of the Blackstone-TXNM deal did require prior authorization, the broader acquisition should not be allowed to proceed. “The merger cannot go forward [because this is] the harbinger of things to come,” she said.
According to a PRC spokesperson, “the commission has not yet issued a ruling or determined how it will proceed” on the request to show cause for the equity transaction. The deadline for direct testimony from PRC staff and intervenors is March 3, rebuttal testimony is due on April 3, and evidentiary hearings are scheduled for mid-May.
As the Prospect previously reported, critics of the acquisition have cast doubt on the PRC’s ability to preserve its jurisdiction over PNM in the event its parent company were to be acquired by the world’s largest private equity firm. Some fear Blackstone could leverage its ownership to benefit its portfolio companies, namely those involved in data center development.
Dozens of New Mexico residents publicly denounced the deal at a hearing on Tuesday. Among them was Blake Eliason, an Albuquerque-based economics researcher specializing in issues of market power and industrial organization.
“If PNM is acquired by a Blackstone subsidiary, the power of this commission to regulate the market for the distribution of power in this state will be severely diminished,” Eliason said. “PNM … would be emboldened to optimize for the interests of its shareholders at the expense of its customers because we are a captive market.”
Roxanne Pacheco, a member of Indivisible Albuquerque, also voiced concern over potential data center expansion across PNM’s service territory. “In this new era of AI, these tech giants are scrambling rapidly to expand their data centers, upgrade transmission lines, shore up the grid, buy up more land for more data centers, and access or acquire water rights for cooling these systems,” she said. “We live in a desert, and we are already facing a water shortage, if not crisis.”
The thrust of Nanasi’s trepidation derives from the potential emergence of affiliate interests post-acquisition.
Blackstone has owned data center developer QTS since 2021. “While QTS does not have a presence in New Mexico today, historically QTS has developed a land bank in the service territories of [Blackstone Infrastructure Partners’] portfolio companies post-investment,” Blackstone stated in a redacted version of a May 2025 presentation it recently added to the docket. “The QTS team is interested in developing data centers in the [New Mexico] market,” the presentation explains. It also identifies “demonstrated hyperscaler interest,” “access to clean power at scale,” and “low-cost land availability” as compelling factors for expansion.
It wouldn’t be the first time, either. Blackstone owns a roughly 20 percent stake in the Northern Indiana Public Service Company (NIPSCO). Last year, the Indiana Utility Regulatory Commission approved NIPSCO’s proposal to establish GenCo, which was launched with the goal of owning, building, and managing generation assets to meet the energy needs of large load customers like data centers. GenCo negotiates deals directly with data centers; Indiana’s Herald Bulletin described GenCo as a “nearly unregulated subsidiary” of NIPSCO.
Meanwhile, in 2024, Blackstone acquired grid parts manufacturer MacLean Power Systems from private equity firm Genstar Capital. MacLean produces “mission-critical” grid components for transmission and distribution networks. Given that data center expansion by QTS and other developers is driving up demand for the very products MacLean manufactures, Blackstone’s acquisition of TXNM would effectively complete the trifecta.
As inviting as it is to pin the tail on private equity for rolling up the utilities industry, the structural solutions needed to eliminate the perverse incentives that attract traditional private equity investors are not without nuance.
The common thread connecting institutional investors, asset managers, and other allocators is their shared pursuit of risk-adjusted returns. Long-term investors like pension funds have a penchant for “coupon clipping”—in other words, earning steady returns on investments that carry minimal risk. Conversely, for private equity to turn a profit, it must meet or exceed a certain level of financial returns on a particular holding at exit. If that holding is a utility, the path of least resistance tends to be a combination of two strategies: dumping capital into infrastructure expansion and thereby growing the rate base, oftentimes expeditiously.
Pension funds partner with private equity to access certain investments, and utilities are no exception. For instance, the Canada Pension Plan Investment Board and California Public Employees’ Retirement System were among the largest investors in the acquisition of Minnesota Power by BlackRock’s Global Infrastructure Partners.
Introducing and scaling Competitive Direct Equity (CDE) is one way to offer steady, reliable returns to utility investors without shifting unnecessary costs onto ratepayers. As Mark Ellis, a senior fellow at the American Economic Liberties Project and an independent expert witness who testifies before state utility commissions, wrote in a Real Clear Energy article he co-authored in October: “Under CDE, utilities would earn only their actual market-based cost of capital, removing the reward for excess spending.”
Similar to Minnesota Power’s justification for its acquisition by BlackRock, TXNM has long emphasized the necessity of the Blackstone deal, arguing that it provides “the financial resources necessary to thrive in a rapidly changing energy environment.” Ralph Wrons, a member of Indivisible Albuquerque who spoke at the hearing, begged to differ.
“There is no record in the evidence that PNM has been shut out of capital markets,” he said. “Stable revenues, regulated returns, and predictable growth are what make utilities attractive to capital markets in the first place.”
Other speakers described Blackstone’s proposed takeover as an affront to New Mexico’s natural beauty and called on the PRC to reject the deal.
“The state has some of the most beautiful national parks, hiking trails, and vistas I’ve ever seen, and they all face constant threats,” Lam Ho, another Albuquerque resident, said at the hearing. “The people in this room with me now know this … [we] will not go down without a fight.”
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