HOUSE MEMORIAL 6

57th legislature - STATE OF NEW MEXICO - second session, 2026

INTRODUCED BY

Patricia Roybal Caballero

 

 

 

 

 

A MEMORIAL

REQUESTING A COMPREHENSIVE STUDY OF PRIVATE EQUITY OWNERSHIP AND CONTROL OF ESSENTIAL GAS AND ELECTRIC UTILITIES AND OTHER CRITICAL INFRASTRUCTURE IN NEW MEXICO.

 

     WHEREAS, gas and electric utilities and other essential infrastructure in New Mexico provide services that are foundational to public health, economic stability, emergency response and community well-being; and

     WHEREAS, utility services function as regulated monopolies, are supported by ratepayer dollars and public financing mechanisms and require long-term capital investment, maintenance and operational continuity; and

     WHEREAS, private equity firms have acquired or sought controlling interests in essential service providers across the United States, raising questions for states about transparency, regulatory capacity and public leverage; and

     WHEREAS, scholarly research indicates that private equity transactions commonly use high-leverage and financial- extraction mechanisms, including dividend recapitalizations and fee structures that can increase financial distress risk and weaken the operating resilience of assets; and

     WHEREAS, wildfire risk and other climate-driven hazards create significant and growing danger for utilities, and long-term mitigation and maintenance investment is central to public safety and affordability; and

     WHEREAS, reports on investor-owned utilities and rate drivers in high-risk jurisdictions indicate that customer affordability is related to capital spending, risk recovery and governance, reinforcing the need to evaluate how ownership structures interact with ratepayer exposure; and

     WHEREAS, peer-reviewed evidence in other essential service sectors, including hospitals and nursing homes, indicates that private equity acquisition has been associated with changes in price, quality, adverse events, staffing-related issues and consumer experience, underscoring the importance of measuring access and service outcomes as well as financial performance; and

     WHEREAS, when private equity firms exit investments, communities and public entities may face stranded debt, degraded assets, unresolved liabilities or pressure for government intervention; and

     WHEREAS, New Mexico has made significant public investments through the New Mexico finance authority, the state investment council, economic development programs, workforce training, education systems and health and human services to support infrastructure, workforce stability and community resilience; and

     WHEREAS, the transfer of control of essential services to external private equity entities may weaken public leverage, complicate regulatory oversight and reduce the ability of the state to align infrastructure operations with long-term public policy goals that include affordability, reliability, environmental justice and workforce stability; and

     WHEREAS, private equity firms have sought ownership or controlling interests in New Mexico's investor-owned utilities, including a proposed acquisition of TXNM energy, the parent company of the public service company of New Mexico, by Blackstone infrastructure and a proposed acquisition of New Mexico gas company by Bernhard capital partners, both subject to review by the public regulation commission; and

     WHEREAS, certain industries and systems constitute essential services upon which the public depends for health, safety and basic daily services, including gas and electric utilities, water and wastewater systems, telecommunications infrastructure, health care delivery systems and other services that operate as natural monopolies or are supported by public financing, ratepayer funds or exclusive franchises; and

     WHEREAS, the acquisition of controlling interests in essential services by private equity entities raises distinct public policy concerns due to the combination of monopoly conditions, long-term capital needs, public dependency and financial extraction incentives that may not align with the provision of safe, affordable and reliable service; and

     WHEREAS, large-scale data centers and other high-load industrial facilities are driving unprecedented growth in electric power demand and water consumption across the United States, placing significant pressure on power generation, transmission and distribution and on water systems and creating new risks, such as grid reliability, resource scarcity and long-term infrastructure costs; and

     WHEREAS, studies and regulatory analysis indicate that, absent appropriate safeguards, the costs of serving large data center loads are often socialized through utility rates, resulting in residential and small-business ratepayers bearing costs associated with private development decisions from which they receive limited direct benefit;

     NOW, THEREFORE, BE IT RESOLVED BY THE HOUSE OF REPRESENTATIVES OF THE STATE OF NEW MEXICO that the legislative finance committee be requested to convene experts from state agencies, including the New Mexico finance authority, the public regulation commission, the attorney general, the state investment council, the economic development department, the workforce solutions department, the public education department and the health care authority, to jointly study and report on the impacts of private equity ownership and control of essential utilities and critical infrastructure in New Mexico; and

     BE IT FURTHER RESOLVED that the legislative finance committee-led study be requested to examine:

          A. outcome differences among publicly owned, cooperatively owned, investor-owned and private-equity-owned utilities in other states;

          B. changes in maintenance spending, infrastructure investment, outage frequency, wildfire or safety incidents and overall system reliability following asset acquisition or changes in control;

          C. exit scenarios and risks to the state and ratepayers, including bankruptcy, asset stripping or forced public intervention;

          D. impacts on access to services in rural, tribal and low-income communities, including shutoffs, service quality and infrastructure investment disparities;

          E. ownership transparency, holding company complexity and the effect of such structures on regulatory oversight and enforcement;

          F. the capital structures used in asset acquisitions, including debt levels, dividend payments, management fees and financial extraction mechanisms;

          G. the impact of ownership and capital structure on utility rates, rate filing frequency and long-term affordability for consumers;

          H. workforce impacts, including staffing levels, safety outcomes, contractor use, retention and institutional expertise;

          I. whether and under what conditions the state should limit, condition or prohibit the acquisition of controlling interests in essential services by private equity entities, including the development of clear definitions, thresholds and criteria to distinguish acceptable forms of private investment from ownership structures that pose unacceptable risk to the public interest;

          J. distinctions between minority or non-controlling investments and transactions that result in effective control, including through voting rights, governance provisions, debt covenants or management agreements;

          K. the impacts of large-scale data centers and other high-load facilities on electric power demand, water consumption, grid reliability and the need for new power generation, transmission and distribution and water infrastructure; and

          L. the extent to which the costs of serving data centers and other high-load facilities are allocated to or borne by residential and small-business ratepayers and the effectiveness of rate design, cost allocation methods, transparency requirements and other regulatory tools in protecting ratepayers from subsidizing such loads; and

     BE IT FURTHER RESOLVED that the study be requested to include an assessment of the appropriate role of public investment, regulation and ownership in protecting essential services as compared to private equity ownership models; and

     BE IT FURTHER RESOLVED that the requested study and recommendations be completed and delivered no later than December 1, 2026; and

     BE IT FURTHER RESOLVED that the findings and recommendations be presented to the legislative finance committee, the state investment council, the New Mexico finance authority and the legislature, with specific identification of statutory, regulatory or policy options available to protect public funds, ratepayers and long-term service reliability; and

     BE IT FURTHER RESOLVED that copies of this memorial be transmitted to the governor, the legislative finance committee, the New Mexico finance authority, the public regulation commission, the state investment council, the economic development department, the workforce solutions department, the public education department, the health care authority and the attorney general.

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