Avangrid, the U.S.-based unit of Spanish energy giant Iberdrola, said it has terminated its planned acquisition of New Mexico utility PNM Resources after failing to receive final approval for the $8.3 billion deal from state regulators.

Avangrid officials in a statement on Jan. 2 said the group needed to receive approval for the deal from the New Mexico Public Regulation Commission by year-end 2023. The commission previously had rejected the proposed acquisition in 2021, citing “quality of service issues” with Avangrid. The original deal was unanimously approved by PNM’s directors in 2020. The commission earlier said the agreement’s risks were greater than potential benefits to the utility’s customers.

The deal included Avangrid taking on $4 billion of PNM debt. PNM Resources in a statement said, “While the PNM Resources Board of Directors approved an extension [for the agreement], it was not accepted by Avangrid and Avangrid terminated the merger.”

Iberdrola in a statement said, “Avangrid Inc.. has today announced its decision to terminate the merger agreement entered into with PNM Resources Inc. on 20 October 2020, given that the conditions provided in the agreement for the closing of the transaction have not been met in the term contemplated.”

Disappointed in Decision

“We are greatly disappointed with Avangrid’s decision to terminate the merger agreement and its proposed benefits to our customers, communities and shareholders,” said Pat Vincent-Collawn, PNM Resources chairman and CEO, in a news release. “As we move forward, our strategic plans remain focused on the infrastructure investments necessary to meet the future energy needs of our customers and communities.”

The merger had been touted as a way to provide PNM’s customers with more renewable energy and further support Iberdrola’s U.S. presence. Avangrid on Tuesday said it had received other approvals necessary for the acquisition to move forward, but did not indicate whether it would take further action to resurrect the deal, saying “With the close of 2023 there is still no clear timing on the resolution of the court review of the New Mexico regulator’s denial of the merger nor any subsequent regulatory actions.” The company said the terms of the deal enabled both Avangrid and PNM to terminate the agreement “if the merger had not yet been consummated” by year-end 2023.

The company’s statement did say Avangrid would still work “to bring clean, affordable, and renewable energy to New Mexico and the 23 states we operate in across the nation. While our merger agreement with PNM has been terminated, we remain more than ever steadfast in our commitment to New Mexico in the development of wind and solar renewables.”

U.S. Presence

Iberdrola through Avangrid has established a strong presence in the U.S. renewable energy market, with projects in Maine and New York worth about $7 billion, according to the company. It also is supporting the Vineyard Wind offshore wind project off the coast of Massachusetts. Avangrid has said it has a $5 billion plan to repower the company’s existing U.S. wind power assets to take advantage of benefits offered in the Inflation Reduction Act.

Officials on Tuesday said the merger with PNM Resources had been approved by five U.S. federal agencies, as well as Texas regulators. PNM serves customers in both Texas and New Mexico.

New Mexico regulators also previously said their rejection of the deal included concerns about Ignacio Galán, Iberdrola’s chair, who had been investigated as part of a probe into possible criminal activities involving Spanish companies.  A Spanish court closed the investigation into Galán in June 2022. The company has denied any wrongdoing.

Darrell Proctor is a senior associate editor for POWER (@POWERmagazine).