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Attorney disqualified in New Mexico utility merger case

August 6, 2021 GMT

ALBUQUERQUE, N.M. (AP) — An attorney representing an international energy company involved in a utility merger in New Mexico has been disqualified because of an alleged conflict of interest stemming from ongoing contracts with the state attorney general’s office.

A hearing examiner with the state Public Regulation Commission issued the order Friday, saying Marcus Rael Jr. can no longer represent Iberdrola in connection with the utility case.

The order pointed out that the New Mexico Supreme Court has held that disqualification based on a conflict of interest claim should take place before any substantive hearings get underway.

Hearings begin Monday on the proposed multibillion-dollar merger between the Public Service Co. of New Mexico, the state’s largest electric provider, and Avangrid, a U.S. subsidiary of Spain-based Iberdrola.

Watchdog groups had filed complaints in July with the state auditor, the state Ethics Commission and the disciplinary board of the New Mexico Supreme Court that highlighted Attorney General Hector Balderas’ relationship with the law firm where Rael works. They alleged that Rael used his influence to convince Balderas to sign off on the merger and that Balderas awarded numerous contracts to Rael and approved improper invoices.

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Balderas and Rael both graduated from the University of New Mexico law school in 2001 and briefly worked together before Balderas ran for public office.

Rael said Friday he doesn’t believe there is a conflict but will honor the order. He said he joined the Avangrid and Iberdrola team because he believes the merger is in the best interest of New Mexicans, and he’s proud of the work he has done.

“I look forward to the merger being complete so that New Mexico achieves its renewable energy goals,” he said in an email to The Associated Press. “New Mexico is poised to be a leader in renewable energy, and with AVANGRID/Iberdrola, we are assured to get there.”

In filings with the utility commission, the attorney general’s office and Iberdrola had denied there was any conflict.

Matt Baca, a spokesman for the attorney general’s office, suggested the claims about a conflict were a “sideshow” and the case needs to proceed on the actual merits.

The hearing examiner noted in the order that the case is of public interest. It will affect more than a half-million customers and New Mexico’s economy as a whole as it will likely change the way electricity is generated and delivered in the state.

Some critics have said a proposed settlement agreement between Avangrid and PNM Resources — the parent company of Public Service Co. of New Mexico — doesn’t go far enough when it come to customer benefits or funds to support economic development in the state.

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PNM and Avangrid recently announced more concessions since their initial proposal failed to win the necessary support. The latest proposal includes $65 million in rate credits for customers, economic development donations of $15 million and additional money for energy efficiency assistance for low-income customers.

New Energy Economy Executive Director Mariel Nanasi is among those who have raised concerns about the merger and Rael’s relationship with the attorney general’s office. Public records obtained by her group and a review by Searchlight New Mexico showed that since taking office in 2015, Balderas has hired Rael or others at his firm to help represent the state in at least 19 cases, which is at least triple the number of cases farmed out to any other private law firm.

Invoices and contracts from the attorney general’s office showed more than $3 million in direct payments of fees and expenses to the Robles, Rael & Anaya law firm.

The hearing examiner’s order also pointed to a series of meetings between Rael and the attorney general’s office from late February through early April while the attorney general was preparing testimony that initially opposed the planned merger.