Laura: THANK YOU SO MUCH FOR JOINING ME ON NEW MEXICO  IN FOCUS TODAY TO TALK ABOUT THE PROPOSED MERGER BETWEEN  YOUR TWO COMPANIES.

THIS IS A SUPER COMPLICATED  ISSUE AND I AM REALLY LOOKING FORWARD TO HAVING  KIND OF A PLAIN LANGUAGE TALK ABOUT THESE REALLY  COMPLICATED ISSUES.

PAT AND DON, I WOULD LOVE TO  START WITH YOU.

WHY DOES PNM NEED THIS  MERGER?

WHY IS THIS SO IMPORTANT FOR  PNM?

Collawn: WELL, THANK YOU  FOR YOUR TIME TODAY AND WE WILL ENDEAVOR TO GET RID OF  OUR NORMAL ACRONYMS WHICH WE ALL USE.

PNM STARTED LOOKING AROUND AND SURVEYING THE ENERGY  LANDSCAPE.

AS YOU KNOW FROM YOUR WORK,  IT IS INCREDIBLY COMPLICATED.

THE ISSUE OF CLIMATE CHANGE IS PARAMOUNT AND THE FASTER  WE CAN TRANSITION OUR PORTFOLIO THE BETTER.

TECHNOLOGY IS BECOMING MORE AND MORE INTERESTING AND  MORE AND MORE SOPHISTICATED.

YOU REALLY NEED TO BE A  LARGE COMPANY WITH A LOT OF MONEY ON YOUR BALANCE SHEET  IN ORDER TO HELP KEEP COSTS LOW FOR CUSTOMERS, AND WHILE  PNM IS A LARGE COMPANY IN TERMS OF NEW MEXICO, WE ARE  A VERY SMALL UTILITY IN THE UNITED STATES.

SO WE  STARTED LOOKING AROUND FOR SOMEONE THAT HAD ALL THE  THINGS WE WANTED IN A MERGER PARTNER.

SOMEONE WHO HAS THE SAME VALUES WHEN IT COMES TO THE  ENVIRONMENT, FOR OUR COMMUNITIES, OUR EMPLOYEES  AND OUR CULTURE HERE IN NEW MEXICO AND COMMUNITIES.

SOMEONE THAT HAD A BIG BALANCE SHEET AND SOMEONE  THAT HAD TECHNOLOGICAL EXPERTISE.

AND WE LOOKED AROUND AND SURVEYED ALL THE UTILITIES  IN THE UNITED STATES AND ENDED UP WORKING WITH  AVANGRID BECAUSE WE THOUGHT THEY WERE THE PERFECT FIT  FOR ALL THOSE THINGS I LISTED.

AND AVANGRID HAPPENS TO BE MAJORITY OWNED, 80% OWNED BY  A COMPANY IN SPAIN CALLED IBERDROLA, WHICH IS A WORLD  LEADER IN RENEWABLES AND TECHNOLOGY AND HAS A VERY  STRONG BALANCE SHEET AND A CREDIT RATING.

SO, IT WAS SORT OF A MARRIAGE MADE IN HEAVEN.

TOOK A LITTLE ROMANCE BUT WE THOUGHT IT MADE SENSE  BECAUSE THEY WANT WHAT IS BEST FOR NEW MEXICANS JUST  AS WE WANT WHAT IS BEST FOR NEW MEXICANS.

Laura: PEDRO, THANKS FOR JOINING US.

WHAT IS KIND OF YOUR ELEVATOR PITCH FOR THE  CURRENT PNM CUSTOMER?

HOW WILL THIS MERGER BENEFIT  PNM CUSTOMERS?

Blazquez: IF YOU WANT TO  MAKE SURE THAT THE PEOPLE HAVE THE BEST QUALITY OF  SERVICE, IT IS NOT ONLY US.

I THINK A LOT OF PEOPLE CAN  DO THAT.

BUT IF YOU WANT TO MAKE SURE IT IS THE BEST QUALITY OF  SERVICE AT THE CHEAPEST PRICE, UNLESS YOU HAVE  CRITICAL MASS, IT IS IMPOSSIBLE.

WE HAVE 32 MILLION CUSTOMERS.

IMAGINE OUR PURCHASING POWER TO BUY THINGS.

PNM HAS A MILLION, LESS THAN A MILLION.

SO FROM THAT POINT OF VIEW, IT IS IMPOSSIBLE YOU CAN BUY  THINGS THAT WILL ALLOW YOU TO GET THAT SERVICE AT THE  SAME PRICES.

SAP, TOP OF STATIONS, WIRES,  EVERYTHING.

SO WE ALL NEED TO COME  TOGETHER AND THAT IS WHY THE ANGLE FOR CUSTOMER IN NEW  MEXICO FOR ME IS SIMPLE.

WE ARE GOING TO MAKE SURE  THAT PNM AND CUSTOMERS BENEFIT FROM OUR SIZE.

SECOND, THE BALANCE SHEET.

I THINK THEY MENTIONED THAT.

AS EXAMPLE, PNM HAS IN HOLDING COMPANY, ONE BILLION  OF DEBT.

WE ARE HAPPY TO TAKE THAT  BILLION TO OUR HOLDING COMPANY IN THE U.S.

OKAY?

WE ALREADY HAVE IN THE U.S.  OPERATIONS MORE OR LESS FOUR TIMES THE SIZE OF PNM.

WE ALREADY HAVE BIG COMPANY IN THE U.S.  WE OWN EIGHT UTILITIES.

I SAID THE SAME THING EVERY  TIME WHEN I BOUGHT THE UTILITY.

WHEN WE MERGE WITH YOU, WE WANT TO BE LOCAL, BUT OUR  BALANCE SHEET, EVERY SINGLE TIME WE ACQUIRE A UTILITY,  THEIR RATING WENT UP BY ONE NOTCH.

IF YOU'RE RATING GOES UP, BASICALLY THE COST GOES DOWN  AND THE RATE PAYERS BENEFIT.

THESE ONE BILLION THAT YOU  HAVE IN THE HOLDING COMPANY RIGHT NOW, WE MOVE TO  AVANGRID HOLDING COMPANY.

IMAGINE WHAT IT IS FOR NEW  MEXICO TO HAVE ONE BILLION LESS OF DEBT.

OTHERWISE THAT WOULD HAVE TO BE TAKEN CARE OF BY NEW  MEXICANS OVER MANY YEARS, AS YOU CAN IMAGINE.

AND THIRD, I THINK THE CUSTOMERS WE BELIEVE THE  GREEN WORLD HAS NOW COME BACK.

WE STARTED FIGHTING IN THAT WORLD 20 YEARS AGO WHEN  NOBODY WAS FIGHTING, SO, I THINK, WE WERE VERY ALONE 20  YEARS AGO FIGHTING AGAINST A LOT OF PEOPLE.

AND A LOT OF COMPANIES, A LOT GOVERNMENTS.

EVERYBODY IS VERY GREEN, EVERYBODY IS GREEN RIGHT  NOW.

BUT I CAN TELL YOU, LAST  WEEK AND TWO WEEKS AGO WE WERE THE GUYS THERE  FIGHTING, YOU KNOW, TO MAKE SURE THERE WAS AGREEMENT.

I THINK YOU KNOW BIDEN, PRESIDENT BIDEN, THERE WAS A  BILL TWO DAYS AGO.

AVANGRID WAS THERE.

WE WERE PROBABLY THE ONLY ENERGY COMPANY.

WHY?

BECAUSE WE KNOW THE GUYS FIGHT TO GO MAKE SURE THE  WORLD IS MOVING IN THE RIGHT DIRECTION.

WE HAD PROOF OF IT.

WE WANT TO DO IT, WE PROVE  IT.

WE HAVE IT DONE.

THOSE ARE MAIN REASONS WHY WE BELIEVE WE ARE THE RIGHT  PARTNER FOR PNM AND WE ALSO RUN THE COMPANIES LOCALLY.

I KNOW A LOT OF U.S. COMPANIES, WHEN THEY GO  BROKE, THEY SEND HUNDREDS OF AMERICANS TO RUN IT, THE  CHINESE, THEY SEND 1000, GERMANS.

IN OUR CASE IT IS VERY SIMPLE.

CHECK OUR MANAGEMENT IN THE U.S.

RIGHT NOW.

IT IS ALL AMERICAN.

THERE MAY BE ONE GUY WHO IS  NOT AMERICAN OR ONE LADY, YOU KNOW.

BUT THE REST ARE AMERICANS AND IF THEY ARE NOT  AMERICANS, THEY ARE THE BEST WE CAN FIND.

HOW WE ARE GOING TO BE RUNNING PNM.

YOU HAVE DON THERE RIGHT NOW.

WE EXPECTING DON TO BE THE PERSON MAKING THE DECISIONS.

YOU CAN CALL OUR CEO'S OF THE OTHER UTILITIES, YOU  KNOW, AND ASK THEM HOW THEY RUN THE UTILITIES.

THEY ARE THE PEOPLE IN CHARGE.

Laura: IF THE MERGER WERE TO GO THROUGH, WHAT ARE SOME  OF THE SHORTER TERM AND THEN LONGER TERM PLANS FOR  RENEWABLE ENERGY IN NEW MEXICO, SOME OF THE CHANGES  WE MIGHT SEE?

Tarry: WE ARE ALREADY ON  THE PATH AND WE HAVE PROSED CARBON FREE BY 2040.

WE'LL LOOK AS PART OF THE MERGER TO BE THERE AT 2035  AND SO, AS PAT SAID, WE NEED BATTERY TECHNOLOGY AND OTHER  TECHNOLOGY TO COME ALONG AND FILL THE GAP.

AND THAT WILL BE IMPORTANT BUT WE ARE ALL CONFIDENT  WITH THE DOLLARS AND MONEY THAT IS GOING IN, THAT THAT  WILL HAPPEN.

IN THE NEAR TERM IT IS  CONTINUING TO LOOK FOR THOSE RENEWABLE RESOURCES, WHETHER  THEY ARE BATTERY, WIND OR SOLAR.

AT THE SAME TIME, BALANCING OUR RELIABILITY.

WE ABSOLUTELY HAVE TO BE RELIABLE.

WE'LL CONTINUE TO BALANCE THAT, BUT AS WE LOOK IN THE  FUTURE, YOU'LL SEE AN ENERGY SECTOR AND IT IS NOT JUST IN  NEW MEXICO.

IT WILL BE IN THE WEST.

BUT I AM CONVINCED THERE WILL BE NEW TECHNOLOGY ALONG  THERE AS WELL.

SO THE BATTERY, THE WIND,  THE SOLAR.

PUMP STORAGE IS ANOTHER  ELEMENT.

THERE IS A WHOLE DIFFERENT  OTHER SET OF FACTORS THAT ARE OUT THERE THAT WILL  CONTINUE, AS INNOVATION CONTINUES TO KICK IN.

I KNOW THAT IBERDROLA IS HEAVILY INVESTED.

THEY HAVE BEEN DOING THIS FOR 20 YEARS.

THEY WERE WELL IN FRONT OF THE CURVE IN EUROPE AND THEY  HAVE INVESTED AND CONTINUE TO INVEST IN NEW TECHNOLOGY.

THAT WILL BE A HUGE BENEFITS WE GET, IS WE CAN LEVERAGE  SOME OF THAT TECHNOLOGY THAT THEY ARE WELL DOWN THE PATH  ON.

Laura:   COULD YOU TALK ABOUT SOME OF THE SPECIFICS  WE MIGHT SEE ON THE GROUND AND ALSO IF THAT ELECTRICITY  GENERATED BY RENEWABLE SOURCES IS FOR NEW MEXICANS,  FOR EXPORT.

KIND OF WHAT WE ARE LOOKING  AT?

Blazquez: I THINK WHEN  YOU LOOK AT NEW MEXICO, WHAT CAN YOU SEE?

IMMEDIATELY, WE HAVE THE RESOURCES TO TALK TO THE  GOVERNOR TO TALK TO THE OTHER PARTIES, TO TALK TO  THE PUBLIC COMMISSION, YOU KNOW, OUTSIDE OF  REGULATIONS, OUTSIDE OF REGULATIONS, THERE ARE MANY  OPTIONS.

TAKE ENERGY.

CALIFORNIA NEEDS ENERGY, NEW MEXICO NEEDS ENERGY.

IT IS A QUESTION OF WHAT DO YOU WANT TO DO?

WE ARE TRANSMISSION BUILDERS.

THERE IS NEED FOR TRANSMISSION EVERYWHERE,  BECAUSE ELECTRICITY IS THE SOURCES ARE THERE BUT THEY  ARE NOT CONNECTED.

THE QUESTION IS WHAT NEW  MEXICO WANTS TO BENEFIT FROM.

IF YOU WANT TO BENEFIT FROM SOME THINGS DON'T LET JUST  PEOPLE TO BUILD ASSETS, OWN THEM AND BE SOMEWHERE ELSE.

MAKE SURE THEY BECOME LOCAL.

THAT IS WHAT WE ARE GOING TO  DO.

MAKE SURE IT HAPPENS IN NEW  MEXICO, THE EMPLOYMENT, ECONOMIC DEVELOPMENT REMAINS  THERE.

WE HAVE DONE THAT EVERYWHERE  WE GO.

OFF SHORE, YOU SEE THE OFF  SHORED WIND DEVELOPMENT IN THE U.S.

I THINK WE ARE GOING TO BE ONE OF THE THREE OR FOUR  PLAYERS IN THE U.S.

DOING OFF SHORE WIND.

WE NEED A LOT OF BACKUP WORK, ENGINEERING, YOU KNOW,  CENTERS, ET CETERA.

WE HAVE CONTROL CENTERS IN  GLASGOW.

WE HAVE CONTROL CENTERS IN  TOLEDO, SPAIN.

YOU DON'T NEED TO HAVE THAT  WHERE THE OFF SHORE WIND ASSETS ARE.

OF COURSE, WE ARE GOING TO HAVE THINGS IN  MASSACHUSETTS.

OF COURSE, WE WILL HAVE  THINGS IN THE CAROLINAS BUT WE WILL HAVE OTHER THINGS IN  OTHER PLACES.

SO I THINK WE WILL BRING THE  OPPORTUNITY TO NEW MEXICO TO START DOING THINGS THAT  OTHERWISE YOU WILL MISS THAT WAY.

I THINK WE ARE THE TYPE OF PEOPLE THAT CAN HELP NEW  MEXICO TO BE PART OF THOSE TAKES AHEAD OF US.

Laura: WE TALKED RECENTLY TO A REPORTER OF THE DAILY  NEWS IN MAINE.

AVANGRID HAS BEEN THERE FOR  ABOUT A DECADE.

AND ONE OF THE ISSUES HE  POINTED OUT WAS PROBLEMS WITH BILLINGS AFTER A BATCH  OF SERIOUS STORMS AND THEN THE RECENT STORY THAT THE  PRESS COVERED THAT CUSTOMERS SAW THEIR BILLS INCREASE BY  35% IN JULY.

THESE ARE THE KIND OF THINGS  THAT MAKE NEW MEXICANS A LITTLE BIT NERVOUS.

CAN YOU ASSURE CUSTOMERS IN NEW MEXICO THAT THESE SAME  KIND OF PROBLEMS, CUSTOMER SERVICE, RATE INCREASES  WON'T HAPPEN HERE?

Blazquez: LET ME JUST GO  ONE BY ONE BECAUSE I THINK IT IS IMPORTANT TO MAKE SURE  THAT WE EXPLAIN WHAT IT IS BECAUSE, YOU KNOW, THE WAY  YOU PUT IT THERE IS NOT REALLY WHAT IS HAPPENING.

THE FIRST THING IS WE CHANGED THE BILLING SYSTEM  IN MAINE.

IF YOU ASK ANY UTILITY  OPERATOR, WHEN YOU CHANGE THE BILLING SYSTEM, YOU HAVE  A REAL MESS.

OKAY?

BUT WE HAVE TO DO IT AND IT WAS TIME TO DO IT.

IT IS NOW 19 MONTHS, NONSTOP WITH NO ISSUE, ZERO.

SO, IF YOU WANT TO SPEAK ABOUT TWO YEARS AGO AND  THREE YEARS AGO WHEN WE CHANGED THE BILLING SYSTEM,  I AGREE.

BUT WE HAVE TO DO IT.

WE ARE PROUD HOW THE WORK  WAS DONE BY THE LOCAL PEOPLE.

WE PUT ADDITIONAL EFFORTS.

19 MONTHS WITH NO ISSUE.

SO, WE ARE COMFORTABLE ABOUT WHAT IT IS.

SECOND, REFERRING TO RATE INCREASES, WE ARE RIGHT NOW  GOING TO THE PUBLIC COMMISSION IN MAINE BECAUSE  THE RATE INCREASE COMING UP NOW IS BECAUSE OF THE  GENERATION PIECE OF THE BILL.

IT IS NOT BECAUSE OF THE NETWORKS.

OKAY.

BECAUSE OF GAS PRICES,  BECAUSE OF GENERATION FEES HAS GONE UP MATERIALLY.

IT IS NOT BECAUSE OF THE NETWORK AND ALSO YOU HAVE  TRANSMISSION PRIORITY IN NEW ENGLAND THAT ARE LOCATED TO  MAINE BECAUSE THEY BENEFIT FROM THAT.

THAT IS NOT BECAUSE OF CENTRAL MAINE POWER.

THAT IS ANOTHER EXAMPLE, IT IS NOT WHAT WE ARE DOING.

IT THINGS YOU HAVE TO PUT ON THE BILL FOR OTHER PEOPLE.

THIRD, WE HAD SOME VERY STRONG COMPETITION FROM  LEGISLATURES IN MAINE TO A TRANSMISSION LINE FROM  CANADA INTO MASSACHUSETTS.

THAT IS FUNDED BY THE  NUCLEAR OPERATORS IN THE REGION.

THEY DON'T WANT ANY GENERATION THERE.

WHY?

HYDRO IS VERY CHEAP.

IT DOESN'T BRING ANY ELECTRICITY INTO NORTHERN  MAINE, NEW ENGLAND.

THE PRICES REMAIN VERY HIGH.

YOU MAKE A LOT OF MONEY.

THAT IS WHY THE POSITION WE  HAVE IS FUNDED BY FOSSIL GENERATORS THAT THEY WANT TO  MAKE SURE NOTHING IS BUILT, NOTHING, NO GENERATION, NO  TRANSMISSION LINE TO BRING POWER, ET CETERA.

IN MAINE WE ARE THE BEST OPERATOR IN RELIABILITY ON  SERVICE BY FAR.

IF YOU COMPARE US WITH  MAINE, EMERA MAINE, WHO WAS APPROVED BY THE PUBLIC  COMMISSION TO BUY, AS YOU KNOW, A UTILITY IN NEW  MEXICO, WE ARE MUCH BETTER OPERATOR THAN THEY ARE.

AND THE PUBLIC COMMISSION APPROVED THEM AS WELL WE ARE  VERY COMFORTABLE.

IF YOU LOOK AT THE  PENALTIES, NOT IN MAINE, BUT IN NEW ENGLAND, I THINK WE  HAVE THE LOWEST PENALTIES IS BECAUSE THE REGULATORY  SYSTEM.

THE PENALTIES CAN BE  NEGATIVE OR ACTUALLY RATE INCREASES.

SO YOU HAVE BOTH AND WE HAVE BOTH SITUATIONS.

WE ARE THE BEST AND LOWEST PENALTY IN NEW YORK, IN  CONNECTICUT AND MAINE, WE ARE THE BEST OPERATOR.

FINALLY, IN TERMS OF THE STORMS, I MEAN, WE GOT LAST  YEAR, YOU KNOW, THE PRIZE FOR THE BEST STORM REACTION  OPERATOR.

PLEASE KEEP IN MIND IN  MAINE, IN NEW ENGLAND AND NEW YORK AND CONNECTICUT WE  USED TO HAVE ONE HURRICANE EVERY FIVE YEARS.

WE ARE HAVING TWO OR THREE MAJOR STORMS NOW A YEAR.

INFRASTRUCTURE IS 50, 60, 70 YEARS OLD.

WE ARE PROUD TO RECEIVE THOSE AWARDS.

I THINK WE HAVE BEEN CONGRATULATED BY THE  GOVERNORS IN THOSE STATES AND PUT AS EXAMPLE IN  CONNECTICUT AND MAINE AND I THINK IN THE CASE OF MAINE,  AS I SAID TO YOU, WE ARE ALREADY 19 MONTHS WITH NO  ISSUE BECAUSE OF THE CHANGE  IN THE BILLING SYSTEM.

Laura: THANK YOU ALL SO  MUCH FOR TALKING WITH ME.

I APPRECIATE THE CHANCE TO  WALK THROUGH SOME OF THESE REALLY COMPLICATED ISSUES.

Blazquez: THANK YOU VERY MUCH.