A private equity firm whose limited experience owning utilities is checkered with compliance problems and cost overruns is attempting to buy the New Mexico Gas Company (NMGC), raising concerns from regulators, environmental advocates and customers in that state about the company, Bernhard Capital Partners (BCP). 

The proposed bid by BCP to purchase the gas utility is part of a larger national trend in which private equity firms are seeking to buy utility companies. This includes another much larger acquisition attempt in New Mexico, that one by Blackstone to buy Public Service Company of New Mexico (PNM), the state’s largest electric utility company. 

The BCP acquisition would place NMGC under the ownership of Saturn Utilities Holdco, LLC (Saturn), a subsidiary of BCP, which is based in Louisiana. As a private company, BCP is not subject to the same legal and financial transparency as NMGC’s current owner, the publicly traded energy holding company Emera. The New Mexico Public Regulation Commission (PRC) must approve the transaction.

Testimony: Bernhard Capital Partners’ ownership of Louisiana water utility included sludge buildup, bloodworms

Advocates and customers have raised concerns about what they say is BCP’s problematic and limited track record of utility ownership.

New Energy Economy (NEE), a New Mexico climate advocacy group opposing the BCP acquisition, drew attention to National Water Infrastructure (NWI), a small Louisiana water utility which BCP has owned since 2020. 

Since then, NWI has been subject to an enforcement action  resulting in a settlement with Louisiana’s Department of Environmental Quality (LA DEQ). 

NEE’s witness, Louisiana-based attorney Jesse George, testified that the LA DEQ settlement and numerous other non-compliance matters at NWI are evidence of BCP’s business track record of exposing its utility customers to harm and its inexperience in operating utilities. The LA DEQ cited NWI under BCP’s leadership for failing to operate and maintain the treatment facility properly. LA DEQ’s inspection found a build-up of solids in the treatment equipment, close to the surface of the wastewater. Further, the inspection revealed a large amount of sludge build-up, with bloodworms observed throughout the sludge – indicative of stagnant water containing organic matter often associated with sanitary waste. 

BCP denied committing any violations, but agreed to pay the LA DEQ a total of $12,817.75 in settlement costs. George’s testimony noted that NWI is a significantly smaller utility than NMGC, with 23,000 customers compared to NMGC’s 556,000. George stated, “The Joint Applicants have not attempted to minimize the risks posed by their ownership and lack of regulated gas utility experience by offering customer protections, like automatic penalties or performance failures. I don’t see any financial insulation for customers if performance declines. Or if reliability declines.” 

George testified that BCP’s track record at NWI was important evidence for the PRC to consider as it applied its six-factor test to evaluate whether the transaction “satisfies the public interest,” as required under New Mexico law. Those factors include “Whether [the transaction] provides benefits to utility customers,” “Whether the quality of service will be diminished,” “Careful verification of the qualifications and financial health of the new owner,” and “Adequacy of protections against harm to customers.” 

But at the request of BCP, the NM PRC Hearing Examiners ruled to deny an exhibit of George’s testimony, in addition to denying his qualifications as an expert witness, instead granting his testimony in part as a lay witness. 

During a public comment hearing, the majority of comments came from NMGC customers in opposition to the purchase. Many cited BCP’s lack of experience and past mishaps running NWI among their concerns. 

BCP donated to decision makers on previous bid for Entergy’s Louisiana gas system

Though BCP is new to gas utility management, NMGC would not be the firm’s first gas utility acquisition. Earlier this year, through its subsidiary – Delta Utilities – BCP received final approval from the New Orleans City Council to purchase Entergy’s Louisiana and New Orleans gas systems, following unanimous approval from the Louisiana Public Service Commission last year. The sale did not receive a full hearing before the council, but nearly a dozen people and organizations provided comments while approximately 80 people submitted comments online, all of which were in opposition.

BCP and its executives donated to all five of the Louisiana Public Service Commissioners over the seven years prior to gaining approval of the acquisition, according to the investigative newsroom Floodlight. $149,000 of the total $200,000 in contributions went to Commissioner Craig Greene, whose district covered Entergy Louisiana’s gas service territory. Delta Utilities – backed by BCP – purchased Entergy’s gas systems for $484 million in July 2025, acquiring 200,000 customers. The Louisiana Public Service Commission approved the purchase by a 5-0 vote. Greene told Floodlight before the vote that the contributions from BCP did not affect his decision. After the vote, Greene announced he would return the donations he reported receiving from BCP that year, totaling $36,500. 

The company also purchased CenterPoint’s gas systems in Louisiana and Mississippi, which serve 380,000 customers for $1.2 billion. The deal was closed in July of this year.

BCP founder formed private equity firm after selling firm that mismanaged multiple costly projects 

BCP’s troubles in managing NWI are not the company founder’s first brush with mismanagement. BCP’s founder, James Bernhard Jr., formed the private equity firm Bernhard Capital Partners in 2013, following the sale of an engineering, construction, and industrial firm, The Shaw Group. Shaw was involved in several business fiascoes under Bernhard Jr.’s leadership. 

After Hurricane Katrina, FEMA awarded Shaw and three other companies no-bid housing contracts of up to $100 million each to support recovery efforts in the disaster-stricken area in 2005. In the proceeding backlash, with many concerned that the Bush administration was not doing enough to respond post-hurricane, FEMA pledged to rebid the contracts. Years later, audits revealed that the contract recipients, including Shaw, wasted tens of millions of dollars across those deals. In addition, after the BP oil spill along the Gulf of Mexico in 2011, the state legislative auditor found that Shaw may have overbilled the state of Louisiana by nearly $500,000 for costs of building sand berms to block oil from washing ashore. 

Shaw, led by Bernhard Jr., was the main subcontractor to Westinghouse Electric Company for construction of the Vogtle nuclear power plant in 2012. The project stalled for years, resulting in cost overruns estimated at $13 billion, and ultimately led to a bankruptcy filing by Westinghouse. By the end of 2012, Bernhard Jr. sold The Shaw Group for $3 billion. 

Other BCP executives have a history of cost overruns and overpromises on project deliverables in the energy sector. BCP executive, and Saturn Holdco President Jeffrey Baudier was the former CEO of Petra Nova LLC, an NRG company capturing carbon dioxide from one of four coal units at W.A Parish Generating Station near Houston, Texas. The carbon capture project stopped operating in 2020, signaling a major setback for proponents of coal carbon capture. The $1 billion project, including $195 million of public funding from the U.S. Department of Energy (DOE), claimed to reduce emissions by 90%. However, a report submitted to DOE found Petra Nova was capturing only 7% of the coal plant’s carbon dioxide, according to EPA data.

NM PRC staff recommend substantial changes to the application for approval

NM PRC staff found that, as proposed by NMGC and Saturn, the transaction provides “no long-term tangible direct benefit to NMGC’s customers. Staff recommended the inclusion of substantive financial long-term commitments that directly benefit customers, a further commitment to addressing safety issues and staffing, and specific cost allocation to mitigate future rate increases, including the non-recovery of costs associated with the acquisition. The staff’s position is that the transaction should only be approved if BCP agrees to enact those changes. Staff member Naomi Velasquez notes that “this transaction is, at best, one denoted by status quo with benefits to NMGC and its ratepayers being nebulous under the most optimistic of scenarios.” 

Proposed transaction draws concern over state’s climate commitments

Many opponents to Entergy’s sale of its Louisiana gas system to BCP’s Delta Utilities voiced concerns over Delta Utilities’ plans to make additional investments in gas infrastructure, which they believe would hinder greenhouse gas emissions reduction goals. Similar opposition is growing in New Mexico. Gov. Michelle Lujan Grisham signed an executive order in 2019 committing New Mexico to reduce GHG emissions by at least 45% by 2030 compared to 2005 levels. 

Another New Mexico clean energy advocate, the Coalition for Clean Affordable Energy, testified that the building of any new data centers powered by gas in New Mexico does not align with the state’s climate commitment. BCP CEO Jeff Jenkins said in an interview that BCP sees a “generational investment opportunity” in providing power to the nation’s growing number of data centers.

Private equity acquisitions carry high stakes for captive customers

Private equity interest in utilities is on the rise, largely focused so far on utilities poised for major infrastructure buildout to accommodate projected load growth from artificial intelligence and data centers. The value proposition comes when utilities make capital expenditures – they recoup from their captive customers the costs of qualifying projects plus an additional profit margin.

Additionally, the moves to own utilities come after many of the same private equity firms have built up robust portfolios of large power users – and look to add data centers to the mix. Given the expansiveness of private equity holdings, potential conflicts of interest loom large. For example, a firm that owns a utility might also hold a stake in a large industrial customer of that utility. In that scenario, the private equity firm could have an interest in keeping rates low for the industrial customer – potentially at the expense of captive residential and small business customers.

Such concerns over customer impacts were prominent in BlackRock’s recent bid to take over Allete, whose largest subsidiary Minnesota Power serves electricity to the northeastern corner of the state, an area that includes a potential new data center. Minnesota utility regulators signed off on the contentious deal in October over the objections of consumer advocates and an administrative law judge who warned that the multitrillion-dollar firm’s aggressive pursuit of profits could stick captive utility customers with higher costs. Supporters of the deal mostly included organizations and individuals with financial ties to the utility.

Shortly before Minnesota regulators signed off on the Allete transaction, news broke that BlackRock is also targeting Virginia-based AES, a substantially larger energy company that operates electric utilities in Indiana and Ohio while also providing renewable power to large tech companies – including ones looking to expand their data center portfolios. When deal rumors came to light, again prompting concerns from consumer advocates, AES was valued around $38 billion. Around the same time, reports surfaced that BlackRock was planning to buy Aligned Data Centers – a developer worth as much as $40 billion.

While the flurry of private equity interest lately is new, investment firms’ snapping up utilities is not entirely unprecedented. Consumer advocates in the Minnesota proceeding pointed to an earlier example of a utility take-private deal that did not turn out well for customers. Michigan’s Upper Peninsula Power Company, known as UPPCO, was sold to a private equity firm in 2014 and since then has seen a series of successive rate hikes and a sale to another private equity firm. Its customers now pay rates 9 cents higher per kilowatt than the state average, as cited in the Minnesota proceeding.

“A utility is not like a Burger King”

During an evidentiary hearing on November 4, the NM PRC hosted on the acquisition of NMGC on Nov. 4, Saturn Holdco President Jeffrey Baudier was cross-examined by Commissioners and intervening parties in the docket. When questioned about his testimony regarding the acquisition premium, an intervenor asked Baudier to explain his position on the staff’s recommendation that NMGC establish a regulatory liability equal to the goodwill or acquisition premium resulting from the transaction, or $100 million. In his written testimony, Baudier claims the staff proposal is based on “the flawed premise that the acquisition premium is due solely to the government monopoly granted to the utility and that the amount over the book value of the utility should be given to customers.” During the hearing, Baudier goes on to say, “That would be the legal equivalent of me going to Burger King and buying a hamburger and saying, ‘I own part of Burger King because I paid for the hamburger.’” 

Later, Commission Chair Gabriel Aguilera addressed Baudier’s comment, saying the analogy “completely misses the mark.” Chair Aguilera stated, “Burger King operates in a competitive environment, and the Gas Company is a natural monopoly. I heard you explain your view on the regulatory compact. Nothing like that exists for Burger King, but it does exist for the Company that you are seeking to purchase.” 

Photo Cred: Tracy O, Flickr