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Blackstone's data center plans may affect TXNM acquisition

approval

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TXNM's sale agreement follows rising electricity demand

from AI

data centers

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New Energy Economy to scrutinize Blackstone's handling of

data

centers

By Laila Kearney

NEW YORK, May 21 (Reuters) - Blackstone Infrastructure's

plans for data centers in New Mexico will be a deciding

factor in whether stakeholders challenge the private equity

group's $11.5-billion proposed acquisition of electric company

TXNM Energy ( TXNM ), the group that blocked TXNM's previous

merger plan told Reuters this week.

TXNM, which is a holding company for regulated utilities,

including PNM in New Mexico, announced its sale agreement with

Blackstone on Monday in the latest of several recent U.S. power

industry deals propelled by rising electricity demand from Big

Tech's AI data centers.

The agreement will require the approval of state regulators,

with input from PNM stakeholders, including the New Mexico

Department of Justice, consumer advocates and clean power groups

such as New Energy Economy.

New Energy led the effort to ultimately thwart TXNM's last

agreement to sell to power company Avangrid, the U.S. unit of

Spanish electric company Iberdrola. After the fight over the

proposed acquisition escalated to the New Mexico Supreme Court,

Avangrid abandoned its $8.3-billion bid for TXNM in late 2023.

Since the foiled deal, data centers have emerged as the

biggest driving force behind U.S. electricity demand, which is

on track to reach record highs this year and in 2026.

How Blackstone plans to capitalize on that demand in New

Mexico will be a key issue in New Energy Economy's scrutiny of

the TXNM purchase, the nonprofit's director, Mariel Nanasi,

said.

Among the considerations are whether Blackstone intends to

own data centers in New Mexico, either directly or through

affiliates, and how it handles the costs of upgrading electrical

systems to connect the large energy loads, Nanasi said.

"We are going to want to have real guardrails around that,"

she said.

TXNM and Blackstone representatives, on a call with

investors shortly after the acquisition announcement, said they

planned to meet with stakeholders over the next 90 days before

filing their plan with the state.

As artificial intelligence data centers proliferate and grow

to use record amounts of electricity, regulatory fights have

emerged over who pays for additional infrastructure and upgrades

needed for the giant energy consumers.

The regulated utilities under TXNM can power data centers,

but they are barred by state regulations from developing,

owning, or operating the centers for third parties, said one

person familiar with the Blackstone-TXNM arrangement, who spoke

on condition of anonymity.

Any transmission upgrades or power generation built to serve

data centers would be paid for by the data center companies, the

person said.