New Mexico has the money to nationalise its power grid. It should not do so

NEW MEXICO has $70bn sitting in a sovereign wealth fund built from oil and gas royalties. The state's largest electricity provider, the Public Service Company of New Mexico, is embroiled in a disputed $11.5bn sale to Blackstone, the world's largest private-equity firm. The coincidence has provoked an obvious question: could the state use its permanent fund to buy the utility back? A campaign called Public Power NM has been pushing for precisely that. The answer, as it happens, is yes. The more important one is whether it should.

The deal that sparked the debate began in May 2025, when TXNM Energy, PNM's parent company, agreed to be acquired by a Blackstone Infrastructure subsidiary. Blackstone also purchased $400m of TXNM shares through a private placement. That move, closed in June 2025, was swiftly challenged. In July 2026, the New Mexico Public Regulation Commission ruled the stock purchase violated state law by proceeding without the commission's prior approval and ordered it reversed. The broader acquisition deadline has since been extended to mid-2027. The case is in limbo, but the controversy it generated is not.

Critics of the deal worry about more than procedural violations. Blackstone is investing heavily in data-centre infrastructure, and some fear it could push data-centre expansion within PNM's service territory. Consumer groups and some residents testified at commission hearings that PNM would be emboldened to prioritise Blackstone's portfolio companies over residential ratepayers. The fear is not fanciful: in a captive market, the incentives of a private-equity owner whose portfolio companies could become the grid's biggest new consumers can diverge sharply from the interests of the families paying their bills.

It is tempting to think that public ownership would solve the problem. New Mexico's State Investment Council, which manages the state's sovereign wealth fund, oversees more than $70bn in assets at the end of 2025, up from roughly $35bn just three and a half years earlier thanks to a production boom and elevated oil and gas prices. The fund is projected to reach $100bn by 2030. The state could afford a majority stake in PNM without even breaking its sweat.

The trouble is that affordability is not the same as prudence. Public ownership of utilities is not a panacea. As the governor, Michelle Lujan Grisham, wrote in an op-ed last month, publicly run utilities can be poorly managed. The city-owned Department of Water and Power in Los Angeles botched a billing-system overhaul in 2013 that cost ratepayers hundreds of millions of dollars and required years of litigation to undo. State ownership also creates a new kind of conflict: when the government that regulates rates is also the government that collects the returns, oversight becomes a conversation with itself.

There is a deeper structural reason to pause. The State Investment Council's mandate is to diversify New Mexico away from fossil-fuel dependence. That is commendable. But deploying permanent-fund assets into a regulated utility that must be maintained for decades is not diversification in the economic sense. It is a form of asset substitution: swapping oil wells for power lines. The state would be locking capital into a single illiquid domestic infrastructure play while the fund's broader portfolio - which returned 7.4% a year over the past decade - earns its way through global markets.

What the council is supposed to do with its returns is also a constraint. In fiscal 2025, the fund sent $2.6bn back to the state; in fiscal 2026 it is funding 28% of public education and 78% of early-childhood education. Acquiring PNM would not erase those obligations. The money that bought the utility would have to come from somewhere - either from drawing down the principal, which would weaken future returns, or from the state budget, which is already stretched. A purchase that seems painless on paper would shift the cost onto schools and hospitals over time.

That said, the concerns about Blackstone are genuine and the regulatory response so far is instructive. The PRC's July ruling, which found the unapproved stock transaction "automatically void", showed the commission can use its teeth. But the very need to police a procedural violation after the fact reveals a weakness: the regulator's authority was tested because the buyer chose to test it. A private-equity firm with the resources of Blackstone can afford to push boundaries and wait for the courts to sort things out. Ratepayers cannot.

The better answer is not to nationalise the grid. It is to strengthen the regulator that already exists. The PRC sets electricity rates, reviews rate requests, and oversees PNM's integrated resource plan, the document that determines how the utility will meet future demand. PNM itself projects that total electricity consumption in New Mexico will rise by 15% to more than 9,600 gigawatt-hours by 2045. The grid will need investment regardless of who owns it.

What the state should insist on is that any acquisition - whether by Blackstone, another private partner, or a consortium - comes with enforceable conditions that prevent conflicts of interest. The PRC should be empowered to require firewalls between a utility owner's energy-distribution business and any other interests that compete for grid capacity, particularly data centres. It should have clear authority to reject equity transactions tied to a pending acquisition, as the statute already provides, rather than having to undo them retrospectively. And the commission's own budget and staffing should be insulated from political pressure so that it can resist well-funded opponents.

Public Power NM's campaign correctly identifies a real tension. But ownership is a blunt instrument for managing it. The state has a sovereign wealth fund of remarkable size for a population of fewer than 2.1 million people. The fund's mission - converting depleting natural-resource revenue into lasting financial resilience - is already ambitious enough. Turning it into a municipal utility is a distraction that would weaken the very diversification it exists to achieve.

New Mexico's challenge is not to become its own landlord. It is to make sure the landlord is answerable.