Dec. 4—A Pennsylvania cybersecurity company sued Avangrid of Connecticut and Iberdrola of Spain this week, contending they engaged in unethical activities that hurt the company.

Security Limits Inc. and its owner, Paulo Silva, filed the civil suit in federal court in New York against the two companies, which are seeking to merge with Public Service Company of New Mexico.

That merger proposal has run into a series of challenges, including that a majority of Public Regulation Commission members said this week they probably would vote against the plan.

Security Limits contends Avangrid, Iberdrola and numerous vendors and partners rigged bids, unnecessarily jacked up prices of equipment for a balance-sheet advantage, stole Silva's ideas and broke nondisclosure agreements.

When asked why it wasn't a criminal matter, one of Security Limits' attorneys, Peter Adelman of New York, said Friday afternoon, "It might well become one."

Avangrid's Albuquerque-based spokeswoman, Joanie Griffin, said Friday a countersuit will be filed soon. Griffin said Avangrid will accuse Silva of defamation, among other things.

Silva, she said through a statement, is a "disgruntled subcontractor" who is "bitter he didn't win competitive procurements."

"The allegations and claims have no merit, and the Company [Avangrid] will vigorously defend itself. In fact, the Company has previously reviewed unsubstantiated allegations made by Security Limits and sent a cease and desist letter to it," the statement said.

The Security Limits suit makes numerous allegations. Named in it are Avangrid, Iberdrola, some executives at both of those companies, and numerous cybersecurity and computer technology vendors and companies.

The suit alleges Avangrid bought equipment at inflated prices and even equipment it didn't need and stored it in warehouses in order to pad its capital expenses. By doing so, the suit claims, Avangrid could meet capital expenditure targets, gain depreciation benefits and recover money through rate increases to customers.

Security Limits says it was denied contracts that were steered to companies "willing to participate in a pay-to-play scheme."

Silva took his complaints Wednesday to the New Mexico Public Regulation Commission. He said in the public comment portion of the meeting that he "discovered that Avangrid's conduct artificially raised rates paid by consumers in New York and illegally reached Avangrid's favored bidders."

Silva also advised the commission to reject the merger proposal as "not in the public interest of Americans."

Griffin's statement said of his Zoom appearance before the commission, "We have concerns about Mr. Silva's use of the New Mexico Public Regulation Commission process as a way to try to gain leverage over Avangrid to obtain future contracts that have nothing to do with New Mexico or PNM."

Iberdrola is Avangrid's parent company. The PNM-Avangrid-Iberdrola merger process in New Mexico has been contentious, with opponents citing, among other matters, service woes at Avangrid subsidiaries and a criminal investigation against Iberdrola's chief executive officer.

Security Limits' suit refers to the latter situation, saying that "corporate misconduct is hardly unfamiliar" to Iberdrola.

The lawsuit seeks several hundred million dollars in damages.