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Got Truth? New Energy Economy could use some!

  • Post published:January 8, 2018
  • Post category:Issues

Considering the magnitude of impact the NM Public Regulatory Commission (PRC) has on every person in this state, we could have a serious problem.

At issue is the PNM rate case currently before the PRC. There were 14 active intervenors (parties actively involved in this case) including PNM. Consider the very diverse list of parties involved:

  1. NM Attorney General who represents residential and small commercial users;
  2. Environmental groups such as Western Resource Advocates (WRA) and Coalition for Clean Affordable Energy (CCAE);
  3. Large entities like Kroger and several water authorities;
  4. New Mexico Industrial Energy Consumers that represents large business users.

Thirteen of those intervenors worked for several months with PNM to reach an agreement on what would be a fair rate increase to allow PNM to recover its costs, make a modest profit, and continue to provide clean, affordable, reliable electricity to its customers. These 13 parties, along with PNM, signed onto a Stipulated Agreement (SA) that outlined the details of a plan that would raise electric rates only a fraction of what was originally requested and do it over two years instead of one year. They also agreed to a rate freeze until 2020.

The alternative, had an agreement not been reached, was a fully litigated case that would drag on for many months costing the intervenors and PNM hundreds of thousands of dollars. The problem with litigation is that many of those costs end up going back into our utility rates. In the interest of the parties and all those they represent, an SA usually saves time and lots of money.

The SA required a lot of give and take, providing success for all concerned – except one party: New Energy Economy. The problem? As with many regulatory proceedings, NEE opposed the other parties by using false information. That bad information seemed more important to the Hearing Examiners than the truth and documentation provided by the parties to the agreement. And to make matters worse, that information was used to form the Recommended Decision in the rate case.

The SA was sent to the two Hearing Examiners assigned to the case. There was a brief hearing to discuss the elements of the SA and provide NEE an opportunity to present opposition to it.

The issue: NEE claimed, among other things, that PNM was imprudent in its investment in Four Corners Generating Station (FCGS) and, therefore, should not recover its investment in that plant. It’s interesting that after 40 years of ownership, PNM’s decision to invest there has been reviewed by many experts and Regulators and prudency has never been an issue.

Does it make sense that one party could correctly determine the investment in FCGS as imprudent especially when you consider forty years of expert review to the contrary? As a matter of fact, NEE is not correct and the Examiners should never have incorporated that misinformation into their Recommended Decision.

Shocking as it was, the first ruling by the PRC Commissioners, save for Commissioner Lynda Lovejoy, agreed with NEE and the Hearing Examiners. Fortunately, PNM filed a motion for reconsideration, and so far, common sense has prevailed and all five Commissioners agreed to reconsider. Let’s hope the final decision, which could be as soon as tomorrow, will see a reversal on the original decision. If we don’t get a different opinion from the PRC Commissioners, here are some alternatives that could occur as a result:

  1. The case could go to full hearing. If that occurs, the case starts with PNM’s initial rate filing that included rates that are about double the rates it agreed to in the SA. In addition, that filing included rates going into effect immediately – not over two years and with no additional rate freeze. And, remember, PNM’s litigation costs go back into rates in its next rate case filing.
  2. PNM could appeal the decision to the Supreme Court. As a regulated monopoly, PNM cannot recover one dime of expenses without PRC approval. No company can stay in business without adequate cost recovery.
  3. Any decision that so harshly comes against cost recovery for investment in the FCGS could result in more lost jobs, something that area and New Mexico as a whole can ill afford.

We are hoping for a positive outcome from the PRC hearing on Wednesday; one that will produce support for an SA that resulted from many experts negotiating for several months and coming to a conclusion that was fair and in the best interest of all parties concerned.