Criticism mounts after PRC decides to reopen PNM rate case

The state Public Regulation Commission is facing criticism over its decision this week to reopen hearings for an electric rate increase proposed by the Public Service Company of New Mexico after a hearing officer in the case recommended a drastically reduced rate hike.
Posted: Thursday, August 25, 2016 11:50 pm
By Rebecca Moss
The state Public Regulation Commission is facing criticism over its decision this week to reopen hearings for an electric rate increase proposed by the Public Service Company of New Mexico after a hearing officer in the case recommended a drastically reduced rate hike.
Commissioners said Wednesday that the PNM rate case could be extended through December if the utility decides to submit more evidence showing that its energy investments are prudent. Reopening the proceedings, which began in April, would undermine a determination earlier this month by hearing officer Carolyn Glick.

On Aug. 15, Glick recommended a 6 percent rate increase, a total of $42 million, rather than the 15.8 percent PNM was seeking to cover some $123.5 million in costs. PNM should not be allowed to include in its rate base a $153 million nuclear power investment, she said, because the company failed to show any evidence that the purchase was the utility’s most cost-effective choice.

Intervenors said Thursday that the PRC’s decision gives the company too much leeway. If the case is reopened, it would be PNM’s third opportunity this year to provide proof that its investments are fair for ratepayers.

PNM has said the more modest rate increase proposed by Glick would lead to hundreds of layoffs at the company and plummeting stock prices. If the commission accepted her recommendation, PNM warned, it would file an appeal in the New Mexico Supreme Court.

Pahl Shipley, a spokesman for PNM, said the company had no comment on plans to reopen the rate hearing but will reply to the commission by Monday. If PNM doesn’t agree to reopen the case, the commission will be required to make its final decision on the rate request by Sept. 30.

PRC spokesman Carlos Padilla said that for certain aspects of the case, PNM hadn’t provided enough information to justify the full scope of the cost recovery it sought.

“What the commission has done with this order is said, ‘We will give them an opportunity to present this information to us.’ It’s basically just giving PNM the opportunity to make their case, to get up to 100 percent of their request,” he said.

“We need to have this information in order for her [Glick] to rule one way or the other.”

The board of directors for the Greater Albuquerque Chamber of Commerce issued a statement Thursday supporting the PRC’s decision to reopen the rate hearing.

But Mariel Nanasi, director of New Energy Economy and one of the intervenors in the case, decried the decision.

Nanasi said PNM has exaggerated the losses it would face from the lower rate hike, and she said the utility made the Palo Verde purchase with “the public’s money” because the investment would increase the company’s revenue, not because it benefits ratepayers.

She asked: “How many chances” does PNM get? “This is a denial of the public’s due process rights.”

“PNM has a burden of proof, and they failed to meet it,” Nanasi said. “There is no way they can show they did analysis they never did.”

Documents from the original Palo Verde purchase agreement show the company did not perform a comparative cost analysis, but instead based the decisions surrounding the purchase on previous lease agreements.

At a June hearing on the rate request, testimony revealed PNM had not considered how the cost of the nuclear power purchase would compare with other energy sources, like solar or wind power. Evidence also showed the company had already recovered some of the investment costs from customers, including costs to lease, maintain and fuel the Palo Verde plant.

This discovery caused Bernalillo County, the city of Albuquerque and Public Regulation Commission staff to retract their original support for the full rate increase.

Andrea Crane, vice president of the engineering contractor The Columbia Group, testified in June, on behalf of the state Attorney General’s Office, that PNM’s rate case was riddled with issues and that the company had failed to justify the price paid for the nuclear power.

“We don’t think you [PNM] did a very good job, at all, of supporting evaluation,” Crane said at the time. “We don’t even think that you’ve necessarily supported a decision to buy the 64.1 [megawatts from Palo Verde].”

On Thursday, James Hallinan, a spokesman for New Mexico Attorney General Hector Balderas, said the office was beginning settlement negotiations with PNM as a result of the PRC’s order to reopen the hearing, “so it would be inappropriate to comment at this time.”

Following Glick’s ruling, Commissioner Patrick Lyons, R-Clovis, accused her of being biased against nuclear energy — an assertion Lyons later retracted — and requested that PNM provide testimony on the financial harm it could suffer from the reduced rate. But environmental groups and Bernalillo County objected, and the PRC agreed Wednesday not to consider any new information about possible financial ramifications for the company.

PNM and any intervening parties have until Monday to file a response to the PRC’s decision to reopen the rate case.

Contact Rebecca Moss at 505-986-3011 or rmoss@sfnewmexican.com.

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