Public Service Company of New Mexico is warning state lawmakers of dire consequences if the state Public Regulation Commission adopts a hearing officer’s recommendation to drastically slash the company’s latest electric rate request, complaining that “the hearing examiner is basically telling PNM to provide the electricity for free.”
In an Aug. 10 letter to legislators, a company lobbyist repeated claims by Pat Vincent-Collawn, president and chief operating officer of the state’s largest utility, that PNM’s credit rating could be downgraded, which would result in higher bills for customers due to increased borrowing costs.
The letter also asserted that if the commission adopts the hearing officer’s recommendation, it would “signal an uncertain business and regulatory environment” for the state.
PNM’s request for $123.5 million in new revenue would mean a rate hike of about 15.8 percent for residential customers. However, hearing examiner Carolyn Glick last week recommended a $41.3 million revenue increase — about a third of what the utility seeks. Glick’s proposal would mean a 6 percent rate increase.
The commission, which has the final say if there is no court challenge, is scheduled to hear the case Aug. 31.
In her letter to legislators, PNM lobbyist Sayuri Yamada also said that if the commission adopts Glick’s recommendation, “it could ultimately force PNM to eliminate nuclear energy from its resource portfolio.”
Yamada said the recommendation “seriously undervalues the important investments PNM has made, especially at Palo Verde Nuclear Generating Station, the nation’s largest carbon-free energy producer.”
Glick recommended that PNM not be allowed to include in its rate base $152.8 million that the company spent on buying 64.1 megawatts of power in two units at the Palo Verde nuclear power plant in Arizona. The hearing officer said PNM failed to show that this was the utility’s most cost-effective choice.
“The prudent investment theory provides that ratepayers are not to be charged for negligent, wasteful or improvident expenditures, or for the cost of management decisions which are not made in good faith,” Glick wrote in her recommendation.
Yamada’s letter didn’t ask legislators to contact or pressure commission members to reject the hearing officer’s recommendation. Yamada wrote, “If you have any questions, please feel free to email or call me.”
Still, Mariel Nanasi, executive director of the clean energy advocacy group New Energy Economy — which has fought PNM’s proposed rate hike — said PNM’s decision to contact legislators was dirty pool. “This is a veiled attempt to get legislators to improperly influence a regulatory matter, a pending case,” she said.
In a news release, Nanasi said, “PNM failed to meet their legal burden to show their nuclear [power] was prudently purchased, and the hearing examiner denied cost recovery for the purchase price as a result, so now it is full court press on political influence. … When PNM can’t win on the merits it works to subvert the democratic process and this kind of ‘extra legal’ behavior drags down the business community, the government, and the reputation of New Mexico.”
But PNM spokesman Pahl Shipley said Yamada’s letter simply told legislators what the company has said publicly about the case.
“PNM strongly disagrees with the hearing examiner’s recommendations and we are simply informing all of our stakeholders, including public officials, customers and communities about the consequences if the PRC adopts the recommended decision,” Shipley said. “Our communications are based on the facts in the case, and appropriately raise concerns about the potential impact on PNM and our customers. This is a serious decision that will impact New Mexico’s energy future and people need to know what’s at stake.”
Correction: This story has been amended to reflect the following correction. A previous version of this story incorrectly referred to PNM lobbyist Sayuri Yamada as "he." The mistake was made in editing.