Unfortunately, once again, New Energy Economy is the only opposition party against PNM’s newest $750 million rate case set for hearing beginning Monday, August 7, 2017 at the PRC building, across the street from the Roundhouse.
PNM is asking ratepayers to foot the bill for 148 million dollars of capital expenditures at the 51-year old Four Corners coal plant, even though the monopoly showed no timely financial analysis to show that the company’s reinvestment in Four Corners is justified, substantiated, supported or cost-effective. The law requires that utilities demonstrate, through a meaningful financial analysis that major capital expenditures are cost-effective and benefit ratepayers if it wants to recover costs from us, ratepayers. Makes sense, right?
In December 2103 PNM signed 14 contracts, important contracts (having to do with its partnership at Four Corners, water use, a 15-year take-or-pay coal supply contract, pollution controls required for continued use, and more) that were to take effect in July 2016. But despite the confluence of all these major obligations, more than a billion dollars worth of commitment, PNM relied on a 19-months earlier alleged analysis to “determine” whether it was going to re-invest, allegedly on our behalf. Before I go in to the May 2012 analysis, lets review how absolutely deviant this action really was.
Would you buy a house without looking at comparable houses and housing prices? Would you buy a house and look at housing sales from 19 months prior? Of course not. Because you are an adult and you understand that growing older means that you must evaluate choices, especially significant capital expenditures (a car, a house) with attention to relevant factors (performance, age, etc.) and consider costs of other alternatives. Those standards of evaluation have been baked into the law.
So, not only did PNM do no contemporaneous analysis before it invested hundreds of millions into the Four Corners plant that it wants reimbursement from us now, in the form of a rate hike, the May 2012 financial “analysis” which PNM claims is the basis for prudence, didn’t actually demonstrate that it was cost effective. Under PNM senior management’s leadership it went rogue. It bet no one would pay attention to its aberrant behavior. Cause no reasonable business would invest hundreds of millions without evaluation unless it was hoping no entity would call its recklessness into question. New Energy Economy has done just that.
The May 2012 “Strategist” economic modeling run compared retiring Four Corners and not, but neither included the coal contract costs (which will rise over 128% during the period of the contract) and didn’t include what PNM calls “maintenance capital” – all the things that are needed to keep the plant from breaking down, which it admits is a lot and will keep growing because the plant is so old and is poor performing (runs 65% of the time).
Because PNM’s evidence was stale, New Energy Economy requested that PNM provide evidence that its choice to continue to invest in the coal plant was fair, reasonable, and just. PNM refused. New Energy Economy was forced to file a Motion to Compel to demand PNM conduct the financial analyses of the impact to ratepayers if it divested from the coal plant. The PRC ruled in New Energy Economy’s favor stating that “It is beyond reasonable PNM perform the analyses.”
Guess what PNM’s evidence demonstrated? That divesting from Four Corners coal plant was $450 million better for ratepayers than sticking with the aging, pollution-belching plant!
There are already more family-supporting jobs in the renewable energy industry than coal and we must require that our elected officials heed the wishes of the electorate: go 100% renewables. Our lives, our children and grandchildren deserve nothing less.
OUR CASE AGAINST PNM'S LAST RATEHIKE - JUST A YEAR AGO IS PENDING BEFORE THE NEW MEXICO SUPREME COURT
In 2016, the PRC gave PNM a green light for more coal and more nuclear even though solar and wind energy are readily available, cheaper, better for our health and the environment, and create local family-supporting jobs.
Now, PNM wants another rubber stamp from the PRC for a $123.5 million rate hike. A few key facts:
1. More expensive power. Rates for residents would increase another 15.83% on top of the 57% increase in residential rates since 2008.
2. Steep mandatory fixed fees. Monthly fees that PNM customers have to pay regardless of electricity usage would increase by 163%. They’d be higher than any of PNM’s utility peers’ fixed charges in the region.
3. More coal. PNM bill-payers would be locked into paying over a half billion dollars for coal for the Four Corners Power Plant for the next 15 years. We’d have to pay every penny even if the plant were transitioned sooner to cleaner sources.
4. More nuclear. PNM customers would pay for more out-of-state nuclear power for 30 years without knowing if other options would be cheaper. PNM did not compare the nuclear costs against any other energy alternatives.
5. Executive pay. The top five executives at PNM make $9 million per year. The average Navajo household living with the pollution from PNM’s coal operations survives on $7,200 per year.
Click here to read New Energy Economy's May 23, 2016 Brief-In-Chief as part of their rate case.