New Energy Economy files its appeal in the New Mexico Supreme Court
against the New Mexico Public Regulation Commission for approving $150 Million in costs from ratepayers for the Four Corners coal plant despite a finding against
PNM for “imprudence” by two Hearing Examiners and the full Commission
On February 7, 2018 New Energy Economy files its appeal against the New Mexico Public Regulation Commission (PRC) for granting cost recovery to PNM for blatantly imprudent costs with respect to its 2013 investment in and life extension of the Four Corners coal plant.
When “prudent” investments for generation resources are made ratepayers must pay in terms of rate increases and conversely when the utility hasn’t prudently incurred investments then ratepayers should be held harmless.
“That’s fair and that’s the law – only prudent investments should be recoverable from customers. Ratepayers should not be stuck with imprudent or dishonest decisions of utility management. PNM invested a billion dollars in Four Corners based on a flawed and stale financial analysis. When pressed about why PNM did not get out despite the opportunity, PNM PNM General Counsel Mr. Apodaca wrote in December 2013 that ‘maintaining our same level of ownership at Four Corners avoids a possible distraction with our [] filing with the PRC next week and our negotiations with the owners at San Juan Generating Station.’” PRC Order December 20, 2017, p. 18, stated Mariel Nanasi, Executive Director, New Energy Economy.
In the recent rate case PNM argued that its investment in Four Corners was prudent. Both Hearing Examiners and the Commission found these facts terribly disturbing and held PNM’s investments at Four Corners to be without merit.
The Hearing Examiners found that with respect to PNM’s participation in the Four Corners coal plant “there is a substantial record on which to make a finding of imprudence.” (Order, Recommended Decision, 10/31/17, p. 69) “The Hearing Examiners find that the appropriate remedy for PNM’s imprudence in extending its participation in Four Corners and pursuing the $90.1 million of the SCR investment and the $58 million of the additional life-extending capital improvements is the disallowance of all costs associated with the investment and improvements.” p. 68
But ultimately, after what Commissioner Lyons described as “lobbying” by PNM he and Sandy Jones and Lynda Lovejoy (all running for election) offered PNM a new deal: it reversed their own finding of imprudence based on NO new evidence, increased the rate hike, and kicked the “imprudence” can down the road to the next rate hike expected to be filed in 2019.
The Commission agreed with New Energy Economy to disallow $36 million of costs associated with San Juan Generating capital improvements.
“This case exemplified imprudence – PNM did no valid financial analysis before investing nearly $1billion in the 50-year old non-performing polluting Four Corners coal plant,” said Nanasi. “Based on NO new evidence Lyons and Jones and Lovejoy scrubbed mention of PNM’s “imprudence” from the Order and raised rates on customers to protect the utility’s profits. Imprudence was THE main issue in the case and the PRC abdicated their number one responsibility – to protect customers – it’s a travesty of justice,” stated Nanasi.
New Energy Economy’s efforts in the case saved ratepayers $50 million more than the benefits contained in the original Stipulation, yet the ratepayers are entitled to further cost disallowances – hence the reason for the appeal.