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Appeal filed to protect regulatory safeguards in a time of disaster capitalism

We filed our New Mexico Supreme Court Appeal to Challenge the Unconstitutional Provisions of the Energy Transition Act

New Energy Economy (NEE) and Citizens for Fair Rates and the Environment (CARE) filed an appeal on Friday in the New Mexico Supreme Court challenging the constitutionality of sections of the Energy Transition Act (ETA).  The Appeal is designed strategically to take on the most dangerous part of the law - 11 lines of text within the 83 page bill. Though short, this specific section has sweeping impacts. The specific language blocks Public Regulation Commission (PRC) review not only of costs for the San Juan coal plant, but for other utility-owned plants as they close in coming years.  This includes the 780 million MWh Palo Verde nuclear facility, in which Public Service of New Mexico (PNM) is a 10.2% investor.  The section reads:

If a public utility has been granted a certificate of public convenience and necessity prior to January 1, 2015 to construct or operate an electric generation facility and the investment in that facility has been allowed recovery as part of the utility's rate-base, the commission may require the facility to discontinue serving customers within New Mexico if the replacement has less or zero carbon dioxide emissions into the atmosphere; provided that no order of the commission shall disallow recovery of any undepreciated investments or decommissioning costs associated with the facility. 62-18-31(C)

PNM included language in this bill to shelter its shareholders from hundreds of millions of dollars in undepreciated assets and decommissioning costs coming down the pipeline for Palo Verde Nuclear Generating Station and all its gas plants. While the Legislature and the public was led to believe the bill was about the San Juan Generating Station’s abandonment, the truth is that the ETA is a “Trojan Horse” that prohibits the PRC from disallowing “any undepreciated assets or decommissioning costs” for future plant closings, effectively eliminating PRC oversight in these decisions. The specific language written into section 31(C) was designed to make ratepayers pay 100% of undepreciated assets (stranded costs) and decommissioning costs (cleanup costs) with NO regulatory oversight.

This is unconstitutional, costly and unfair.

Proponents of the bill and lawmakers who passed the law struck compromises with the utilities in order to pursue a transition away from coal and increase the renewable portfolio standard. It is still our hope that the intention was never to pass all abandonment costs for all of PNM’s gas plants and nuclear onto ratepayers without any PRC oversight or ability to modify or adjust PNM’s cost requests. 

Though the New Mexico Constitution holds that "the subject of every bill shall be clearly expressed in its titlle" -- that was definitely not the case with the ETA. There is no mention of the word nuclear, deregulation, undepreciated assets or decommissioning costs in the title. Few legislators had any idea that they were turning over the future determination of all decommissioning and recovery costs to the utilities themselves, with no recourse for the people of the state.

The Supreme Court earlier this year chose not to address constitutional issues in the ETA, in favor of letting the hearing process continue for the San Juan coal facility. In the course of the San Juan hearings the impact of leaving those issues unaddressed became clear, especially as they apply to future decision-making.  Allowing this section to stand will create billions of dollars in ratepayer liability for the Palo Verde plant alone.

The Appeal does not take issue with the Renewable Portfolio Standard increase in the Energy Transition Act - as we have always been supporters of that measure.

So we are pursuing the well-established process of judicial review to protect us from unconstitutional provisions in legislation.  We’re looking forward to the Supreme Court’s careful examination of the issues involved, and to the restoration of full constitutional protection to the people of our state.


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