On Tuesday New Energy Economy once again filed a Motion to Recuse Commissioner Patrick O'Connell because, once again, PNM's uneconomic and imprudent investments in the Four Corners Coal Plant are at issue in PNM's recently filed rate increase application. That application, the largest in PNM's history, would increase rates for the average PNM customer by about $25 each month. This rate case comes on the heels of the case decided on Jan 3rd, 2024, which we appealed at the NM Supreme Court because the PRC concluded that the company's investments to extend the life of the coal plant were imprudent but then failed to hold ratepayers harmless for 100% of the harm they suffered as a result. Our appeal is pending.
An analysis by RMI flagged the Four Corners Coal Plant as the #2 coal plant in the country for gross losses between 2015-2023 - recording a loss of $1,084,695,512 since 2015. You can see in the image below that the plant has been operating at a loss almost continuously.
That means not only were PNM's investments of $1.1 Billion to extend the life of the plant imprudent, but the Hearing Examiner's finding that the plant is currently operating uneconomically was also correct. Every single time PNM purchases energy from Four Corners it costs more than energy it could procure elsewhere, and ratepayers and the climate are paying the price for PNM's continued reliance on coal.
Recently public utility Commission's in Minnesota, Louisiana and Michigan have investigated the uneconomic purchases of coal by their public utilities, and in Michigan the Commission warned the utilities that purchasing energy at above market prices would not be allowed. When the Michigan utilities failed to heed that warning, the Commission disallowed $11.2 million associated with uneconomic coal energy purchases to be charged to ratepayers. The Michigan Commission has set a precedent that if the data shows that utilities are asking to recover costs above what was available on the market, those costs should be capped to the market price. New Mexico's PRC should take notice and act to protect New Mexico ratepayers from PNM's continued reliance on expensive coal power.
Why is all of this relevant to our Motion to Recuse O'Connell? In 2016 Commissioner O'Connell was the chief witness and advocate for PNM’s position that reinvestment in the Four Corners Power Plant was cost effective and would be for twenty years. That testimony has been proven incorrect, with the current PRC finally making a finding of imprudence against PNM in the last rate case.
The law states that a Commissioner shall self-recuse "when in previous employment the commissioner or hearing examiner served as an attorney, adviser, consultant or witness in the matter in controversy." (NMSA §62-19-7 A (3) (2021))
PRC Chairman O’Connell appropriately recused himself in the Avangrid merger case and the last PNM rate case because he provided testimony relevant to those cases before his appointment to the Commission. The same rationale applies here, because the Commission will determine how much cost recovery PNM is eligible for, if any, which includes consideration of the cost of energy from FCPP, and the current FCPP capital additions of $38,416,073, and the accelerated depreciation schedule it is seeking for the coal plant in this case. The Chairman's testimony about Four Corners in Case No. 16-00276-UT is squarely at issue again in this rate case.
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