Today, jointly with all intervenors, New Energy Economy filed a settlement agreement with PNM and the PRC to settle the issue of delayed San Juan Generating Station rate credits in the New Mexico Supreme Court.
Under the Energy Transition Act (ETA), in exchange for 100% cost recovery from customers for its undepreciated investments into the San Juan plant, PNM promised customer savings via low-interest securitized bond issuance and rate adjustment at the time of coal plant abandonment. PNM did not issue the ETA bonds and PNM continued to charge ratepayers as if the plant was still operating. The Hearing Examiner and the PRC agreed that PNM’s decision not to issue rate-credits violated the ETA and the Financing Order, and would result in illegal windfall profits at the expense of New Mexican families. The PRC ordered PNM to immediately issue the promised credits. The simple logic underlying the PRC’s order was that if PNM is no longer incurring almost $100,000,000/year in SJGS operating costs, PNM must stop collecting those costs from customers. Then on November 1st, 2022 the Supreme Court granted PNM’s Motion for Stay of the PRC’s order, allowing PNM to continue to collect these “costs”, including profit, until the conclusion of the rate case.
New Energy Economy together with the New Mexico Office Of The Attorney General, New Mexico Affordable Reliable Energy Alliance, Coalition For Clean Affordable Energy, Prosperity Works, PRC Staff, Western Resource Advocates, and the County Of Bernalillo, negotiated with PNM to ensure that ratepayers be reimbursed for the full amount of $115M already overdue to ratepayers as a result of the delay of the rate credits that were due “upon abandonment” of San Juan Generating Station. As the Joint Motion to the NM Supreme Court states: “the need for a prompt implementation of rate credits [is] to remedy harm to customers that resulted from the ETA Bonds not being issued at or near the time the final unit of SJGS was shut down on September 30, 2022.” (p. 3, ¶ 3.) Our agreement also ensures that:
Customers shall be held harmless if the average weighted coupon rate of securitized bonds exceeds 5.5%. Shareholders must pay for any additional principal or interest above the 5.5% and refunds will appear on customers simultaneously.
Customers will not reimburse PNM for cost recovery (through bond issuance or otherwise) for its legal costs for the Show Cause proceeding and PNM’s appeal to the Supreme Court.
PNM shall not seek any amendment to the Financing Order unless it results in a lower rate and adds no new costs to the amount financed.
PNM will ask the NM Supreme Court to dismiss its appeal in the rate credit case, S-1-SC-39440 to the PRC. Upon issuance of an order by the PRC approving the settlement rate credits will be issued within 30 days and customers will see the nearly 11% rate credit on their bills - $9.28 per month for the average rate payer.
Other important issues in the rate case, including the prudence of PNM’s nearly $1B reinvestment in the coal powered Four Corners Power Plant, the prudence of its reinvestments in nuclear power at the Palo Verde Nuclear Generating Station and responsibility for associated decommissioning costs, and PNM’s request for an increased Return on Equity remain to be determined.
We came together to demand PNM return windfall profits that it has collected at the expense of New Mexicans. The savings that come from the transition to clean energy must be passed on to customers. Today’s agreement shows that when advocates for the people of New Mexico work together, we can achieve just outcomes that protect ratepayers.