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PNM Rate Case intervenors united on Four Corners imprudence!

As we write this we acknowledge that people are so frightened about the chaos and destruction and violence that is occurring all over the world. In our little corner of the world, we continue our own pursuit of small piece of the struggle, something that we have collectively been pursuing for seven years.

Yesterday we filed our post-hearing Brief in Chief opposing PNM's proposed $790M rate increase and the company's outrageous demand that customers bear the significant costs of PNM's investments in expensive dirty coal and nuclear assets when it made no financial or ethical sense to do so.

Following the completion of the rate case hearing, intervenors have submitted briefs summarizing their arguments on each issue. New Energy Economy's brief argues that PNM is requesting, in effect, that the PRC allow it to violate its pact with the New Mexico public - that in exchange for monopoly control and a guaranteed rate of return on capital investments, it will provide reliable electricity and operate its company as prudently, efficiently and cost-effectively as it reasonably can - in the following respects:

1. Palo Verde Nuclear Generating Station: When PNM repurchased 64MW and extended the 114MW leases at the Palo Verde Nuclear Generating Station it did so without any financial analysis. PNM requests cost recovery for its undepreciated investments, its continued collection from ratepayers for the 114MW lease even after it was sold to a third party, and the significant future decommissioning costs. If New Energy Economy is successful, we will save ratepayers a total of $138M and the potentially enormous costs of decommissioning a nuclear plant. New Energy Economy argues that all of the above should be removed from rates and paid by company shareholders.

2. Four Corners Power Plant: PNM is requesting that it receive compensation in rates for all costs associated with the Four Corners Power Plant (“FCPP”) even though, when its operating contracts for that plant had expired, it renewed them unilaterally, for its own business purposes, without considering the benefits and costs of alternatives. This was, by definition, imprudent. New Energy Economy argues that as a remedy for PNM's imprudence Four Corners should be removed from rate base, and to the extent that PNM still uses FCPP to serve customers, ratepayers should pay only fuel, operation and maintenance costs, saving $200M for ratepayers and preventing securitization of undepreciated investments under the ETA - another $300M.

3. Return on Equity: PNM seeks a rate of return on equity (ROE) of 10.25%, up from its current 9.575%, which significantly exceeds the median 8.3% ROE received by 35 western utilities. New Energy Economy proposes an 8.9% Return on Equity for capital investments.

We also argue that PNM's failure to align depreciation rates with the terminal life of FCPP and Palo Verde (a deliberate ploy to prolong ROE profit) creates an intergenerational injustice, that $6.7M of community solar costs should not be included in rates, that the proposed time-of-use rate design pilot project is intentionally ineffective to reduce energy consumption or save money and must be redesigned, and that PNM's proposed monthly fixed charge increases will disproportionately impact low-income customers and those that deploy energy efficiency and solar.

The following parties joined New Energy Economy in calling for the above findings of imprudence and the consequential remedy: New Mexico Attorney General, Bernalillo County, and Albq. Bernalillo County Water Utility Authority. A number of parties, like Sierra Club, also called for a finding of imprudence on Four Corners but suggested a slightly different remedy. All parties opposed PNM's proposed ROE increase. New Energy Economy asked for the lowest ROE percentage.

Justice is rarely swift and the fight is never easy. New Energy Economy has been arguing against PNM's imprudent investments in coal and nuclear energy for eight years, and it is this case that will finally decide who is left holding the bag for their greed and corruption. We also know that the fight for energy democracy and climate justice are only just beginning, and we intend to keep fighting for all that we value and all that we love.


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