PNM scheme to erase cost savings used to justify the ETA bailout will squeeze poorest New Mexicans

Updated: May 11



"Berenice Reza has no heating or air conditioning in her home: She relies on portable electric heaters during cold weather and fans when it’s hot. In winter, she also heats her home with her stove, which runs on propane gas." - Searchlight NM


Every now and then an article comes along that really opens your eyes, almost as if you finally got that new eyeglass prescription you needed. The Searchlight article "The other energy crisis" published March 30th was eye opening, illustrating with clarity exactly how and why energy insecurity hurts the most vulnerable in our state. The author detailed the domino effect of utility shutoffs - how a layoff or reduced hours or unexpected emergency leads to late energy bills and accumulated fees, utility disconnection leads to unhealthy eating, struggles with hygiene, illness and difficulty sleeping, working and learning at school. Essentially utility disconnection leads to many thousands living in "substandard housing," without heat, water, or light. PNM reported that close to 23,000 customers were at risk of disconnection in January.

It is hard for most of us to imagine living with that level of hardship, let alone trying to raise children without access to basic necessities. And yet the energy burden for families in New Mexico can sometimes reach 18% of family income. That is why it is so egregious that PNM is once again attempting to skirt the law to squeeze every last dollar from New Mexico families.

Even after getting everything they asked for in the ETA - $360M from ratepayers for their undepreciated investments in the San Juan coal plant - they now want to squeeze another $125M from customers. By delaying the issuance of securitized bonds after the plant closes, PNM will erase the cost savings for ratepayers that were touted as justification for the bailout they received under the Energy Transition Act. They plan to keep charging for operation of the San Juan station until the next rate case, even after it has closed, and then charge ratepayers again for the bond interest once the bonds are issued.

How can this be allowed? It cannot.

PNM told legislators and regulators that ratepayers would save money when the San Juan Coal Plant was closed because the purchase of securitized bonds "at the time of abandonment" would result in a lower rate on undepreciated costs. PNM lied to the public, they lied to legislators to get the ETA passed, and they lied to regulators when they agreed in the financing order that PNM would abandon San Juan Generating Station, issue low interest bonds, and adjust rates simultaneously, resulting in customer savings. PNM's own brief to the Supreme Court states:

"At the time that PNM starts charging customers the Energy Transition Charges (ETC) [in the bonds], it must immediately reduce its rate base and eliminate all costs of SJGS from rates, which will more than offset the additional cost of the ETC. All else held equal, it is estimated that, with the saving from the retirement of SJGS and the addition of lower emission resources, the average residential customer will realize a saving of $6.87 per month."

New Energy Economy will argue that PNM has failed to abide by the financing order that granted PNM authority for its coordinated effort to: 1) abandon SJGS; 2) "immediately reduce its rate base and eliminate all costs of SJGS from rates"; and 3) issue low interest bonds.

Due to PNM's failure to abide by the dictates of the financing order (a financing order that PNM wrote!) the PRC should issue an immediate rate credit for all costs associated with SJGS abandonment. Not only should PNM be denied the extra $125M they are trying to squeeze out of New Mexicans, the $360M bond issuance authorized in the financing order should also become void for PNM's non-compliance with the financing order's terms and conditions.

The victims of PNM's greed are not just abstract faceless "ratepayers," they are mothers and fathers, elderly grandparents on fixed incomes, and children who suffer in the cold and dark when inflated bills can't be paid. Legislators should be furious that they were lied to, and action should be taken to rein in the greed and abuse of this private company that inflicts so much damage on the most vulnerable New Mexicans while continuing to slow walk the transformative change that is needed so desperately right now.

FOLLOW THE MONEY:

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