PRC Commission reverses “imprudent” Four Corners finding despite PNM’s billion dollars reinvestment in the coal plant with no valid financial analysis
On May 23, 2017 PNM and a dozen other parties signed a Revised Stipulation (settlement) that seeks an increase in rates. New Energy Economy lodged the sole Opposition to the Stipulation, claiming foremost that PNM’s re-investment in the Four Corners coal plant was “imprudent” and was a ratepayer subsidy of PNM losses at the 50-year old plant. PNM argued that its investment was prudent. But the Hearing Examiners disagreed.
The Hearing Examiners found that with respect to PNM’s participation in the Four Corners coal plant “there is a substantial record on which to make a finding of imprudence.” (Order, Recommended Decision, 10/31/17, p. 69) “The Hearing Examiners find that the appropriate remedy for PNM’s imprudence in extending its participation in Four Corners and pursuing the $90.1 million of the SCR investment and the $58 million of the additional life-extending capital improvements is the disallowance of all costs associated with the investment and improvements.” p. 68 However, in the context of a stipulation, they ultimately disallowed much less: a disallowance of profit on the $148 million only. On December 20, 2017, the Commission agreed with the Hearing Examiners’ finding of “imprudence” while leaving the rate impact in tact.
But today the Commission offered PNM a new deal: it reversed its finding of imprudence based on NO new evidence, reduced the rate increase further, kicked the imprudence can down the road and allowed the disproportionate rate design in the original Stipulation to stand. PNM has five days to accept or reject the PRC’s new offer.
The Commission agreed with New Energy Economy to disallow $36 million of costs associated with San Juan Generating capital improvements.
“If this case doesn’t prove imprudence no case ever will – PNM did no valid financial analysis before investing nearly $1billion in the 50-year old non-performing Four Corners coal plant,” said Mariel Nanasi, Executive Director, New Energy Economy. “The PRC over-ruled not one but two Hearing Examiners and their own prior determination of PNM imprudence. Based on NO new evidence Lyons and Jones reversed course and removed mention of the “imprudence” finding. Despite their absolute duty to only raise rates if the Commission determines prudence they avoided the issue. Imprudence was THE main issue in the case and the PRC abdicated their number one responsibility – it’s a travesty of justice and I guess PNM’s lobbyists got to them,” stated Nanasi.