A little after 5pm yesterday PRC Hearing Examiner's issued a recommendation that the PRC reject PNM's plan to continue charging ratepayers for the San Juan Generating Station (SJGS) even after it closed! According to the Financing Order drafted pursuant to the Energy Transition Act (ETA), PNM was to issue a rate adjustment at the time of the San Juan Generating Station closure on June 30, 2022 for Unit 1 and September 30, 2022 for Unit 4. WHY? So PNM ratepayers would NO LONGER BE CHARGED for a closed plant that wasn't providing any service. PNM changed its plan and it notified no one, not the Commission or parties, of its new plan. PNM decided to continue charging ratepayers although SJGS was no longer used or useful!
All parties, except PNM, oppose PNM’s new plan.
Our primary argument is that PNM’s new plan violates the ETA and the April 1, 2020 Financing Order. We argue that PNM should abide by the representations it made in its Application and in the testimony it provided in the original hearings in this case. We argue that PNM should issue the energy transition bond rate credits to remove the units’ costs shortly after the abandonments. We ask the Commission to order PNM to issue the rate credits and to remove all of the costs of the units immediately upon their abandonment. We also ask that PNM be required to make the energy transition fund payments upon the abandonments.
Important quotes from the Hearing Examiner's Recommended Decision:
It is not, however, as if PNM executives were not aware that their securitization messaging narrative was fraught with potential peril. Quite the contrary, in fact, as the evidence shows PNM executives recognized the risk their strategy portended, noting under “Potential Outcomes: Credibility –
Impression of the company could have long-term implications for their reputation, brand and trustworthiness here – not only for customers but also regulation.
PNM is trying to avoid paying the bonds and savings to customers, this may be viewed as a corporation . . . breaking promises that we made.
This runs the risk of looking like a corporate shell game -p.63.
The new plan enables a double recovery of costs by PNM. PNM ratepayers would pay and PNM shareholders would be able to continue to recover approximately $134 million of costs for the San Juan units – facilities that are no longer providing service to PNM customers – plus the costs of other resources that replace the San Juan units until the conclusion of the promised rate case in January or February 2024. p. 9 (Emphasis supplied.)
Indeed, given the blatant manipulation of provisions of the ETA on the part of PNM and the attendant moral hazard revealed in this proceeding, the Hearing Examiners believe it would be utter folly for PNM’s position not to be called out for what it is. - p. 108.
The Hearing Examiners find it in the ratepayers’ interest and the interest of heading off any additional imprudent conduct or moral hazard to require PNM to include in its next base rate case application filing an explanation and defense of the prudence of delaying its bond issuance beyond the San Juan abandonment dates and what actions PNM may take to protect customers from interest rate increases incurred as a result of PNM’s intended bond issuance delay. - p. 108.
PNM was granted $360.1M on a silver platter by the legislature through the ETA. Was that enough? NO! PNM wanted to plunder some more - $138M more. The Hearing Examiners rightfully described PNM's conduct as imprudent and rejected their plan to plunder. Now their entire ETA boondoggle is at risk because of their own misconduct.
Not only did PNM act unreasonably, and in violation of the Commission's Order, but it hired a public relations firm to discredit challengers, including New Energy Economy - who it named specifically - to counter our expected claims that PNM was taking $90M from ratepayers. PNM worried about the risk of looking like they were creating a corporate shell game - and they were!
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