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Press Release: PNM Business Decisions Derided in Rate Hike Case

May 2011

Contact: Mariel Nanasi 505-469-4060

PNM Business Decisions Derided in Rate Hike Case

PRC Hearing Testimony Focuses on Company’s Reckless Investments

Santa Fe – A nationally recognized expert in utility regulation testified today before the New Mexico Public Regulation Commission (PRC) in opposition to the $180 million rate hike being requested by PNM.

Testifying on behalf of New Energy Economy, William Steinhurst stated that PNM acted with imprudence when the company knowingly made shortsighted investments in retrofitting its coal fired power plants, including the San Juan Generating Station. PNM knew or should have known that the upgrades it invested in were not adequate to meet regulatory requirements facing its coal-fired plants, but PNM still committed hundreds of millions of dollars in pursuit of these inadequate upgrades. By attempting to recover the costs of these unwise investments by means of a rate hike, PNM is demanding ratepayers pay for the company’s mistakes.

‘Based on the evidence, its clear that PNM made reckless business decisions and now expects New Mexico families and business to pay for the company’s failures,’ stated Mariel Nanasi, Executive Director of New Energy Economy. ‘PNM should accept responsibility for its mistakes, shut down the dilapidated San Juan Generating Station and help get New Mexico’s economy growing again by committing to energy efficiency, renewable energy and natural gas.’ The US Department of Energy and prominent investment analysts predict a massive wave of coal plant closures in coming years.

Steinhurst recommended that the PRC disallow the cost of PNM’s imprudent retrofits and require PNM to provide a comprehensive analysis of cost implications for all existing and upcoming regulations. This analysis can then be used to determine which of these costs should be borne by ratepayers.

Steinhurst further stated that PNM’s reckless business decisions have had serious negative impacts on public health and the environment that could easily have been avoided if the company had exercised better business judgment. Since 2005, PNM knew or should have known about the impact of current and emerging environmental regulations on the viability of their coal-fired plants, and should have especially considered likely laws regarding air pollutants, GHGs, water use, and waste disposal. Financial rating agencies and markets were looking at these same factors, and many utilities across the country took the prudent steps to address that risk by retiring their coal plants and invest in a clean energy portfolio.

PNM is New Mexico’s largest utility and the source of more than 50 percent of all carbon pollution in the state. PNM’s coal-fired San Juan Generating Station released more than 8.5 million tons of CO2 into the air and consumed more than 9.3 billion gallons of clean water in 2010.

About William Steinhurst

William Steinhurst is a Senior Consultant with Synapse Energy Economics. Dr. Steinhurst worked at the Vermont Department of Public Service from 1981 to 2003, where he served as Planning Econometrician and, beginning in 1986, as Director for Regulated Utility Planning. Before that he served as Chief of Research and Statistics and Director of Planning and Research at the Vermont Department of Corrections; as Acting Deputy Commissioner and Director of Planning and Evaluation at the Vermont Department of Social and Rehabilitation Services, and as Director of Planning at the Vermont Agency of Human Services.

Dr. Steinhurst has written or co-authored dozens of papers and reports on statistics, modeling, energy policy, and regulation. Most recently, he was commissioned by the National Regulatory Research Institute to write a primer on the electric industry for new regulators, Electricity at a Glance. He has consulted for various clients, including the consumer advocates, state energy offices, and private firms.

He has testified as an expert witness in approximately 30 cases on topics including utility rates and ratemaking policy, default service procurement, prudence reviews, integrated resource planning, demand side management policy and program design, utility financings, power purchases, statistical analysis, and decision analysis.

Dr. Steinhurst holds a BA in Physics from Wesleyan University, and an MS in Statistics and Ph.D. in Mechanical Engineering from the University of Vermont.

About New Energy Economy

New Energy Economy is a registered 501(c) (3) nonprofit organization established in 2004 to create economic opportunity in New Mexico with less carbon pollution and more clean energy. New Energy Economy works in partnership with diverse allies to encourage job growth, investment and innovation in a more efficient, sustainable and equitable energy sector. New Energy Economy grounds its work in the research and findings of the world’s leading scientific and technological authorities including the Intergovernmental Panel on Climate Change (IPCC) as well as Sandia and Los Alamos National Laboratories. Learn more


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