Last week the PNM Rate Case hearing wrapped up two days early. Each party had the opportunity to cross examine the expert witnesses of PNM and each intervenor will now submit briefs by October 18th. Chief Hearing Examiner Anthony Medeiros and Hearing Examiner Christopher Ryan presided over the hearing and will issue a recommended decision to PRC Commissioners for their consideration, most likely during the month of November. The PRC will then issue an Order in the case. Commissioners Ellison and Aguilera sat in on the hearing periodically to listen to proceedings and ask questions of witnesses. (Commissioner O'Connell recused himself from the case due to expert testimony he filed in support of PNM in a prior Four Corners case.)
PNM's requested rate increase adds up to $790 million in additional revenue.
New Energy Economy's expert, Christopher Sandberg, argued convincingly that ratepayers be held harmless for the imprudent investments made in Four Corners Power Plant after 2016, and that Four Corners be removed from rate base. To the extent that PNM continues to rely on FCPP for energy for customers, ratepayers would only be required to pay for operation and maintenance. This means that ratepayers would no longer be obligated to pay PNM for profits on FCPP, capital expenditures, and future decommissioning cost. Sandbergs arguments were bolstered by New Mexico Attorney General witness Andrea Crane, who explained to Commissioner Ellison her position on Four Corners imprudence, securitization and cost recovery:
On Palo Verde too, Ms. Crane reiterated New Energy Economy's position that because PNM's decision to repurchase and extend leases from the Palo Verde Nuclear Generating Station (PVNGS) has already been found imprudent and PNM is seeking rate recovery for:
A. Stranded Assets of 114MW - Amount $96.3 million
B. Continued collection for 104MW even after sale to third party as of January 2023 - $38.4 million
C. Future Decommissioning Costs for Imprudently Purchased 64MWs and Imprudent Lease Extension of 114MWs is PNM's Responsibility NOT Ratepayers
And finally, New Energy Economy's argument that PNM's requested Return on Equity (ROE) increase to 10.25% is completely unjustified was bolstered unexpectedly by the PNM attorney's cross examination itself:
PRC Staff Economist Christopher Dunn was quick on his feet and was accurate in his response, reading into the record the complete quote above the highlighted text that directly undermined PNM's misleading effort to omit the context regarding actual median ROE for 35 western electric utilities - 8.3%.
As he pointed out, PNM does not deserve an increased guarantee of return on its investments because, in fact, the utility faces less business risk than other industries. For the test year being used in this case, PNM expects that almost a third - 31% - of its total revenues will come from automatic “rider revenue” that permits increases to rates outside of the rate review process. Because these rate riders materially reduce the risks of its operations, we recommended that PNM's Return on Equity be set at no more than 8.9%.
If we win on all our issues then customers will save at least $200 million on Four Corners and $135 million on Palo Verde nuclear, and a yet to be determined amount due to the reduction of ROE.