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Reader View: Was the PNM stock upgrade pre-determined?

Richard Rosenstock points out a key question that was left out of the recent article, “So why did PNM stock get an upgrade?” by Steve Terrell. If analyst Anthony Crowdell explained his decision to upgrade PNM stock by stating he was confident the commission would approve the replacement power stipulation, how could he be so sure unless the PRC had told him themselves, and thus prejudged the case? Rosenstock calls for a legitimate investigation of what happened in Crowdell's meeting with PRC representatives. "If the logical explanation is verified, the commissioners taking part in the meeting should be recused from the replacement power case and probably all cases involving PNM."

Posted: Saturday, June 20, 2015 7:00 pm

By Richard Rosenstock

Steve Terrell’s recent piece, (“So why did PNM stock get an upgrade?” Roundhouse Roundup, June 14), asks a good question, but the article fails to provide the only logical conclusion.

The article indicates that the stock analyst, who made the stock upgrade for Public Service Company of New Mexico just before the Public Regulation Commission voted to give PNM more time to try and cure the deficiencies in its case, visited New Mexico and met with Commissioner Patrick Lyons and “other PRC officials.” Commission Chairwoman Karen Montoya has admitted she was one of those officials. The meetings took place while Commissioners Lyons and Montoya are in the process of judging PNM’s request for a replacement plan for two units being closed at the San Juan Generating Station.

The article stated: ‘“After visiting New Mexico we are upgrading PNM to Buy from Hold and anticipate the [Public Regulation Commission] will approve the [San Juan Generating Station] agreement in the June/July time frame,’ wrote analyst Anthony Crowdell in a May 27 email to potential investors.” Why would the analyst anticipate the commissioners would approve the agreement unless they told him that that was what they were going to do and thus had prejudged the case?

During the extensive hearing this spring, it came out that PNM had grossly underestimated the costs of the additional coal it sought to use to replace the closing units as well as inflated the price it wanted to pay for its already-owned nuclear capacity at Palo Verde Unit 3 in Arizona. What also was shown was that PNM had never considered the alternatives of solar and wind, which are now much cheaper than the coal and nuclear plan PNM proposes. As a result, the hearing examiner recommended that the PRC reject PNM’s replacement proposal.

Given this scenario, why would this stock analyst assume the commissioners would go against the weight of the evidence presented and the recommendation of the hearing examiner? The only logical answer is that the commissioners indicated they will allow PNM’s replacement plan regardless of the evidence and the recommendation of the hearing examiner.

Not surprisingly, shortly after the analyst’s upgrade, the commissioners by a 4-1 vote allowed PNM additional time to present new coal contracts and partnership agreements, which they hope to complete in August (at least the fifth time PNM has sought the extension for the same reason).

It is unethical, illegal and goes against the most fundamental principles of due process for a deliberating body to pre­judge a dispute before all the evidence is in. They apparently felt that it was more important to protect PNM stock than to preserve their own neutrality and lack of bias.

There needs to be a thorough investigation of what actually happened in this meeting. If the logical explanation is verified, the commissioners taking part in the meeting should be recused from the replacement power case and probably all cases involving PNM.

Richard Rosenstock is an attorney in Santa Fe and has lived and practiced law here and in Tierra Amarilla for more than 40 years.


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