New Energy Economy today filed Notice of Appeal at the NM Supreme Court in PNM’s recent rate case. The Public Regulation Commission (PRC)’s decision to order a $84.8 million (32.4% of net plant) disallowance for imprudent investments to extend the life of the Four Corners Coal Plant (FCPP) was arbitrary and capricious, and effectively allows PNM undue profits on an imprudent and wasteful resource decision at the expense of PNM ratepayers and the environment.
In 2019 the NM Supreme Court held that if the PRC finds that a utility has incurred costs imprudently, ratepayers cannot be called on to reimburse the utility for any of them: “[T]he purpose of a prudence review is to hold ratepayers harmless from any amount imprudently invested, a disallowance should equal the amount of the unreasonable investment." (Public Serv. Co. of N.M. v. N.M. Public Reg. Comm’n, 2019-NMSC-012, ¶¶40, 42, 444 P.3d 460 (“PNM v. PRC”).)
In this case the Hearing Examiner found that there was a nearly $240 million impact suffered by customers as a result of PNM’s imprudent investment to extend the life of the FCPP, but the Commission imposed a disallowance that was far less than that for no lawful reason. The proper remedy in this case is a 100% disallowance of the harms suffered by ratepayers due to PNM’s investments in Four Corners.
We will also argue that the PRC’s decision to allow PNM to recover all of its claimed $96.3 million in “stranded costs” related to leases from the Palo Verde Nuclear Generating Station was arbitrary and capricious and inconsistent with law, and that the Commission's failure to require PNM to perform a comparative analysis and determine responsibility for decommissioning costs related to PVNGS was a gross violation of the PRC’s responsibility to protect ratepayers from wasteful expenditures. The decommissioning costs for a nuclear generating facility could be astronomical. This is yet another example of PNM’s assumption that it can ignore an Order by the Commission without consequence.
Ultimately, the issues we raise in this appeal reflect the necessity of rigorous oversight to protect the public interest. Private monopolies must not be allowed to disregard regulatory constraints on the assumption that, ultimately they will end up in a better position by evading the law, suffering just a slap on the wrist at the expense of New Mexico residents. The law is clear - ratepayers must be held harmless for any amount imprudently invested.
WE JOINED ALL PARTIES IN A STIPULATED AGREEMENT TO SETTLE THE NEW MEXICO GAS COMPANY RATE CASE
Today New Energy Economy joined the New Mexico Department of Justice, the New Mexico Affordable Reliable Energy Alliance, the Coalition for Clean Affordable Energy and other intervenors in a stipulated settlement agreement with New Mexico Gas Company (NMGC) in rate Case. 23-00255-UT. The stipulated settlement will benefit New Mexico gas customers by:
Reducing the proposed rate increase from $49M to $30M, a 39% decrease, a number more closely aligned with actual revenue requirements.
The monthly fixed access fee of $12.40 will remain unchanged. NMGC originally proposed an increase to $15.50. This provision of the stipulation is particularly important to low and fixed income ratepayers who are disproportionately impacted by fees levied regardless of gas consumption.
The Return on Equity, a guaranteed profit charged to ratepayers for capital investments by NMGC, will remain the same as before at 9.375%. NMGC had requested an increase to 10.5%.
NMGC agreed that Covid related losses and expenses related to NMGC’s application for a Certificate of Convenience and Necessity for an LNG plant (Case No. 22-00309-UT) will not be charged to ratepayers, a savings of more than $10M.
Importantly, in response to New Energy Economy’s February 20th Motion to Dismiss based on the misleading public Notice in the case, the stipulated settlement includes an agreement to revise the Notice format in future rate cases to increase transparency for gas customers and intervenors. New Energy Economy agreed to withdraw its Motion to Dismiss as part of the agreement.
More than 540,000 New Mexican households are dependent on New Mexico Gas Company and have no choice in their gas provider. Today we were pleased to join with all intervenors to achieve fair rates and a fair return on capital investments, to protect low income ratepayers from higher access fees, and to ensure that going forward New Mexico Gas Company will properly disclose the impact that any rate increase application might have on customers.
Ultimately the climate crisis requires that we shift away from fossil fuels and towards efficiency, electrification and 100% renewable energy to heat our homes. Until that date justice demands that New Mexicans are protected from utility greed and exploitation.
AND FINALLY, TODAY WE FILED OUR BRIEF TO ARGUE FOR UNIFORM, TRANSPARENT AND REASONABLE IMPLEMENTATION OF COMMUNITY SOLAR
We filed a joint brief with the Coalition for Community Solar Access and Renewable Energy Industry Association at the PRC to ensure that Community Solar implementation is uniform, transparent and reasonable, and will finally result in the deployment of 200MW of community owned solar. The investor owned utilities have been fighting tooth and nail to stall, obstruct, unduly delay interconnections and add costs to Community Solar projects ever since the Community Solar Act was passed in 2021.
Next up on March 11th will be oral argument in all three investor owned utilities appeal at the NM Supreme Court to try to invalidate Community Solar rules over bogus claims.