While accusing the state’s largest electric utility of deliberately misleading regulators, the New Mexico Public Regulatory Commission ordered the Public Service Company of New Mexico (PNM) to issue rate credits to customers upon closure of each remaining unit of the San Juan plant.
In its order, unanimously approved on Wednesday, the PRC adopted the decision recommended by the hearing reviewers which was made public earlier this month.
PNM will also need to include a careful assessment of its decision to delay the bond issuance in its next rate filing. If the delay is found to have resulted in an increase in interest rates, shareholders could be asked to absorb the costs of the interest rate increase.
San Juan Generating Station Unit 1 will close this week and Unit 4 will close this fall. Upon the power plant’s closure, PNM must provide funding to three state agencies responsible for assisting affected workers and community.
Although not included in the order, the PRC may at a later date open a case to determine whether PNM violated the state’s energy transition law. Commission President Joseph Maestas raised the possibility and said he would lead such an effort.
PNM argued that delaying the bond issuance and not instituting a rate credit will prevent a utility rate roller coaster by decreasing the magnitude of the rate increase that PNM will seek once it files. its next tariff file.
But, by delaying that, opponents say taxpayers will pay for the operations of the power plant for years after it closes.
“We have pleaded and pleaded for over a dozen years for this moment. At the time, we predicted that shutting down coal was cheaper and better for the environment and our health,” Mariel Nanasi, executive director of the new energy economy and spokesperson for PNM, said in a statement. hurry. “Today’s PRC-ordered victory shuts down another PNM coal unit in San Juan and the average ratepayer will receive a 10% per month credit on their bill beginning in October as solar and wind are cheaper than fossil fuels.The PRC has unequivocally chastised PNM for its cover-up, for its dishonesty, for its “cheating”: it’s time to invest in community care and repairs and reap the benefits of the community-owned renewable energy instead of continuing to depend on a corrupt monopoly.”
PRC says PNM lacks transparency
This case demonstrated the PRC’s growing frustration with the MFN and what the Commissioners see as a lack of transparency.
“This is just the clearest illustration I’ve seen since I’ve been on the bench here at the commission of how this company serves its own ends and makes it difficult for us to get the information we need. we need,” she said.
Related: Groups say PNM will ‘overcharge’ customers by not issuing bonds when SJGS closes
The PRC alleges that PNM changed its plan to not issue bonds or remove the San Juan plant from tariffs when the plant shuts down this year. The commissioners further say that PNM chose not to inform the PRC of this decision and that the PRC was informed of it by consumer groups this spring.
“There are such things as lies by omission,” Maestas said.
PNM spokesman Raymond Sandoval said the PNM was transparent and cited testimony a PNM official gave in 2019 indicating that the PNM would issue bonds with the upcoming tariff case. He further stated that the only way for PNM to remove the San Juan plant from tariffs is through a tariff case. When the COVID-19 pandemic hit, the tariff case was delayed, then delayed again in a merger case in which a larger utility, Avangrid, tried to take over the utility.
Judith Amer, the PRC’s general counsel, said it was clear in previous cases that PNM would issue the bonds as the power plant’s closure approached so that shareholders and taxpayers would receive benefits.
Since that changed, Amer said “taxpayers aren’t taking advantage of the market and PNM is just saying, ‘trust us, we’ll give it to them in the future.'”
PNM maintains that ratepayers could see a large increase following the next rate case. Sandoval said PNM believed it was helping customers by delaying the rate case amid the pandemic and is now being punished for that action.
“We don’t know if they’re doing a favor until we look at the fare case and see if a fare increase is indeed warranted,” Commissioner Stephen Fischmann said.
At the same time, internal documents referenced in the recommended decision indicate that PNM is hiring an outside firm to develop a messaging strategy that hearing reviewers say PNM used to label its decisions as altruistic.
Sandoval said that when PNM has complicated topics it needs to communicate with customers, it will bring in outside companies to help with that process. This involves getting customer feedback on messaging.
He further criticized the PRC’s lack of transparency, saying the commissioners are lecturing the PNM on transparency despite holding a two-hour closed session on Tuesday to deliberate on the matter. He said it did not follow the commission’s normal procedure of asking the hearing reviewers to present the recommended decision in a public meeting and then asking the general counsel to present the objections or arguments against it. the recommended decision also at a public meeting prior to the committee’s vote on the order.
Additionally, he said the order violated the board’s policy of avoiding what is known as piecemeal or single-issue pricing. The hearing reviewers acknowledged this in their recommended decision.
Related: PRC Hearing Reviewers: PNM ‘Plots’ and Engages in ‘Clever Manipulation’ of Energy Transition Law
The commissioners take turns to criticize the PNM
At Wednesday’s meeting, each commissioner in turn criticized PNM’s action, accusing the company of trying to cheat and hide information from the commission. Maestas accused PNM of trying to profit shareholders or increase executive bonuses.
Sandoval said that was not the case. He said the money that would have been used to pay for the San Juan plant will be used to cover rising expenses in other areas.
He compared it to a cafe that charges $5 for a cup of coffee to cover the expenses of an espresso machine that keeps breaking down. He said that if the cafe gets a new espresso machine, it won’t have to pay that maintenance fee anymore, but if the cost of coffee beans goes up, it doesn’t make sense for the owner to lower the price of it. a cup of coffee simply because it no longer pays to fix the espresso machine. Instead, he said the business owner would use the money that would have been spent on repairs to cover the cafe’s rising costs.
Commissioner Theresa Becenti Aguilar and Commission Deputy Chair Cynthia Hall said PNM’s actions in this case will impact their future credibility before the commission and Becenti Aguilar questioned some of the other decisions made by the service. audience. Becenti Aguilar said she believes PNM misled the public about the need to expand operations at San Juan Generating Station’s Unit Four.
Even Commissioner Jefferson Byrd, the only Republican on the commission and the commissioner who most often opposes imposing corporate fines, had harsh words for PNM. He said he usually gives the companies the benefit of the doubt, but, when it comes to PNM, he said it’s obvious the utility tried to mislead the commission. He said the hearing reviewers described the means by which PNM attempted to do so. He expressed support for Maestas’ proposal to open a case to investigate PNM’s behavior and possibly impose fines.
While PNM says it was transparent and that its plan will save customers money in the long run, all parties that intervened in the case, including the New Mexico Attorney General’s Office and consumer groups, supported the commission in adopting the recommended decision.
The concern is that PNM could collect $94 million a year from taxpayers and then possibly also collect on past investments in the power plant that it has not yet repaid by including them in securitized bonds that it is authorized. to be issued under the Energy Transition Act should the utility choose to issue them.
“To the layman, this may all seem very confusing, but it’s actually quite simple,” Fischmann said. “We have ETA. It’s very clear what he was supposed to do and where he was supposed to go. And the bottom line is that PNM attempted to cheat its obligations under ETA. They are just trying to cheat customers with money.
Fischmann said PNM officials knew they were cheating because they chose not to inform the commission because internal documents showed they were concerned.
“In my opinion, their credibility is now nil,” he said.
The case could go to court
PNM plans to appeal this decision to the Supreme Court of New Mexico.
“We wholeheartedly and unconditionally support New Mexico’s historic energy policy set forth in the Energy Transition Act and its provisions for carbon-free energy, reducing costs for customers, and supporting affected communities. Despite the external challenges, our teams have been working to go beyond passing the legislation and finding ways to achieve the carbon-free transition sooner and more cost-effectively for customers,” said the President and CEO of PNM Resources, Pat Vincent-Collawn, in a statement. “It is disheartening for PNM to be arbitrarily penalized today for choosing not to file its planned customer rate increases over the past two years, a change made to benefit customers as we navigate the energy transition in midst of an unpredictable global pandemic. We will appeal today’s order.