The New Mexico Public Regulation Commission denied Public Service Company of New Mexico’s request to delay issuing rate credits while the state Supreme Court considers an appeal of the regulators’ order to issue them.
Should the court rule in PNM’s favor, the utility will not be required to issue those rate credits.
The rate credits are intended to remove the costs of operating and maintaining the San Juan Generating Station from the customers’ bills following the closure of the power plant. One unit has already closed and the remaining unit will close at the end of September.
“I’ve never felt so clear about a decision as this one,” Commissioner Joseph Maestas said prior to the commission unanimously voting to reject PNM’s request to delay issuing rate credits.
He said the public interest would be harmed if the rate credits are delayed.
The vote came after the commission met in closed session Thursday and then recessed for several hours to allow an order to be drafted.
“I think with this order, we’re standing firm,” said Commission Chairwoman Cynthia Hall. “I think it’s the right thing to do.”
During Thursday’s meeting, PRC Counsel Judith Amer said that by not issuing bonds that were made possible by the Energy Transition Act at the time that the power plant closes, PNM is attempting to get a windfall for shareholders.
PNM has argued that it will spend the money it currently uses to maintain and operate the power plant on the increasing costs of operation in other parts of the utility. By doing this, PNM argues customers will benefit because the size of rate increase PNM will request in the future will be smaller. However, there is nothing on paper requiring the utility to do so.
PNM has also said it intends to issue bonds in conjunction with a rate case that it has yet to file. It originally planned to file this rate case in 2020 and PNM officials say that it delayed filing the rate case in part because of the impacts of COVID and not wanting to hurt customers financially. It also delayed the rate case during an attempt to merge with the utility giant Avangrid.
Additionally, in a filing with the PRC, a PNM official stated that the utility would create a regulatory asset that would allow customers to be reimbursed if the PRC had agreed to delay the rate credits and if the state Supreme Court rules in the PRC’s favor.
Amer pointed out that the regulatory asset would require a rate case, which could put such relief to customers coming 16 months in the future.
She said ratepayers are individuals. Some of the future ratepayers may not include the current ratepayers because people may move in and out of PNM’s service territory.
Additionally, Amer said customers need relief now as they face inflation and post-COVID economic stress.
In the order issued Thursday, the PRC found that PNM will not face irreparable harm by issuing rate credits but customers could face irreparable harm if the rate credits are not issued.
Amer said PNM has ways to prevent irreparable harm from happening to the utility, such as issuing the bonds.
Commissioner Stephen Fischmann later criticized the delay in issuing bonds and said the increased interest rates will hurt customers.
“The $128 million that customers are being scammed out of under PNM’s proposal is a drop in the bucket compared to what the costs to customers will be for the excess bond costs caused by their delay,” he said.
