November 2, 2022

NM Supreme Court presses pause on rate credits for PNM customers

Hannah Grover

The final day of operations at San Juan Generating Station

Customers of the state’s largest electric utility will continue paying the same rate they were paying when the San Juan Generating Station was operating—at least for now.

Earlier this year, the New Mexico Public Regulation Commission ordered Public Service Company of New Mexico to issue rate credits to prevent customers from paying for the operations of a now-closed coal-fired power plant that customers no longer benefit from.

PNM promptly appealed this order to the New Mexico Supreme Court and asked the court to stay the implementation of the rate credits until after the case is resolved. On Tuesday, the court granted this stay.

That means customers will only see the rate credits if the state Supreme Court rules in favor of the state regulatory commission. 

Mariel Nanasi, the executive director of New Energy Economy and one of PNM’s more vocal critics, expressed disappointment with Tuesday’s decision.

“I understand that the Court wants to reserve judgment for a full consideration on the merits, but it is unfortunate that during the interim PNM will continue to charge ratepayers for San Juan Generating Station operating costs even though we are not getting any electricity from the plant,” she said. 

The topic of rate credits was an area of contention between the PRC and PNM, with regulators accusing the utility of purposefully attempting to mislead the commission.

PNM argues that the cost of doing business has gone up and that by not issuing the rate credits the utility can invest that money in other areas. The utility company has said that delaying rate credits would mean smaller increases in rates in the future. 

The utility plans to remove the costs associated with the San Juan Generating Station from rates during the next rate case. The PRC must approve any change in rates. 

PNM stated in its appeal that not issuing a stay of the rate credits would result in the company losing more than $128 million in revenue.

PNM also argues that the financing order approved by the PRC and the Energy Transition Act state that PNM will eliminate the coal-fired power plant from its rates when the energy transition charge goes into effect rather than upon the closure of the plant. The energy transition charge is a fee on every customer’s bill to pay off the bonds that essentially refinanced debt owed for past investments into the power plant.

PNM also claims that it intended the bonds to be issued and new rates to go into effect around the time that the plant closed, however factors like the COVID-19 pandemic and an attempted merger with the utility giant AVANGRID led to delays. PNM now says that it will issue the bonds in 2023 or 2024 following the conclusion of an upcoming rate case.