July 6, 2023

Group says PRC commissioner should recuse himself from PNM rate case

One of three men tasked with determining how much many New Mexicans will pay for electricity in the future may have to recuse himself from that case.

The vocal advocacy group New Energy Economy filed a motion on Friday requesting that New Mexico Public Regulation Commissioner Pat O’Connell recuse himself from the Public Service Company of New Mexico’s ongoing rate case, citing previous testimony O’Connell provided on behalf of PNM during past rate cases.

When reached Wednesday, O’Connell said he has not yet made a decision about recusing himself from the case.

“I’m in the middle of doing my analysis on that,” he said. “I mean, I really take my duties seriously. And there’s a process that’s in the laws so I’ve just got to analyze that.”

He said now that NEE has filed the motion, he plans on responding to the organization’s request.

Should he find that it is necessary to recuse himself from the case, O’Connell said he does not anticipate that it will have a huge impact on the outcome of the rate case.

“We still have two commissioners that will rule on the case when it gets to that point, if I recuse myself,” he said.

O’Connell previously worked for PNM and then for the advocacy group Western Resource Advocates prior to his appointment to the PRC.

He voluntarily chose to recuse himself from another case earlier this year based on his past work. That case involves PNM’s application to merge with the utility giant AVANGRID. While working for WRA, O’Connell testified in support of the merger.

The last time PNM raised rates was in 2016. State regulators left one question unanswered during that case—whether investments in pollution control technology for Four Corners Power Plant were prudent.

Groups like NEE maintain that, instead of investing in pollution control technology, the owners of the Four Corners Power Plant should have shuttered the facility or exited their shares in the plant.

PNM owns a 13 percent stake in the Four Corners Power Plant. The utility is now trying to transfer that ownership share to Navajo Transitional Energy Company.

O’Connell served as one of PNM’s expert witnesses, arguing that the investments were prudently made and that continued use of coal-fired power plants would save customers money.

At the time, O’Connell worked as the utility’s director of planning and resources.

In his testimony, O’Connell said PNM had evaluated the possibility of retiring at least some of its coal resources multiple times and found that continued use of two coal-fired power plants was the most cost-effective path.

This was based on a cost comparison to combined cycle natural gas, not renewable energy sources.

O’Connell explained that alternative energy sources were not “currently or immediately available” to replace coal generation assets.

Replacing 200 megawatts of coal generation at Four Corners Power Plant with combined cycle natural gas would cost $200 million, O’Connell testified. In comparison, he said the pollution controls cost $66 million.

Regulators considering the current rate case must address the unanswered question regarding if those investments were prudent.

The 2016 rate case was not the only time that O’Connell testified in favor of keeping coal-fired generation. He also testified in the 2013 rate case. 

Additionally, the current rate case requires regulators to determine if PNM made a prudent decision to delay issuing energy transition bonds associated with the closure of the San Juan Generating Station and if the utility took steps to protect customers from interest rate increases that were incurred due to the delay.

“The decisions made in this case will directly affect the economic wellbeing of hundreds of thousands of New Mexicans,” NEE Executive Director Mariel Nanasi said in a press release. “The decision making process must not be tainted by the appearance of bias. We respectfully requested the Commissioner to recuse himself to ensure the integrity of the process in this important case.”

Recusals are not unheard of for the PRC, nor is this the first time a group has called upon a commissioner to recuse themselves from a case. The biggest change is that there are fewer commissioners involved in making decisions than there previously were. The commission switched from an elected body of five members to an appointed body of three members this year.

One notable past example of a commissioner recusing herself from an important case was Commissioner Lynda Lovejoy recusing herself from hearing a case involving the San Juan Generating Station in 2018, a decision she later sought to reverse.

Later, in 2020, San Juan County legislators sought to have two commissioners recuse themselves from a case involving the San Juan Generating Station. The commissioners did not do so.