New Energy Economy has appealed state regulators’ decision in the Public Service Company of New Mexico’s recent rate case to the state Supreme Court.

The consumer and environmental advocacy group argues that the rate decrease should be even greater because the utility imprudently invested in the Four Corners Power Plant as well as the Palo Verde Nuclear Generating Station.

Ray Sandoval, a spokesman for PNM, said in an email statement that parties to the New Mexico Public Regulation Commission’s proceedings have a legal right to file an appeal.

“PNM will participate in the appellate process and will continue to focus on the next steps in our transition to a carbon-free grid,” he said.

NEE has been a vocal opponent of coal and nuclear power and is a frequent critic of PNM.

While the PRC found that PNM had made imprudent investments, it allowed the utility to recover some of those costs. NEE Executive Director Mariel Nanasi said PNM should not be allowed to recover any of that money through rates.

“Ratepayers are to be held harmless for the imprudence of utility management,” she said.

In the case of the Four Corners Power Plant, a past commission during the 2016 rate case left unresolved the question of whether the investments into the coal-fired power plant in northwest New Mexico were prudent. That question had to be addressed in the most recent rate case. 

In between the two cases, PNM was able to collect money from customers to pay for those investments.

In the most recent rate case, the PRC allowed PNM to partially recover the costs of investments into Four Corners Power Plant. Those investments included pollution controls.

PNM is a partial owner of the Four Corners Power Plant, which currently only operates during summer months to help meet peak demands. The utility previously attempted to transfer its shares in the Four Corners Power Plant to Navajo Transitional Energy Company, but state regulators denied that application.

Nanasi said that PNM’s decision about a decade ago to continue receiving electricity from the Four Corners Power Plant cost ratepayers $240 million, yet PNM is still allowed to recover the majority of its investment into the facility.

“We’ve been overpaying for seven years on Four Corners,” Nanasi said.

The PRC cited the time that passed without an answer in regards to the prudency of the Four Corners investment as one of the reasons why the utility should be able to partially recover its investments.

While the PRC found continuing use of the Four Corners Power Plant was not prudent, the state regulators acknowledged that ratepayers did benefit from the facility which provided reliable baseload power.

The decision to continue using Four Corners Power Plant was made in 2013 following an analysis that was done more than a year earlier. State regulators criticized the utility for not performing another analysis closer to the time that it signed the fuel contract for Four Corners Power Plant, stating that a lot changed between May of 2012 and December 2013. 

Additionally, NEE says PNM should not be permitted to recover all of the stranded costs related to Palo Verde. Stranded costs occur when a utility ends the use of an asset before it finishes paying for investments into the facility.

NEE argues that it is illegal to include stranded costs in rates and that, because investments into Palo Verde were done imprudently, the facility has not been “used and useful,” which is required if a utility is going to recover those investments through rates.

And, NEE states, the PRC should address the future decommissioning costs of Palo Verde and determine who will be responsible for paying those currently unknown expenses.

“The issue, if anything, is overripe to the point that it is becoming moldy,” the group states in a document stating the issues on appeal.

Nanasi said she believes Palo Verde will close within the next decade, likely due to water scarcity. Palo Verde is located in Arizona and nuclear generation requires large amounts of water.

She said that when Palo Verde does close, it could leave PNM with an enormous bill. 

Nanasi used San Onofre Nuclear Generating Station in California as an example. Decommissioning that facility costs billions of dollars. 

The costs to decommission Palo Verde could be borne by customers decades in the future who never received power from the facility should state regulators determine that PNM has the right to recover those costs through rates.

Nanasi said she believes the legacy of nuclear power production will be one of the biggest environmental disasters the country is facing. That is in part because the United States has not found a permanent solution for dealing with the radioactive waste generated by those power plants.

One temporary option may be storage at a facility in New Mexico; however, the state and various communities along the railroad lines that would be used to move the nuclear waste to the facility have vocally opposed such an initiative.

“It’s a ticking time bomb and there’s no answer to the waste and nobody wants it,” Nanasi said.