Sierra Club isn’t an issue in PNM rate case

This op-ed was originally published in the Santa Fe New Mexican.

My View: David Coss

Public Service Company of New Mexico wants to raise our electric rates by more than 15 percent, and it was not happy that a Public Regulation Commission hearing examiner recommended a rate hike of “only” 6.6 percent.

So the utility and its friends have pulled out all the stops to paint the decision as unreasonable, including threats of Supreme Court appeals and layoffs and the strange accusation that the hearing examiner used to hike with the Sierra Club, which isn’t a party in the case.

The real story? Hearing examiner Carolyn Glick simply advised that ratepayers be protected from unjustified financial transactions that benefit PNM’s shareholders at the expense of its customers.

What most outraged PNM and its associates was the recommendation that customers not be forced to pay for PNM’s purchase of 64 megawatts of nuclear power it had been leasing from Palo Verde Nuclear Plant. This prompted PNM-associated groups to “accuse” Glick of being an environmentalist.

But the decision was purely economic, based on PNM’s failure to show that the nuclear transactions were in the best interest of ratepayers.

Glick was not alone in this assessment. The attorney general’s expert witness testified, “In no way, shape or form did they justify the market value that they are asking for here.” Several intervenors, including PRC staff, withdrew support for PNM’s purchase after the commission itself asked for more information in June on the nuclear purchase, for which PNM proposes charging customers more than twice the price it agreed to charge for Palo Verde power in another case.

In another win for consumers and the environment, Glick rejected PNM’s attempt to recover $50 million it spent on pollution equipment of dubious benefit at San Juan coal plant. The equipment wasn’t necessary to meet regulations, and PNM didn’t evaluate less-costly alternatives before making this huge investment that results in higher rates for us and increased earnings for PNM’s shareholders.

Glick also recommended rejecting PNM’s request to raise our monthly service fee from $5 to $13, though she did advise upping it to $7. Higher service fees hurt low-income customers the most and punish energy-efficient users.

In fact, Glick’s recommendation included several setbacks to the environment. She recommended against PNM’s decoupling pilot, which would remove its disincentive to encourage energy efficiency without costing consumers. The disapproval seems to be based on a misunderstanding of some aspects of decoupling, and the commission should give it another look with some modifications.

Glick also, disappointingly, approved rate recovery from another unjustified PNM decision — a contract in Four Corners Coal Plant that locks PNM into paying for coal there for decades, whether it uses it or not. Glick said the reasonableness of the contract should have been considered in a previous case, but this is the first rate case since PNM signed the contract.

Too often, PNM makes big decisions that will benefit shareholders and cost ratepayers and then demands approval after the fact by threatening layoffs or further rate increases if it doesn’t get what it wants. It shouldn’t put its employees or its customers — or PRC commissioners — in that position.

The PRC’s responsibility is to protect ratepayers against imprudent investments by regulated monopolies such as PNM. Here’s hoping that commissioners do just that and examine each aspect of the recommendation and case based on the merits, not on threats.

Former Santa Fe Mayor David Coss is chairman of the Rio Grande Chapter of the Sierra Club.

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