Regulators want to reopen hearings in PNM rate case

Utility told it must agree to provide additional info

State regulators voted unanimously Wednesday to reopen hearings in a contentious utility rate case — if Public Service Company of New Mexico agrees to certain conditIons — giving PNM the chance to provide the cost-benefit analysis a hearing examiner said was lacking from its rate request.

Under the terms of the Public Regulation Commission order, the hearings will be reopened if PNM agrees to submit additional information about transactions associated with the Palo Verde Nuclear Generating Station and air pollution controls at the San Juan Generating Station. The utility also must make its resource modeling software avail-

able to the commission for free.

PRC attorney Michael C. Smith said it is unclear how the case will move forward if PNM does not agree to the terms of the order.

PNM spokesman Pahl Shipley said the company would not comment on the order until it had a chance to review it.

The order reflects the primary points of disagreement between PNM and hearing examiner Carolyn Glick, who recommended a rate increase far lower than the one PNM had requested.

Her Aug. 4 recommended decision slashed PNM’s rate hike request by two-thirds, from an increase of $123.5 million in annual revenue to $41.3 million. PNM customers on average would see their bills rise by 6.4 percent under the recommended decision, rather than 14.4 percent under the utility’s request.

PNM officials have said they will file an appeal with the state Supreme Court if the PRC adopts the recommended decision without changes. The company has said it will have to lay off up to 300 employees if the recommended decision stands.

The company has also said it plans to file a new rate case at the end of the year.

“We’re going to have the same problems on the next rate case if we don’t figure this out now,” said PRC Commissioner Sandy Jones, who called in to the meeting remotely.

The PRC will now have until Dec. 15 to rule in the rate case. PNM must file its response to the order by Monday afternoon.

Much of the controversy in the case stems from Glick’s decision to exclude the Palo Verde transactions and the San Juan pollution control costs from the calculation that determines how much PNM can charge customers. In her recommended decision, Glick said PNM acted “imprudently” by failing to sufficiently weigh other options when it purchased 64.1 megawatts of nuclear power for $163.5 million, extended several leases at Palo Verde for $19.5 million per year and installed $52.3 million worth of air pollution controls at San Juan that some called excessive.

“Any reasonable business, in particular, a utility, when it had the opportunity to look at whether it was going in a direction that was going to impact customers, should have conducted a more thorough cost-benefit analysis,” Glick said at last week’s hearing.

PNM maintains that the investments Glick excluded from the rate calculation were prudent and appropriately analyzed. After the orders were passed Wednesday, Commissioner Patrick Lyons apologized to Glick for accusing her of being biased against nuclear energy at last week’s public meeting.

“When you make assumptions, you make mistakes,” Lyons said. “It was a mistake on my part, and I apologize for that.”

Glick thanked Lyons for his apology.