Stop bailouts For PNM’s dirty energy

The Public Service Company of New Mexico, our largest electric monopoly, is subject to the oversight of the New Mexico Public Regulation Commission. Over the past two years, PNM has repeatedly asked the PRC to approve aggressive price hikes against consumers.

Last year, the PRC approved a rate increase that will force consumers to pay an additional $65.7 million into PNM’s coffers annually (“Talks on PNM rate hike request begin,” Aug. 6). Now the utility is seeking an additional $62.3 million. Both rate hikes are primarily to compensate PNM for the costs for coal and nuclear generating plants in the Four Corners region and a plant in Arizona.

While the PRC has denied PNM a small fraction of the increases it has sought, the commission hasn’t gone far enough to protect consumers from having to foot the bill for PNM’s continued investments in dirty, outdated energy sources.

Coal is a “fossil fuel,” a nonrenewable energy source that discharges harmful emissions when burned, including carbon dioxide, the primary contributing factor in global climate change. The value and efficiency of coal-fired and nuclear plants (with their high radioactive waste and decommissioning costs) has declined significantly over the past 20 years, while simultaneously, solar and wind have become less costly and more efficient, and storage capacity has become cost competitive.

The evidence presented to the PRC in connection with PNM’s requests to raise rates clearly shows that PNM’s decision to continue its coal and nuclear investments is a bad deal for consumers and flouts the public interest. PNM failed to show any sound business reasoning for its decision to enter into a new 15-year lease for the Four Corners coal plant and presented no analysis comparing the costs of coal against other resources. PNM also failed to provide any comparative analysis of carbon emissions from the Four Corners plants, thereby precluding informed decision-making by the PRC or reasoned public consideration with regard to clean energy alternatives. A recent decision by the U.S. Court of Appeals for the District of Columbia held that without a comparative analysis of greenhouse gas emissions, public agencies such as the PRC — and citizens — are unable to make a fully informed decision as to the prudence of a particular energy investment.

In hearing PNM’s latest request to increase rates, the hearing examiners who reviewed the evidence expressly found that PNM’s coal reinvestment at Four Corners was “imprudent” — lacking in sound business judgment and unsupported by contemporaneous market analysis.

Under the law, consumers cannot be forced to pay for “imprudent” decisions by utilities managers, and the law mandates that rate increases seeking reimbursement for such bad investments must be denied. But the hearing examiners, while acknowledging that this is the law, nonetheless recommended a “compromise” rate increase for PNM, sufficient to reimburse it for all coal costs, excluding only profit on the capital expenses, essentially a gift for its imprudence of hundreds of millions of dollars — a bailout. The hearing examiners’ decision is now before the PRC for approval.

It’s good to know the hearing examiners drew the line at allowing a public utility to actually profit from unsound business decisions that other businesses would be forced to absorb, but clearly this does not go far enough. Utilities are required by law to operate in the public interest — i.e., invest in resources that provide electricity in a cost-efficient, prudent, transparent, and environmentally sound manner. The Public Service Company of New Mexico has failed to provide meaningful data in support of its expenditures, precluding any meaningful public discourse. Without this information, the PRC must follow the law and deny any further rate increases tied to Four Corners coal.

Alison Platt is a freelance writer and environmentalist in Santa Fe.