The end of utility company regulation?

Iimagine framers of the New Mexico Constitution in 1910 were well aware of federal efforts to break up the Standard Oil monopoly and were motivated to create the Public Regulation Commission to “regulate the utilities, including electric” as these industries were developing. However, by 1917, two independent providers merged into one dominant power company, eventually renamed the Public Service Company of New Mexico, and the seeds of a monopoly had been sown.

In 1941, the Public Utility Act provided additional policy details and procedures describing the PRC’s regulatory duties, wherein the interests of both consumers and utilities were to be considered in determining fair, just and reasonable utility rates. In exchange for market “exclusivity,” PNM would become a “regulated monopoly” controlled by the PRC to ensure customers’ interests were protected.

In 1998, legislators crafting the Public Regulation Act knew a number of states, such as Connecticut and Maryland, were “deregulating” their utility markets, by creating open marketplaces to drive down high residential electricity rates, and allowing consumers an opportunity to choose electricity generated from 100 percent renewable sources.

In contrast, New Mexico legislators assumed “free-market conditions” would encourage other providers to emerge, and eventually eliminate the need for the PRC and any regulation altogether. In the absence of free-market competition however, legislators were very clear utilities must submit to oversight and regulation by the PRC. Unfortunately, in the absence of substantive laws to “deregulate” the industry in the intervening 20-year period, consumers have been deprived of lower electricity rates and, most sadly, an opportunity to receive 100 percent renewable energy-derived power.

PNM has a long history of burning fossil fuels to generate electricity, and by 2016 was realizing its failure to divest from fossil fuels earlier was an economic mistake. Through a glaring act of hubris, PNM convinced state legislators to eliminate its nemesis, the PRC, in the Energy Transition Act of 2019 by erasing PRC’s power to regulate the utilities in abandonment cases, taking away due process and judicial review in appeals, and making ratepayers 100 percent responsible for costs associated with closing coal-dependent power plants. All this was in exchange for getting the utilities to transition to using mostly renewable energy by 2050.

Many New Mexicans want their electricity generated from 100 percent renewable energy sources well before 2050, reparations/retraining for San Juan workers, and fair sharing of the financial costs associated with abandoning coal plants.

Remarkably, the governor, the Legislature, local newspapers and several environmental groups have cast the PRC as the villain in this saga for not applying the ETA, retroactively, to existing cases involving PNM, thereby delaying help for families impacted by this closure.

Clearly ratepayers, especially those below the poverty level, would be most adversely impacted by eliminating PRC regulatory functions, now and into the future, as they swallow costs for abandoning fossil fuel power plants. This blatant power grab by PNM, and shocking willingness of our state government to economically burden its citizens with lifelong surcharges in exchange for renewable energy standards, is unconscionable.