Court: New Mexico regulators must reconsider utility case

ALBUQUERQUE, N.M. (AP) — The New Mexico Supreme Court on Thursday ordered utility regulators to reconsider a 2016 decision that cleared the way for the state’s largest electric provider to increase rates.

The court in its ruling found that the state Public Regulation Commission violated Public Service Co. of New Mexico’s due process rights by denying the utility the ability to recoup future costs related to decommissioning the Palo Verde nuclear power plant in Arizona.

The commission had found that the utility acted imprudently in repurchasing part of the Palo Verde Nuclear Generating Station and renewing leases for power from the plant. As a result, the commission decided to limit the amount of spending on Palo Verde that PNM could recoup from customers through rates.

The court said most of the limitations outlined in the rate case were lawful, but that the commission failed to give PNM any notice at the rate hearing before deciding to exclude future decommissioning costs from rates.

“PNM was not afforded an opportunity to be heard on the issue,” Justice Barbara Vigil wrote in the opinion. “Accordingly, we conclude that the commission’s decision to disallow recovery of any future decommissioning costs as a remedy for PNM’s imprudence deprived PNM of its right to due process of law.”

Under the original Palo Verde leases, the utility was responsible for decommissioning costs related to the capacity it had been leasing. PNM’s spending on the Arizona plant has been covered through electric rates, but the commission decided that if more money was needed, the utility — not ratepayers — should cover those expenses.

The court called on the commission to craft a new order, saying that parts of the previous decision that were deemed lawful could be included. The court also acknowledged that more hearings before the commission may be necessary.

Some environmentalists said the ruling represented a victory for ratepayers as the court validated the commission’s earlier findings that the utility’s decisions regarding Palo Verde were imprudent.

Mariel Nanasi, executive director of the group New Energy Economy, said no financial analysis was done before PNM invested millions of dollars in the nuclear plant. She suggested there were other alternatives, such as solar and wind in Albuquerque and Santa Fe.

“The regulatory agency and the high court have made it clear that the utility cannot invest ratepayer money for shareholder benefit alone,” she said in a statement.

The utility also is under pressure to meet more aggressive renewable energy mandates, and PNM officials have acknowledged that Palo Verde will continue to be a part of its generation portfolio.

New Energy Economy and numerous other organizations have requested that the Public Regulation Commission investigate the utility’s nuclear power plans.