Hundreds of thousands of New Mexicans can expect to save over $100 on their utility bills over the course of the next year or so.
The state’s Public Regulation Commission on Thursday approved a settlement that will send $115 million back to customers of the Public Service Company of New Mexico. The settlement helps end a legal battle over prices PNM charged people after it decommissioned a coal plant that went on for over a year.
The average residential customer will get a $9.28 monthly credit, PNM spokesperson Ray Sandoval said. He said the savings will kick in on people’s bills within the next month.
“This action by the Commission to approve the settlement allows customers to realize additional benefits of our energy transition in their bills,” he said.
PNM still has to sort a few more things out in the New Mexico Supreme Court before savings can go into effect, though Sandoval said it’s mostly procedural. A state judge has to first approve a motion to pull PNM’s appeal before the New Mexico Supreme Court which argued against paying for credits.
The settlement also allows PNM to issue over $360 million in bonds and has safeguards so New Mexicans don’t have to pay if interest rates exceed a certain amount. The utility also can’t charge its customers or sell bonds to recover legal costs.
Mariel Nanasi is the executive director of New Energy Economy, one of the parties that opposed PNM in court. She said this is the first time New Energy Economy has ever settled with PNM because the utility “has finally agreed to do what it was supposed to do in the first place: stop collecting money from ratepayers on a closed plant.”
“While we are happy to have reached a settlement with PNM on these overdue rate credits, it’s a shame we had to fight an expensive legal battle to claw back money that PNM has owed to its customers for a year,” she said.
Nanasi said before the meeting she anticipated the PRC would support the settlement because that’s what the commission’s decision was last year, “and it was right.”
This matter started up back in 2020 when the commission approved a plan for PNM to close the San Juan Generating Station, authorizing the utility to sell bonds to recover costs and lower prices for its customers.
Last year, the utility announced it would do this in 2024 instead, saying it had plans to lower prices with a general rate base change, which the pandemic delayed. A hearing is ongoing now for the 2024 rate base change request.
In 2022, the commission held a public hearing and concluded PNM should give out credits after New Mexicans’ bills didn’t and weren’t going to immediately become cheaper with the closure of the coal plant.
The same month, PNM appealed the PRC decision with the New Mexico Supreme Court and, for a year now, hasn’t had to follow the state’s original order to give refunds to New Mexicans.
Commissioner: ‘The right thing to do’
At Thursday’s meeting, commissioners had two options: just approve the settlement — which they did — or send it to another public hearing, which is what Commissioner James Ellison advocated for.
He said he has questions about why numbers have varied on how much PNM would’ve over-collected by the end of this year. The PRC order from June 2022 lays out annual savings of $94 million for New Mexicans, and the utility is paying $21 million more than that in this settlement.
Ellison also voiced concern that the PNM rate increase request is going on now as well, which is also impacted by the shutdown San Juan Generating Station.
Given how extended the timeline already is, Ellison said it doesn’t hurt to ensure the commissioners are doing enough research and make a decision on the settlement in a few weeks, instead of on Thursday.
“When we make this decision, it’s final,” he said. “We can’t go back to think about, ‘Should we have considered this or that issue?’”
However, Commissioner Pat O’Connell said past commissioners have already done due diligence on this case through the previous public hearing, and delaying the approval of the settlement would have affected people struggling to pay their bills.
“I don’t want to delay lowering the bills for poor people a day,” he said.
O’Connell also talked about the ongoing rate increase hearing. With the potential for electricity prices to increase starting in 2024, O’Connell said if these credits don’t start up soon, they could get lost in the wash.
He said he heavily factors in that the settlement was agreed upon by so many different organizations or agencies. Included in the nine total parties who signed on to the settlement were PNM, New Energy Economy, PRC utility division staff, the Albuquerque Bernalillo County Water Utility Authority and the New Mexico Office of the Attorney General.
“I can’t think of a case that had a more diverse group, and (it’s) unanimous,” O’Connell said.
Ellison said a two-week delay would not have been unreasonable. He said if the Supreme Court can take almost a month to send this case back to the PRC, then commissioners can have another week for extra research.
Plus, he added, things still have to get settled at the Supreme Court before PNM can put credits on people’s bills.
“It’s not just dependent on what we do, but it also depends on when the Supreme Court takes action,” he said.
Ellison still voted in favor of approving the settlement when the other two commissioners didn’t back his request for another public hearing. He said this is still “the right thing to do.”
“It’s a very promising and welcomed development that we have this stipulation, and it shows that if you can get that diverse group of parties to sign on to it, then there’s probably some strong merit to it,” he said.
Ellison also said the PRC could still try to separate the issue of the San Juan Generating Station from the rest of PNM’s proposed rate increase.
