Stand against PNM rate hike
Unfortunately, once again, New Energy Economy is the only opposition party against Public Service Company of New Mexico’s newest $750 million rate case set for hearing beginning Monday (Aug. 7) at the PRC building, across the street from the Roundhouse (“PNM submits new rate hike proposal,” May 24).
PNM is asking ratepayers to foot the bill for $148 million of capital expenditures at the 51-year old Four Corners coal plant, even though the monopoly showed no timely financial analysis to prove that the company’s reinvestment in Four Corners is justified, substantiated, supported or cost-effective. The law requires that utilities demonstrate, through a meaningful financial analysis that major capital expenditures are cost-effective and benefit ratepayers if it wants to recover costs from us, ratepayers. Makes sense, right?
In December 2013 PNM signed 14 contracts, that were to take effect in July 2016. These were important contracts having to do with its co-utility partnership at Four Corners, water use, a 15-year take-or-pay coal supply contract, pollution controls required for continued use, and more. Despite the confluence of all these major obligations, more than a billion dollars worth of commitment, PNM relied on an analysis conducted 19 months earlier to “determine” whether it was going to re-invest, allegedly on our behalf. Before I breakdown the substance of the May 2012 analysis, lets review how absolutely deviant this action really was.
Would you buy a house without looking at comparable houses and housing prices? Would you buy a house and look at housing sales from 19 months prior? Of course not! Because you are a responsible person and you understand that being accountable means making informed decisions and evaluating choices based on a comparative analysis between alternatives. You or your family would not undertake significant capital expenditures (a car, a house) without attention to relevant factors (performance, age, etc.) and without careful consideration of all your options. Those standards of evaluation have been baked into the law.
So, the first trespass is that PNM failed to conduct the required contemporaneous analysis before investing hundreds of millions into the Four Corners coal plant on our behalf (the cost of which will fall entirely on our shoulders if they win this rate hike). But the even bigger abuse is that the May 2012 financial “analysis” that PNM claims is the basis for prudence, was yet another example of them cooking the books.
Because PNM’s evidence was stale, New Energy Economy requested that PNM provide evidence that its choice to continue to invest in the coal plant was fair, reasonable, and just. PNM refused. New Energy Economy filed a Motion to Compel to force PNM to conduct the financial analyses of the impact to ratepayers if they HAD divested from the coal plant instead of furthering their investment. The PRC ruled in New Energy Economy’s favor stating that it is “beyond reasonable” PNM perform the analyses.
And low and behold – what did the evidence reveal? That divesting from Four Corners coal plant was $450 million better for ratepayers than sticking with the aging, pollution-belching plant.
We do not have to accept PNM’s rogue behavior and its insistence on dirty and costly energy. We can do better. There are already more family-supporting jobs in the renewable energy industry than coal and we must require that our elected officials heed the wishes of the electorate: go 100% renewables. Our lives, our children and grandchildren deserve nothing less.
Mariel Nanasi is the executive director of New Energy Economy. For more information and to learn how you can be invovled, please visit: NewEnergyEconomy.org.