PRC I

[This is the first of two columns on the Public Regulation Commission, with the second to be published next Sunday.]

In our changing world, how is the Public Regulation Commission (PRC) performing as a protector of the public? 

The world is moving toward renewable energy sources. Soon each house, business, and manufacturer will supply most or all of its energy from solar panels. A new California law requires that new buildings include solar panels – and even the home-builders apparently agree. Yeah, a new home will cost a bit more; but minimal or nonexistent utility bills will rapidly repay the investment. 

Lower solar costs and rapid improvements in storage are facilitating a decentralized system. The power grid will become more like a bank, with each of us depositing a bit of excess power much of the time and occasionally borrowing back some. We no longer need nearly so many huge gas-fired plants constantly sending large amounts of energy to our cities.

That decentralization is what utilities fear most. If they can build and own huge systems – gas, coal, nuclear, even solar – they make big profits. By tying profits to capital expenditures, our state's system arguably encourages waste. But if we each generate more of that energy, and utilities create less power (and transfer it from afar) and mostly direct energy traffic through the grid, their profits and our rates are more limited. Utilities have been standing on the brakes of this change, but it's coming. 

It could be here now. 

Meanwhile, El Paso Electric builds more huge plants because that's more profitable than energy-efficiency measures such as time-of-use rates, lowering peak demand, and encouraging distributed rooftop solar. 

The PRC has approved five new EPE gas plants in five years. These deals saddle us with those plants – and their high costs – for 40-50 years. One estimate says those new gas plants could cost us $5 billion over time. 

A friend compares it to investing zillions in mainframe computers just when PCs were taking over the world. Will we spend decades paying for dinosaurs? 

The PRC decides how we invest, after considering complex analyses and arguments. The playing field might seem tilted against us. Utility companies' sole legal duty and desire is to maximize profits. They have highly capable lawyers they pay well, passing on the costs to us. Although many states' PRCs have independent customer advocates, paid to argue for ratepayers' interests, we don't. The PRC hears one side presented by top professionals, and the other side presented by a few dedicated nonlawyer volunteers – assuming they can even negotiate the procedural maze those lawyers know by heart. (Recently some cities and counties have also intervened.) 

Even if commissioners are unbiased and want to be fair, they're hearing a case skewed toward one side. 

Despite that, hearing examiners, who read all the briefs and hear all the witnesses, have recently recommended decisions against utilities. PRC counsel has agreed. But the Commission has repeatedly voted 3-2 to overrule the hearing examiner in favor of utilities. (PRC Chair Sandy Jones has logical explanations for the votes, and notes he's overruled the hearing examiner in ways the utilities didn't like, including overruling one decision that intervenor Merrie Lee Soules's testimony couldn't be considered.) 

Those two cases are on appeal to New Mexico's Supreme Court. 

Since 2008 real median income in New Mexico is down 3.6%. Public Service Company of New Mexico's compensation is up 122%, and its stock price up 301%. 

It's hard not to be concerned.

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[This column appeared in the Las Cruces Sun-News this morning, Sunday, 20 May 2018, and also on the newspaper's website and KRWG's website.  A spoken version will air during the week on KRWG and on KTAL-LP, 101.5 FM.  Next week's column will discuss in more detail the candidates for the PRC, incumbent Sandy Jones and former State Senator Steve Fischmann.]

[I mention the 3-2 votes to overrule the hearing examiner.  I'll discuss those more fully in the next post, next Sunday.  Both look bad: in one, involving further investment in a coal plant in Four Corners area, PNM had reached a settlement with certain parties (by giving those categories especially low rates, to the detriment of most ratepayers) and the hearing examiner, after a hearing, recommended rejecting the settlement.  The PRC's lawyer agreed.  The Commission initially voted to follow the recommendation.  Two months later, three commissioners, including Jones, voted to reverse that decision and accept the settlement.  That meant PNM got the higher rates it wanted.  Jones said there was little choice, because the law set a deadline for the decision and there wasn't an adequate record.  An opponent pointed out that the law he cited had changed; and the PNM's own lawyer obviously thought the commission could safely reject the proposed settlement.  I'm no expert, and am still looking into this stuff.
In the other case, again rejecting the advice of a hearing examiner and the PRC's lawyer, the Commission (3-2) approved PNM's plan for meeting its renewable energy requirements.  Critics have made much of the fact that PNM was contracting with Affordable Solar for five solar fields on PNM would own.  The period for bids was only 30 days, and had other problems, so that one expert witness called it "rigged" and the Hearing Examiner agreed it was unfair.  One issue -- on which experts disagreed -- was whether the 30 days was or wasn't enough.  Some argued that for such a complex project, as a turnkey deal, 90 days would have been more appropriate; but others (and Jones, when we talked) said that because of the complexity, and the sophistication of potential bidders, the 60 days' difference wouldn't have mattered because bidders either had a system ready to propose or they didn't.  If they did, 30 days was enough.  If they didn't, the extra 60 days wouldn't help.  Jones says he's an expert on construction.  I'm not.  But, again, obviously the hearing examiner saw it differently.  
Jones's opponent have made much of the fact that Jones gets significant campaign contributions from Affordable Solar and related parties.  It doesn't look good.  Jones points out that Affordable Solar -- which got a $73 million contract -- wasn't directly regulated, as PNM is; that Affordable Solar is a great and New Mexican company; and that the appeal is delaying this and other renewable energy projects.]