By Ben Luce
Chairman, Break the Grip!
House Bill 305 is now poised for Senate passage. Despite the large alliance of supporters, this bill is deeply flawed.
Although purported to promote energy efficiency, all HB 305 really does is take away people's energy efficiency savings by allowing the utilities to implement huge rate increases, as a means to prodding those utilities into promoting energy efficiency.
Proponents argue that HB 305 is needed to avoid new power plants. But the state could just as easily have the Public Regulation Commission fund independent energy efficiency programs that would be just as effective, more trustworthy, and for a small fraction of the cost of approach mandated by HB 305.
The real reason for this bill is simply the high level of influence that the utilities have in New Mexico. A tell-tale sign that increased utility profits are the real driver for HB 305 is that the bill applies the same rate increase approach to gas efficiency, which has nothing to do with avoiding power plants.
The environmental groups promoting HB 305 are deeply misguided and in some case compromised by their relationships with utilities. One of the main proponents, Western Resource Advocates, a member of the Coalition for Clean Affordable Energy, even has a Public Service Company of New Mexico official, Jeff Burkes, on its board. Burkes is lobbying for HB 305.
Another, the Southwest Energy Efficiency Project, accepts money from investor-owned utility interests. The lobbyist for this group, Gail Ryba, is now the chairperson for the coalition, and the main advocate promoting HB 305.
The Public Regulation Commission has failed to provide legislators critical information about this bill in the bill's Fiscal Impact Report. The commissioner who led the PRC to support this bill, Ben Ray Lujan, is the son of the sponsor of the bill, House Speaker Ben Lujan. The speaker often favors utility interests with his bills. Examples include his support for electricity deregulation and related legislation in 1998 and 2001, his memorial in 2003 to remove PRC authority to impose a renewable energy standard; his bill last year to roll back the moratorium on winter utility shutoffs for low-income people.
Ben Ray Lujan's support for this bill is truly contrary to his role as PRC Commissioner. For while he negotiated some language in the bill that purports to protect consumer interest, that language is very weak, and clearly trumped by the guaranteed extra profits provided for by the bill, and also other language in the bill that is designed to largely strip the Commission of its authority to limit or regulate utility-based efficiency programs.
I believe the impetus for HB 305 is PNM's frustration with the commission's prior opposition to the rate increase mechanism established by the 2005 Efficient Use of Energy Act, which HB 305 is intended to strengthen. It is noteworthy that the PRC did contribute highly critical information in the fiscal impact report for that bill in 2005.
PNM's frustration with the PRC is reflected in an e-mail which I obtained last year via a public records request, and which was subsequently cited by the PRC in the recent rate case proceedings. Burkes, the lobbyist pushing HB 305 for PNM now, wrote the e-mail in an attempt to break an alliance between myself and the commission with respect to flawed legislation in the 2007 Session.
It's interesting that the bulk of the fiscal impact report for HB 305 was contributed by the Environment Department, which does not have expertise with utility rate regulation. But the department does have a high-level staff member, Sandra Ely, who heads the Climate Change Program, and who is the spouse of lobbyist Steve Michel. Michel is lobbying for HB 305 on behalf of Western Resource Advocates, the same group with the PNM lobbyist on its board.
Most crucially, the fiscal impact report fails to give a fair evaluation of the potential for independent— non-utility-based— efficiency programs or a true estimate of the cost to consumers of HB 305. The cost will likely be in the hundreds of millions of dollars per decade. It could be even more should utilities succeed in exporting extra power and justifying new plants. HB 305 also exposes ratepayers to further risk associated with fuel prices, climate impacts to energy sales, and other unanticipated consequences.
It therefore appears that the fiscal impact report, the most critical source of technical information for legislators, has been thoroughly whitewashed, and that the Legislature has been deprived of crucial information.
HB 305 was developed behind closed doors over the space of just a few weeks before the session, instead of with the kind of extensive and open public process that complex regulatory law demands.
I urge senators to oppose HB 305 or amend it such that proper regulatory oversight is restored and the option for independent efficiency programs is included.
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