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PRC may face major changes within year

Copyright © 2019 Albuquerque Journal

SANTA FE – Over the years, two members of New Mexico’s most powerful regulatory body have been convicted of felonies and another lost a sexual harassment trial.

Gov. Michelle Lujan Grisham

Its elections have spawned waves of campaign cash – from special-interest groups and a company it regulates.

Now Gov. Michelle Lujan Grisham and a bipartisan majority of lawmakers are exploring whether New Mexico ought to fundamentally reshape its Public Regulation Commission.

The often-overlooked agency has a tremendous impact on how much New Mexicans pay for electricity, gas and, in some cases, water and telecommunications. Much of its work is quasi-judicial, or similar to how a court would operate.

But an increasing number of elected leaders in New Mexico describe the PRC as a potential threat to the state’s business climate.

“It’s got to have a greater degree of professionalism,” House Speaker Brian Egolf, D-Santa Fe, said in a recent interview.

Senate Minority Whip William Payne, R-Albuquerque, said the commission’s work has been influenced by partisan and activist interests.

New Mexicans would be “better served by a professionalized commission,” he said.

Voters are already set to weigh in – with a constitutional amendment set for the 2020 ballot that would turn the PRC into an appointed body, with nominees screened for professional qualifications.

But lawmakers might take action even earlier. Lujan Grisham plans to add “PRC reform” to the Legislature’s agenda for the 30-day session that begins in January.

Potential legislation could include transferring some of the PRC’s decision-making power to the courts, restructuring its divisions and altering its funding process, legislators said.

Senate Majority Leader Peter Wirth, D-Santa Fe, said the 2020 legislation would be designed to make quick changes to the PRC, not necessarily to interfere with the constitutional amendment. The constitutional changes to the commission, if approved by voters, wouldn’t go into effect until 2023.

“The concern that’s been expressed to me and by the governor is that this commission is too important to not make changes immediately,” Wirth said.

Campaign spending complicates things for PRC

New Mexico is one of fewer than a dozen states with an elected regulatory commission like the PRC.

The five members of the New Mexico Public Regulation Commission are elected by districts. They run under partisan labels, with a primary election to choose each party’s candidate.

Once in office, each commissioner makes $90,000 a year.

Outside political groups sometimes spend heavily on the elections. The parent company of the Public Service Company of New Mexico, for example, donated about $440,000 last year to a committee involved in PRC races.

PNM is an electric utility regulated by the commission.

Environmental, energy and other organizations also donated to political committees that spent on PRC races last year.

Doug Howe, a utility economist and former member of the PRC, said the heavy political spending is at odds with the work of a commission that functions much like a court. Each commissioner is akin to a judge, he said, charged with applying New Mexico’s utility law when considering rate increases and similar matters.

“Generally speaking,” Howe said, “the commissioners that get elected that are good at retail politics are not necessarily the ones who are very good at the job of regulating utilities and understanding how the law should be applied in those particular cases.”

The campaign spending – often through political action committees, not the candidates themselves – complicates matters, he said.

The public “should not believe for one second they know who is in whose pocket when it comes to election of the commissioners,” Howe said.

Even some of the sitting commissioners say they’d like to see changes.

Public Regulation Commissioners Cynthia Hall and Steve Fischmann, both Democrats, say an appointment process similar to how judges are chosen would help.

In an interview, Hall said commissioners are asked to wear too many hats – to act like judges in some ways, but also elected by a constituency in a particular district.

“It gives commissioners a burden in trying to negotiate the two different roles they play,” Hall said. “I think they really should have to serve at large, and they shouldn’t feel beholden to someone who voted for them either.”

To that end, a bipartisan majority of lawmakers this year agreed to ask voters to approve a constitutional amendment reshaping the PRC.

The legislation, Senate Joint Resolution 1, would turn the commission into a three-member body appointed by the governor. An independent nominating committee would set professional qualifications and vet the candidates before the governor picks an appointee.

The idea was crafted by a working group led by three senators – Wirth, the Democratic Senate leader from Santa Fe, and Republicans Payne of Albuquerque and Steven Neville of Aztec.

Controversial PRC decisions

The push for overhauling the PRC comes amid escalating controversy over its decisions.

In April, for example, commissioners ordered PNM to directly charge Facebook $39 million for construction of a new transmission line that would carry electricity from a wind farm in Torrance County to Facebook’s data center in Los Lunas, rather than share those charges among ratepayers.

Following a series of appeals by PNM, the commission agreed in June to reconsider its decision when the utility files its next rate case.

But state officials and economic development organizations say the commission’s actions in that case reverberated beyond state borders, potentially causing a “chilling effect” on decisions by other companies to invest in New Mexico.

In July, the PRC voted in a split decision to review PNM plans to shut the coal-fired San Juan Generating Station under an old case docket that precedes the state’s new Energy Transition Act, which took effect in June.

The transition act establishes new guidelines to replace fossil fuel generation with carbon-free electricity by 2045, and it explicitly authorizes PNM to recover nearly $300 million in lost San Juan investments with bonds that would be paid off by ratepayers. The proceeds would help pay for some replacement power and provide $40 million for local economic development programs and assistance for laid off workers to mitigate the impact of plant closure.

But by placing the issue in an old case docket, the commission can potentially ignore the new law and instead force PNM to absorb much of the costs for shutting San Juan. Some commissioners have said they want to consider that to protect ratepayers.

That provoked a head-on confrontation with the governor and legislators, who accuse the PRC of overstepping its authority.

Steve Michel, attorney for the environmental group Western Resource Advocates, said the commission’s defiance of state law marks a turning point in PRC dysfunction.

“The commission is more broken than I’ve ever seen it in 35 years,” said Michel, who has intervened at the PRC since 1984. “It’s bad from top to bottom as a functional agency.”

A national credit-rating agency, meanwhile, used words like “challenging,” “inconsistency” and “unpredictability” to describe the state’s regulatory environment this month.

But some say the controversy over PRC decisions isn’t reason to change the whole system.

“This discord should surprise exactly no one because the Energy Transition Act was rushed into law without any regard for the consequences,” said Larry Behrens of Power the Future, an advocacy group for energy workers.

“Concerns were raised about protecting ratepayers,” he said, “and we were told not to worry because the PRC would have oversight. Now, the PRC is standing up for ratepayers, and the eco-left with their Santa Fe allies want to change the rules.”

The chairwoman of the Public Regulation Commission, Theresa Becenti-Aguilar, a Democrat, wouldn’t comment on the proposed constitutional amendment or the possibility of other legislation.

In a written statement to the Journal, she said the commission is following state laws and regulations and that, under the Constitution, the PRC was created “to be an independently elected body, separate from the Governor and the Legislature.”

Not the first time the PRC has been in trouble

Debate over the PRC isn’t new. The agency has attracted plenty of unflattering attention over the years.

In 2010, the state Supreme Court ordered the removal of Commissioner Carol Sloan after she was convicted of two felonies. She had been accused of attacking a woman she believed was having an affair with her husband.

The next year, another member of the PRC, Jerome Block Jr., pleaded guilty to a number of felonies, including identity theft, credit-card fraud and embezzlement. He agreed to resign and never seek office again.

Years earlier, in 2007, a jury awarded nearly $842,000 in damages to a woman who said Public Regulation Commissioner David King had sexually harassed her and that he and the PRC retaliated against her because of her claims. King denied that he’d done anything wrong.

In 2004, Commissioner E. Shirley Baca was charged with possession of marijuana and drug paraphernalia. The charges were eventually dropped.

In 2013, following voter approval of a constitutional amendment a year earlier, state lawmakers passed a bill setting minimum qualifications for members of the PRC. The next year, there was controversy over whether they were being properly enforced.

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