Copyright © 2021 Albuquerque Journal
The state Public Regulation Commission’s five elected members won’t waddle away like lame ducks, despite voter approval to replace them with three governor-appointed commissioners.
Constitutional Amendment 1, approved by 56% of voters in November, will transform the PRC from its 20-year status as a five-member elected body into a three-member commission appointed by the governor from a list of candidates proposed by a bipartisan nominating committee. But that won’t happen until 2023, and current commissioners intend to make the most of their next two years in office, said PRC Chair Stephen Fischmann.
“There’s still a lot of work to do,” Fischmann told the Journal. “I hope to sit down with other commissioners in the first months of the new year to create a work plan with a list of priorities and a disciplined schedule to achieve them. We want to leave things in good condition when the appointed commissioners come on board.”
That includes a hefty list of legislative agenda items the commission will push in the new session that starts Jan. 19, including possible reforms to the state’s Energy Transition Act, as well as efforts to increase and stabilize the PRC’s annual budget to hire more professional staff and lease a new office.
And apart from legislative initiatives, the PRC will preside over some huge utility issues this year. High among them are Public Service Company of New Mexico’s request to merge with the Connecticut-based utility operator and renewable energy company Avangrid, as well as PNM’s proposal to withdraw from the coal-fired Four Corners Generating Station in 2024, seven years ahead of schedule.
At the same time, the Legislature may also pursue more PRC changes, according to two of the three senators who sponsored the constitutional amendment approved by voters.
Senate Majority Leader Peter Wirth, D-Santa Fe, and Republican Sens. Steven Neville of Aztec and William Payne of Albuquerque (now retired) jointly sponsored the constitutional amendment, which garnered broad bipartisan support in the 2019 session. The measure aimed to “de-politicize” the commission by replacing elected officials with technically qualified, appointed professionals in an effort to end political battles that have engulfed PRC decisions since before Gov. Michelle Lujan Grisham took office.
Reform opponents called the amendment a “power grab” by the governor to control the PRC. But with that battle now resolved through voting booths, Wirth and Neville expect to follow it up with statutory changes in the PRC’s mandates so that, in the future, commissioners focus solely on utility-related issues.
The commission’s current regulatory authority extends to transportation companies, the state Fire Marshal’s Office and the Pipeline Safety Bureau. The Fire Marshal’s Office will become part of the state Homeland Security Department in July, but those other functions also need to be transferred to other departments or agencies, Neville said.
“Those other regulatory functions are not called for under the constitutional amendment, and they need to now be adjusted in statute through future legislation,” Neville told the Journal. “We want the commission to deal only with utilities. Transportation issues could logically be placed under the Department of Transportation, and other functions moved to the Regulation and Licensing Department.”
Pursuing those changes will be a lot easier than the constitutional amendment was, Wirth said.
“The amendment specified that the only constitutional duty of the PRC is utility rate-making, so it defaults to us now to look at other functions that the PRC has been involved in,” Wirth told the Journal. “That can all be done now by statute.”
Legislators must also organize the new nominating committee that will propose a list of potential commissioners to take over the PRC in 2023.
The Legislature passed enabling legislation in the 2020 session that removed the PRC from the election code and authorized the nominating committee’s establishment as a seven-member body. It will include four legislators – two from each legislative chamber, with no more than two members from the same party – and one representative from each of the state’s three research universities.
The committee must be formed by July 2022 and begin meeting by September 2022 to nominate at least five prospective commissioners from at least three counties. The governor must choose three commissioners from that list and then send the choices back to the Senate for final approval.
“The process is now in place to choose people with professional qualifications for the PRC,” Neville said. “We’ll look at forming the committee in the next few months.”
Plenty to do
In the meantime, the current PRC has a lot of issues to resolve to function properly over the next two years and provide a stable agency for incoming commissioners in 2023, Fischmann said.
For one thing, the commission needs new offices, since the General Services Department evicted it in 2020 from its longtime perch at the PERA Building across from the Roundhouse in Santa Fe.
It’s currently homeless, with all 126 active employees now working remotely in the pandemic, and no special legislative appropriation to lease a new office suite, which must include adequate space for public hearings on utility cases.
Commissioners will ask for office funding in the coming session and seek a potential budget increase to hire more technically qualified staffers who are professionally trained on utility and regulatory issues, Fischmann said. That’s critical, because the PRC has lost many specialists through attrition, compounded by a hiring freeze under the pandemic that’s left it with eight vacant positions.
“We have big, complicated cases to deal with and not enough staff with the needed expertise to deal with them,” Fischmann said.
That includes the PNM-Avangrid merger, PNM’s proposed early withdrawal from the Four Corners coal plant, and coming rate cases for PNM and the state’s other two public electric utilities.
Apart from the budget, commissioners will seek potential changes in the energy law that could prove controversial. That includes clearer definition of PRC ability to scrutinize investments in fossil fuel plants to determine whether a utility is entitled to full recovery when abandoning a facility under the energy act, which authorizes the use of bonds to pay back utilities that are then paid off by ratepayers.
That was a major sticking point during 2020 hearings on PNM’s plan to abandon the coal-fired San Juan Generating Station in 2022. The governor and legislators had to appeal to the New Mexico Supreme Court to force the PRC to apply those clauses in the law during the case, and similar uncertainty could come up in forthcoming hearings on the Four Corners plant.
Another potentially controversial proposal would force all utilities to bid out new power plant construction to third-party suppliers when replacing fossil fuel facilities with non-carbon resources under the energy act, said Joe Maestas, a new commissioner from Española who won the PRC District 3 seat in northern New Mexico in the November election. He was sworn in Jan. 1 to replace former Commissioner Valerie Espinoza, who was term-limited.
That issue came up in mid-December, when the PRC rejected El Paso Electric Co.’s request for approval to build a 228-megawatt natural gas plant to serve customers in southern New Mexico. EPE expected to build the plant itself with no competitive bid from third parties that could potentially lower costs.
“A lot of utilities have specific projects with the prerogative to self-build, and ratepayers are on the hook for it,” Maestas told the Journal. “We want to support open-source competitive bidding going forward with an amendment to require that utilities only pursue third-party power purchase agreements for replacement power up until 2045, when the energy act mandates 100% carbon-free resources.”
Maestas could bring new energy to the current PRC over the next two years. His term will be truncated from four to two years to make way for newly appointed commissioners in 2023, but he expects to embrace all issues during that time.
“I want to pursue strategic, yet aggressive plans to achieve carbon-free generation going forward,” Maestas said. “I don’t want to just keep the seat warm for our future replacements.”