Thinking about the Energy Transition Act brings Rumpelstiltskin to mind. In this Grimm’s classic tale, the miller told the king that his daughter could spin gold from straw.
Under threat of death, the king demanded she deliver the gold by morning. Distraught, and having no idea how to even begin, the daughter wept. Then, out of nowhere, as happens in fairy tales, an elfish man, Rumpelstiltskin, entered promising to help her deliver the gold.
But he exacted payment, and after converting rooms of straw into gold, he requested her first-born child. With no choice, she conceded to Rumpelstiltskin’s ultimatum. And remember, this is a fairy tale.
Our legislators passed the ETA in 2019 based on promises of the highest renewable energy portfolio standards in the country, a securitization tool to finance closure of dirty, old power plants by selling bonds and adding an additional charge on customers’ monthly bills, and transition funds for workers, workforce development and economic transition.
These all provided really great news for New Mexicans, and the proposed ETA amendments will leave them intact. But also included in the ETA were provisions that violate both N.M. and federal constitutions, permitting PNM to take unlimited hundreds of millions of dollars from ratepayers outside of the regulatory process, with no opportunity for ratepayers to assert claims or defenses, and without due process. This is a nightmare, not a fairy tale.
Unlike the miller’s daughter, we have the regulatory compact, the agreement that has served as the bedrock of national utility regulation for almost a century. It states that PNM will be allowed to operate as a monopoly in exchange for submitting to regulation by the state through the New Mexico Public Regulation Commission. The PRC is our regulatory authority charged with ensuring utility customers have just and reasonable rates, and ensuring reasonable and adequate services to the public as provided by law.
The ETA states the PRC “shall not disallow — recovery of any undepreciated investments or decommissioning costs by a utility.” Like the miller’s daughter’s predicament, our ratepayers’ rights are completely stripped by removing the PRC’s ability to provide oversight of PNM’s charges, and this is before decommissioning costs are included.
The ETA eliminates the PRC’s authority to regulate the electric monopoly, giving PNM a blank check, and thereby leaving ratepayers without protection to pay over $2 billion for PNM’s undepreciated coal, gas and nuclear investments. Regulation protects customers from unfair and unreasonable costs, and up until now, not a myth, but a guard against unjust rates.
The miller’s daughter also didn’t have any legal remedies to pursue, but we do. The proposed ETA amendments in a Senate bill sponsored by Bill Tallman, Antoinette Sedillo Lopez and Elizabeth Stefanics will restore the ratepayers’ rights by addressing two main unconstitutional provisions: 1) reinstate PRC authority, and 2) remove the 100% guarantee for plant abandonment.
New Mexicans deserve to have all costs evaluated, modified and most importantly decided by the regulatory agency that was created to protect us and not allow PNM to unilaterally make those decisions.
Thankfully, we have legal precedent to help protect us. The law says that if utilities invest prudently, ratepayers pay. But the inverse is also true: if utilities do not invest prudently “ratepayers should be held harmless for the imprudent acts of utility management.”
PNM’s investment in the Four Corners coal plant was found to have been “imprudent,” so ratepayers should be absolved, but the ETA requires us to pay for the Four Corners Power Plant regardless. That isn’t fair.
PNM is part of a disturbing national trend: utilities all over the country have been getting caught (contributing to) legislators in exchange for bailouts of uneconomic nuclear and coal investments. In the past three years, PNM Resources and PNM’s political action committee have spent $556,550 to influence N.M. legislators and other government officials.
Rumpelstiltskin determined the stakes, leaving the miller’s daughter powerless, but we can write letters, email, text and call our N.M. legislators asking them to support the ETA amendments to guarantee our story has a happy ending.