Attorney Gen. of State v. N.M. Pub. Regulation Comm'n

• Decision Date: 27 July 2011
• Docket Number: 32,480.,Nos. 32,475,s. 32,475
• Citation: 258 P.3d 453,2011 -NMSC- 034,150 N.M. 174
• Parties: ATTORNEY GENERAL of the State of New Mexico, Appellant,v.NEW MEXICO PUBLIC REGULATION COMMISSION, Appellee,andPublic Service Company of New Mexico, Western Resource Advocates, and Coalition for Clean Affordable Energy, Intervenors.New Mexico Industrial Energy Consumers, Appellant,v.New Mexico Public Regulation Commission, Appellee,andPublic Service Company of New Mexico, Western Resource Advocates, and Coalition for Clean Affordable Energy, Intervenors.
• Court: New Mexico Supreme Court

150 N.M. 174

258 P.3d 453

2011 -NMSC- 034

ATTORNEY GENERAL of the State of New Mexico, Appellant,

v.NEW MEXICO PUBLIC REGULATION COMMISSION, Appellee,andPublic Service Company of New Mexico, Western Resource Advocates, and Coalition for Clean Affordable Energy, Intervenors.New Mexico Industrial Energy Consumers, Appellant,

v.New Mexico Public Regulation Commission, Appellee,andPublic Service Company of New Mexico, Western Resource Advocates, and Coalition for Clean Affordable Energy, Intervenors.

Nos. 32,475

32,480.

Supreme Court of New Mexico.

July 27, 2011.

Gary K. King, Attorney General, Jeffery S. Taylor, Assistant Attorney General, Santa Fe, NM, for Appellant Attorney General of the State of New Mexico.Peter Jude Gould, Santa Fe, NM, for Appellant New Mexico Industrial Energy Consumers.Robert Y. Hirasuna, General Counsel, Margaret Kendall Caffey–Moquin, Associate General Counsel, Santa Fe, NM, for Appellee New Mexico Public Regulation Commission.Benjamin Phillips, Ruth Fuess Keegan, Albuquerque, NM, Cuddy & McCarthy, L.L.P., Rebecca D. Dempsey, Santa Fe, NM, for Intervenor Public Service Company of New Mexico.

OPINION

SERNA, Justice.

{1} These consolidated appeals are challenges to the Public Regulation Commission's (PRC) effort to comply with the Efficient Use of Energy Act. NMSA 1978, Sections 62–17–1 to –11 (2005) (amended 2008) (EUEA). The EUEA was amended by the Legislature, requiring the PRC to identify and remove regulatory disincentives to a public utility's implementation of energy efficiency programs. To comply with this legislative mandate, the PRC issued a Final Order on April 8, 2010, amending its Energy Efficiency Rules contained in 17.7.2 NMAC (03/01/2007). The Attorney General (AG) and the New Mexico Industrial Energy Consumers (NMIEC) appealed separately from the PRC's Final Order, challenging the Final Order on several grounds. We consolidated both appeals, and after reviewing the record below, address only one dispositive issue, annulling and vacating the PRC's Final Order.

I. BACKGROUND

{2} In 2005, the Legislature enacted the EUEA, requiring the PRC to “direct public utilities to evaluate and implement cost-effective programs that reduce energy demand and consumption.” Section 62–17–5(B). The Legislature in Section 62–17–5(F) instructed the PRC to “identify any disincentives or barriers that may exist for public utility expenditures on energy efficiency and load management and, if found, ensure that they are eliminated.”

{3} In response to this mandate, the PRC promulgated its Energy Efficiency Rules at 17.7.2 NMAC (03/01/2007). The Energy Efficiency Rules required, in relevant part, that utilities file proposals with the PRC to remove disincentives or barriers to energy efficiency programs that the utilities believe to exist. See 17.7.2.9(K) NMAC (03/01/2007). If a utility did not file such a proposal, that utility would be precluded from recovering the costs of eliminating the disincentives and barriers to its energy efficiency programs. 17.7.2.9(K)(4) NMAC (03/01/2007).

{4} In 2008, the Legislature amended the EUEA to allow utilities both to earn a profit on energy efficiency development and receive an incentive for instituting energy efficiency programs. See § 62–17–5(F). In response to the 2008 amendments to the EUEA, the PRC issued an order to conduct a rulemaking proceeding to amend 17.7.2 NMAC through the use of workshops conducted by interested parties and presided over by an appointed hearing officer. Between May 2008 and January 2009, twenty-two workshops were held and attended by several interested parties.

{5} The workshops produced a proposed rule known as “Alternative A” to amend 17.7.2 NMAC. Alternative A has three major components. One, it permits utilities to temporarily recover an adder of one cent for each kilo-watt hour saved and ten dollars for each kilo-watt reduced from the annual demand due to approved energy efficiency programs. This adder, called the “Interim Adder,” would expire almost two years after the Final Order. Two, Alternative A requires utilities and interested parties to file proposals for a permanent solution to eliminate disincentives to energy efficiency programs. Three, Alternative A provides that, after the Interim Adder expires, the utilities will continue to receive an incentive of one-half a cent for every kilo-watt hour saved and ten dollars for each kilo-watt reduced from the annual demand due to approved energy efficiency programs, the “Reduced Adder,” even after a permanent solution to removing disincentives is implemented.

{6} The PRC requested public comment on Alternative A and scheduled an evidentiary hearing on the economic justification of Alternative A. The PRC stated that evidence and comments collected during the workshops would not be part of the evidentiary record for the rulemaking process.

{7} At the evidentiary hearing, the three investor-owned utility companies in New Mexico, Public Service Company of New Mexico (PNM), Southwestern Public Service Company (SPS), and El Paso Electric Company (EPE), each presented projected revenue the utility anticipated losing due to its energy efficiency programs and the projected recovery the utility would experience if the PRC were to adopt Alternative A. SPS estimated that it would lose $2.52 million in revenue the first two years that Alternative A would be in effect, but recover $9.57 million from the Interim Adder. PNM estimated that it would lose $9.36 million in revenue the first two years that Alternative A would be in effect, but recover $12.15 million from the Interim Adder. EPE estimated that it would lose $2.53 million in revenue the first two years that Alternative A would be in effect, but recover $1.36 million from the Interim Adder. From these estimates, the PRC concluded that in the first two years, the Interim Adder contained in Alternative A would result in SPS receiving a profit of $7.05 million, PNM a profit of $2.79 million, and EPE not receiving a profit, but failing to recover $1.16 million of its lost revenue. Each utility testified that Alternative A was a reasonable compromise that removed the disincentives to implementing energy efficiency programs. Evidence was received from several other parties, both in support of and opposition to Alternative A.

{8} The PRC issued a Final Order amending 17.7.2 NMAC with Alternative A, with minor amendments not relevant to this appeal.¹ The AG and NMIEC requested a rehearing which the PRC denied. An appeal to this Court, pursuant to our appellant jurisdiction over appeals from final orders of the PRC contained in Article VI, Section 2 of the New Mexico Constitution and NMSA 1978, Section 62–11–1 (1993), followed.

II. DISCUSSIONA. Standard of Review

{9} “We review administrative orders to determine whether the Commission's decision is arbitrary and capricious, not supported by substantial evidence, outside the scope of the agency's authority, or otherwise inconsistent with law.” N.M. Indus. Energy Consumers v. N.M. Pub. Regulation Comm'n (NMIEC), 2007–NMSC–053, ¶ 13, 142 N.M. 533, 168 P.3d 105 (brackets, internal quotation marks and citation omitted). The burden is on the parties challenging the agency order to make this showing. Id. This Court does not have the authority to modify orders of the PRC; we must “either affirm or annul and vacate” the order. NMSA 1978, § 62–11–5 (1982); accord In re Petition of PNM Gas Servs. (In re PNM), 2000–NMSC–012, ¶ 10, 129 N.M. 1, 1 P.3d 383. “In reviewing the PRC's decision, we begin by looking at two interconnected factors: whether the decision presents a question of law, a question of fact, or some combination of the two; and whether the matter is within the agency's specialized field of expertise.” Albuquerque Bernalillo Cnty. Water Util. Auth. v. N.M. Pub. Regulation Comm'n (ABCWUA), 2010–NMSC–013, ¶ 17, 148 N.M. 21, 229 P.3d 494 (internal quotation marks and citation omitted).

{10} “Statutory interpretation is an issue of law, which we review de novo.” NMIEC, 2007–NMSC–053, ¶ 19, 142 N.M. 533, 168 P.3d 105. “When construing statutes, our guiding principle is to determine and give effect to legislative intent.” Id. ¶ 20. We follow “classic canons of statutory construction,” looking “first to the plain language of the statute, giving the words their ordinary meaning, unless the Legislature indicates a different one was intended.” Id. When construing statutes related to the same subject matter,

the provisions of a statute must be read together with other statutes in pari materia under the presumption that the legislature acted with full knowledge of relevant statutory and common law. Thus, two statutes covering the same subject matter should be harmonized and construed together when possible, in a way that facilitates their operation and the achievement of their goals.

State ex rel. Quintana v. Schnedar, 115 N.M. 573, 575–76, 855 P.2d 562, 564–65 (1993) (internal ellipses, alteration omitted); accord Pub. Serv. Co. of N.M. v. N.M. Pub. Util. Comm'n, 1999–NMSC–040, ¶ 23, 128 N.M. 309, 992 P.2d 860.B. Just and Reasonable Rates

{11} The New Mexico Public Utility Act (PUA) defines “rate” as

every rate, tariff, charge or other compensation for utility service rendered or to be rendered by a utility and every rule, regulation, practice, act, requirement or privilege in any way relating to such rate, tariff, charge or other compensation and any schedule or tariff or part of a schedule or tariff thereof.

NMSA 1978, § 62–3–3(H) (2009). When a utility implements an energy efficiency program, the utility reduces the amount of energy consumed by its customers. This necessarily results in a reduction in the utility's revenue. Through the adders contained in Alternative A, utilities receive additional revenue as compensation for reducing the consumption of their energy. We, therefore, agree with the PRC's conclusion that the adders contained in Alternative A are rates.

{12} The...