Citizens For Fair Rates & The Env't v. N.M. Pub. Regulation Comm'n

Decision Date10 January 2022
Docket NumberS-1-SC-38247
PartiesCITIZENS FOR FAIR RATES AND THE ENVIRONMENT, and NEW ENERGY ECONOMY, INC., Appellants, v. NEW MEXICO PUBLIC REGULATION COMMISSION, Appellee, and PUBLIC SERVICE COMPANY OF NEW MEXICO, WESTERN RESOURCE ADVOCATES, COALITION FOR CLEAN AFFORDABLE ENERGY, and SIERRA CLUB, Intervenors-Appellees. In the Matter of Public Service Company of New Mexico's Abandonment of San Juan Generating Station Units 1 and 4, NMPRC Case No. 19-00018-UT.
CourtNew Mexico Supreme Court


and PUBLIC SERVICE COMPANY OF NEW MEXICO, WESTERN RESOURCE ADVOCATES, COALITION FOR CLEAN AFFORDABLE ENERGY, and SIERRA CLUB, Intervenors-Appellees. In the Matter of Public Service Company of New Mexico's Abandonment of San Juan Generating Station Units 1 and 4, NMPRC Case No. 19-00018-UT.

No. S-1-SC-38247

Supreme Court of New Mexico

January 10, 2022

The slip opinion is the first version of an opinion released by the Chief Clerk of the Supreme Court. Once an opinion is selected for publication by the Court, it is assigned a vendor-neutral citation by the Chief Clerk for compliance with Rule 23-112 NMRA, authenticated and formally published. The slip opinion may contain deviations from the formal authenticated opinion.


Freedman Boyd Hollander Goldberg Urias & Ward, P.A. John Warwick Boyd, Esq. Albuquerque, NM for Appellant Citizens for Fair Rates & the Environment

New Energy Economy, Inc. Mariel Nanasi, Esq. Santa Fe, NM for Appellant New Energy Economy, Inc.

Public Regulation Commission Michael C. Smith, Acting General Counsel Santa Fe, NM for Appellee

Western Resource Advocates Steven S. Michel Cydney Beadles Santa Fe, NM Keleher & McLeod, P.A. Thomas C. Bird Albuquerque, NM for Intervenor-Appellee Western Resources Advocates PNM Resources, Inc. Stacey J. Goodwin Ryan T. Jerman Albuquerque, NM Miller Stratvert P.A.

Richard L. Alvidrez Samantha Kelly Albuquerque, NM for Intervenor-Appellee Public Service Company of New Mexico

Jason A. Marks Law, LLC Jason A. Marks Albuquerque, NM Sierra Club

Matthew Gerhart Denver, CO for Intervenor-Appellee Sierra Club Stephanie L. Dzur Albuquerque, NM for Intervenor-Appellee Coalition for Clean Affordable Energy




{¶1} In State ex rel. Egolf v. New Mexico Public Regulation Commission, 2020-NMSC-018, ¶ 32, 476 P.3d 896, we reaffirmed that the authority of the New Mexico Public Regulation Commission "goes no further than what has been statutorily authorized," and we directed the Commission to apply the Energy Transition Act (ETA), NMSA 1978, §§ 62-18-1 to -23 (2019), to proceedings relating to Public Service Company of New Mexico's (PNM) planned abandonment of its interests in the San Juan Generating Station (San Juan) Units One and Four, Egolf, 2020-NMSC-018, ¶¶ 1-2, 33. We now address an appeal from the Commission's final order on PNM's request for a financing order in connection with those abandonment proceedings in Case. No. 19-00018-UT (April 1, 2020 final order).

{¶2} This appeal is brought by Citizens for Fair Rates and the Environment and New Energy Economy, Inc., two organizations that represent energy consumers who intervened in the administrative proceedings below. For ease of reference and reader comprehension, we hereinafter refer to both organizations in the singular as "New Energy." New Energy raises several issues for our review, most of which attack the ETA on constitutional grounds. In addition to these constitutional challenges, New


Energy also raises a single claim of error in the findings of the Commission relating to the requirement that PNM submit a "memorandum . . . from a securities firm" in support of its application for a financing order. Section 62-18-4(B)(5).

{¶3} For the reasons we explain herein, we decline to reach two of New Energy's issues because they are not properly before the Court and are not essential to our disposition of this appeal. Therefore, we express no opinion on the Commission's statutory authority to review and disallow recovery of a utility's "actual final energy transition costs" in the ratemaking proceedings contemplated by Section 62-18-4(B)(10) and Section 62-18-5(F)(8). We further decline to address New Energy's arguments regarding an invasion of judicial powers under Section 62-18-8(B) and Section 62-18-22.

{¶4} With respect to the issues we deem properly presented and herein address, we reject New Energy's constitutional challenges to the ETA. We likewise conclude that the Commission's final order is based on a reasonable construction of Section 62-18-4(B)(5) and is supported by substantial evidence. Accordingly, we affirm the Commission's final order. See NMSA 1978, § 62-11-5 (1982) ("The [S]upreme [C]ourt shall have no power to modify the [Commission's] action or order appealed from, but shall either affirm or annul and vacate the same.").



{¶5} As the matter before this Court is primarily a facial challenge to the constitutionality of the ETA, we begin with a short overview of the challenged Act. We then summarize the proceedings that are relevant to this appeal.

{¶6} The ETA comprises the most significant part of Senate Bill 489, a 2019 legislative enactment with various measures designed to support New Mexico's renewable portfolio standard. 2019 N.M. Laws, ch. 65, §§ 1 to 23 (enacting the ETA); see NMSA 1978, § 62-16-4 (2014, as amended 2019) (setting forth the requirements of public utilities under New Mexico's renewable portfolio standard). Of particular relevance to this dispute, the ETA provides a means whereby a qualifying public utility in New Mexico may finance, through securitization, the "energy transition cost[s]" associated with abandoning a coal-fired generating facility. Section 62-18-2(H), (S). These potentially securitized energy transition costs may include "financing costs," § 62-18-2(H)(1), and up to $375 million in "abandonment costs," § 62-18-2(H)(2)(a)-(d). These energy transition costs also include anticipated payments into three state-administered funds that will assist various communities affected by the facility's abandonment. See § 62-18-16(A), (D), (G).


{¶7} If a utility desires to securitize these energy transition costs, it may apply to the Commission for a "financing order" that will "authorize[] the issuance of energy transition bonds" in the amount of the utility's estimated costs. Section 62-18-2(K), (L). The financing order will also authorize the utility to collect from its customers a separate "energy transition charge" in repayment of these bonds. Sections 62-18-2(L), (P), 62-18-6(A), 62-18-10. In language only regulators can appreciate, the ETA provides that these energy transition charges are "non-bypassable," meaning that energy consumers receiving electric services from the utility will not be able to avoid paying the charge "for as long as the energy transition bonds . . . are outstanding and the related financing costs have not been recovered in full." Section 62-18-2(P).

{¶8} A utility that wishes to obtain a financing order from the Commission must submit an application with several estimates, supporting documents, and other specified information as identified in Section 62-18-4, including "a memorandum with supporting exhibits from a securities firm" attesting to the proposed energy transition bonds' AAA rating, § 62-18-4(B)(5). The Commission is required to "issue a financing order approving the application if the [C]ommission finds that the qualifying utility's application for the financing order complies with the requirements of" Section 62-18-4. Section 62-18-5(E). Once issued, "[a] financing order is irrevocable and the [C]ommission shall not reduce, impair, postpone or


terminate the energy transition charges approved in the financing order . . . ." Section 62-18-7(A). However, the Commission will continue to supervise the energy transition charges and may approve adjustments "to correct for any over-collection or under-collection" of the charges. Section 62-18-6(B). The Commission must also approve a "ratemaking process to reconcile and recover or refund any difference between the energy transition costs financed by the energy transition bonds and the actual final energy transition costs incurred by the qualifying utility." Sections 62-18-4(B)(10), 62-18-5(F)(8).

{¶9} The current appeal is from PNM's application for a financing order in connection with the planned abandonment of its interests in San Juan Units One and Four. See Case No. 19-00018-UT. In Egolf, 2020-NMSC-018, we concluded that the Commission did not lawfully initiate the proceedings in Case No. 19-00018-UT to compel PNM to abandon San Juan because, at the relevant time, "no statute grant[ed] the Commission authority to compel a public utility to file an abandonment application." Egolf, 2020-NMSC-018, ¶ 26. Because abandonment proceedings for San Juan had not lawfully commenced prior to the enactment of the ETA, we issued a writ of mandamus to the Commission, explaining that "the Commission had a nondiscretionary duty to apply the ETA" to the abandonment proceedings


subsequently initiated by PNM in Case No. 19-00195-UT. Egolf, 2020-NMSC-018, ¶¶ 2, 16, 33.

{¶10} On remand, the Commission vacated any order in Case Nos. 19-00018-UT and 19-00195-UT determined to be inconsistent with the writ issued by this Court and properly considered PNM's application under the ETA. Shortly thereafter, the hearing examiners issued a recommended decision extensively reviewing the law, arguments, and evidence presented in support of and against PNM's application. The hearing examiners recommended that the Commission approve PNM's application, with several modifications to the terms and language of the financing order as proposed by PNM. The Commission subsequently rejected filed exceptions to the recommended decision and adopted the findings, conclusions, and orders of the recommended decision in its final order.

{¶11} As a result, the Commission gave leave for PNM to issue energy transition bonds of up to $361 million in connection with the abandonment of its interests in San Juan Units One and Four and to collect separate and non-bypassable energy transition charges...

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