IN RE COMMISSION'S INVESTIGATION OF PNMGS

• Decision Date: 08 March 2000
• Docket Number: No. 25,439.,25,439.
• Citation: 998 P.2d 1198,128 N.M. 747,2000 NMSC 8
• Parties: In the Matter of the COMMISSION'S INVESTIGATION OF the RATES FOR GAS SERVICE OF PNM'S GAS SERVICES, A Division of Public Service Company of New Mexico. Attorney General of the State of New Mexico, Appellant, v. New Mexico Public Utility Commission, Appellee, and New Mexico Industrial Energy Consumers, Intervener.
• Court: New Mexico Supreme Court

998 P.2d 1198

128 N.M. 747

2000 NMSC 8

In the Matter of the COMMISSION'S INVESTIGATION OF the RATES FOR GAS SERVICE OF PNM'S GAS SERVICES, A Division of Public Service Company of New Mexico.

Attorney General of the State of New Mexico, Appellant, v. New Mexico Public Utility Commission, Appellee, and New Mexico Industrial Energy Consumers, Intervener.

No. 25,439.

Supreme Court of New Mexico.

March 8, 2000.

Patricia A. Madrid, Attorney General, Jeff Taylor, Assistant Attorney General, Santa Fe, for Appellant.

Stacey J. Goodwin, Santa Fe, for Appellee. Steven S. Michel, Karl O. Wyler, Santa Fe, for Intervener.

OPINION

MAES, Justice.

{1} This is a direct appeal of utility rate Case number 2762, involving PNM Gas Services (PNMGS) and the Attorney General acting on behalf of the citizens of the State of New Mexico. This Court has appellate jurisdiction by virtue of NMSA 1978, § 62-11-1 (1993). In this case, the New Mexico Attorney General, Public Regulatory Commission staff, and a number of other interested parties negotiated a stipulation¹ with PNMGS that among other things established a new rate plan for PNMGS's customers. The agreement reached by the parties included a $9.00 customer access fee and a standard distribution rate of $0.1044 per therm. Once the parties had agreed to the stipulation, they sought review by the Public Regulatory Commission (PRC or Commission) pursuant to NMSA 1978, § 62-6-4 (1993) ("The Commission shall have general and exclusive power and jurisdiction to regulate and supervise every public utility in respect to its rates and service regulations ..."). The hearing testimony before the PRC only concerned the stipulation and all parties involved urged the PRC's approval of the stipulation. Despite this, the PRC did not adopt the stipulation, but instead established a two-tiered rate plan that was not suggested in the proposed stipulation. The PRC's plan allowed residential customers to elect between a higher customer access fee of $14.56 combined with a lower distribution charge of $0.0393, or choose a lower customer access fee of $9.00 combined with a higher distribution charge of $0.1198 per therm.

{2} The Attorney General challenges the Commission's rate design, arguing that the Commission's alteration of the stipulation agreed to by the parties makes it void by its own terms, and that there is no evidence in the record to support the changes made by the Commission to the stipulation. She also contends that her due process rights were violated because the Commission consulted with PNMGS and Commission staff witnesses, after the hearing, in making calculations underlying the residential rate options, and because the Commission's changes to the stipulation were made without notice to the Attorney General or an opportunity to be heard. The PRC argues there was substantial evidence on which to base the rates and that the order makes sense in theory because, it is argued, the first rate option results in a more levelized bill over time and is more advantageous for higher use customers while the second option results in a bill that is more variable between seasons and is generally more advantageous for lower use customers. Because the record is devoid of substantial evidence supporting the order, we vacate the order and remand to the Commission. See NMSA 1978, § 62-11-5 (1982) ("The supreme court shall have no power to modify the action or order appealed from, but shall either affirm or annul and vacate the same."). We therefore need not reach the other arguments of the Attorney General.

Standard of Review

{3} The Attorney General has the burden of showing that the rates established in the Commission's final order in NMPUC case No. 2762 was unreasonable or unlawful. NMSA 1978, § 62-11-4 (1965). This court has determined that the appropriate inquiry in determining whether an order of the commission is unreasonable or unlawful is whether the commission's decision was arbitrary and capricious, unsupported by substantial evidence, or an abuse of the agency's discretion because it is outside the scope of the agency's authority, clear error, or violative of due process. See, e.g., Morningstar Water Users Ass'n v. New Mexico Pub. Util. Comm'n, 120 N.M. 579, 582, 904 P.2d 28, 31 (1995)

.

{4} In determining whether substantial evidence supports the fact finder's decision, the Supreme Court looks to the whole record. Otero County Elec. Coop., Inc. v. N.M. Pub. Serv. Comm'n, 108 N.M. 462, 464, 774 P.2d 1050, 1052 (1989). Under whole record review,

the court must be satisfied that the evidence demonstrates the reasonableness of the decision. No part of the evidence may be exclusively relied upon if it would be unreasonable to do so. The reviewing court needs to find evidence that is credible in light of the whole record and that is sufficient for a reasonable mind to accept as adequate to support the conclusion reached by the agency.

National Council on Compensation Ins. v. New Mexico State Corp. Comm'n, 107 N.M. 278, 282, 756 P.2d 558, 562 (1988).

Substantial Evidence

{5} The issue before the court is not whether the Attorney General presented substantial evidence to support the stipulation but rather whether the Commission's Final Order approving modification to the rate design stipulated by the parties is supported by substantial evidence in the record. "The question is not whether substantial evidence exists to support the opposite result, but rather whether such evidence supports the result reached." Las Cruces Prof'l Fire Fighters v. City of Las Cruces, 1997-NMCA-044, ¶ 12, 123 N.M. 329, 940 P.2d 177.

{6} Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Attorney Gen. v. New Mexico Pub. Serv. Comm'n, 101 N.M. 549, 553, 685 P.2d 957, 961 (1984). The Commission is not required to accept the opinion of experts as long as the ultimate decision is supported by substantial evidence. Id. at 554, 685 P.2d at 962. The Commission's decision is to be rejected only if conflicting evidence renders incredible the evidence in support of the decision. Otero County Elec. Coop., at 465-66, 774 P.2d at 1053-54.

{7} Of the five entities filing testimony on the proposed stipulation, including PUC staff, each specifically supported the $9.00 monthly service charge included in the stipulation. Despite this, the PRC has referenced several passages from the record and attempts to show that its decision implementing the tiered rate structure was supported by substantial evidence. We will analyze the evidence for substantive merit.

{8} The PRC states, "Taken as a whole, the evidence in the record supports the Commission's findings and conclusions that residential rates must take into consideration the need to provide stability and predictability in billing ...." Yet the PRC here refers us to the testimony of William J. Real, Senior Vice-President of PNMGS, where he stated,

I believe the Commission was concerned about price spikes in natural gas prices and viewed the $14.56 fee as a means of providing price stability to residential customers. However, as a result of the Company's changes to the method of developing the monthly [purchased gas adjustment cost or PGAC], and PNMGS' being granted authority to recover prudently incurred gas portfolio hedging costs, the risk of price spikes has been reduced. Furthermore, the continued promotion of budget billing has allowed several thousand customers to take advantage of this service to levelize their total gas bill. Because of these changed circumstances, we believe the Commission is now in a position, by adopting the Stipulation, to reduce the access fee for a significant number of customers ....

Thus, the record actually contradicts the assertions of the Commission because this statement clearly demonstrates PNMGS' willingness to reduce the access fee and adopt the proposed stipulation. While the Commission states in its brief, "Staff's witness also testified that the impact of the higher monthly charge [formerly] in effect was to stabilize all customer bills," it leaves out the remainder of the witness's statement:

Conditions have changed since the Commission ordered that recovery of revenues from residential customers should be weighted more heavily toward the access fee. The Commission made it clear in its Final Order in NMPUC Case No. 2662 ... that it was responding to the comments of customers in NMPUC Case No. 2752 who wanted more stability in their winter gas bills than occurred during the gas commodity cost-price spike of 1996-1997. Since that final order was issued, several changes have been made to alleviate the problems the customers addressed[.]

The witness then goes on to describe the various changes that have been made and concludes, "These efforts have changed the environment we are in today. In light of this, it is acceptable in the Stipulation to return to a more consumption-based rate design and that will simultaneously benefit the majority of PNMGS residential customers." Again, the full record shows the statement of the PRC to be something short of the whole story, and does not provide substantial evidence to support the PRC's cause.

{9} The PRC alleges that an orderly transition to a more competitive market is an issue of concern to PNMGS and that the PRC's modification of the stipulation will help bring about such transition. The record fails to support a conclusion that the PRC's modifications would aid in the development of a competitive market place. The specific testimony relied upon by the PRC in support of their allegation is contrary to, rather than in support of, the PRC modification to the stipulation. For example, a PNMGS witness stated, "The information that will be developed through the studies contemplated by the Stipulation will help all of the parties to provide previously unavailable cost and usage information to the Commission that will aid in the...