Sw. Pub. Serv. Co. v. New Mexico Pub. Regulation Comm’n

• Court: New Mexico Supreme Court
• Writing for the Court: ZAMORA, Justice.
• Citation: 572 P.3d 878,2025 NMSC 013
• Docket Number: S-1-SC-39432,S-1-SC-39558,S-1-SC-39611,S-1-SC-39678
• Decision Date: 16 January 2025
• Parties: SOUTHWESTERN PUBLIC SERVICE COMPANY, Appellant, and El Paso Electric Company, Public Service Company of New Mexico, Intervenors-Appellants, v. NEW MEXICO PUBLIC REGULATION COMMISSION, Appellee, and Coalition for Community Solar Access, Renewable Energy Industries Association of New Mexico, City of Las Cruces, New Energy Economy, and Coalition of Sustainable Communities New Mexico, Intervenors-Appellees. In the Matter of the Commission’s Adoption of Rules Pursuant to the Community Solar Act, NMPRC Case No. 21-00112-UT Southwestern Public Service Company, Appellant, v. New Mexico Public Regulation Commission, Appellee. In the Matter of the Commission’s Adoption of Rules Pursuant to the Community Solar Act, NMPRC Case No. 21-00112-UT Southwestern Public Service Company, Appellant, v. New Mexico Public Regulation Commission, Appellee. In the Matter of Implementation and Administration of the Community Solar Program, Case No. 22-00020-UT In the Matter of the Compliance Filing of Southwestern Public Service Company Pursuant to 17.9.573.9 NMAC, Case No. 22-00240-UT In the Matter of the Application of El Paso Electric Company for Approval of Tariffs Necessary for Implementation of the New Mexico Community Solar Program and Accounting Order, Case No. 22-00243-UT Southwestern Public Service Company, Appellant, v. New Mexico Public Regulation Commission, Appellee. In the Matter of Implementation and Administration of the Community Solar Program, Case No. 22-00020-UT In the Matter of the Compliance Filing of Southwestern Public Service Company Pursuant to 17.9.573.9 NMAC, Case No. 22-00240-UT In the Matter of the Application of El Paso Electric Company for Approval of Tariffs Necessary for Implementation of the New Mexico Community Solar Program and Accounting Order, Case No. 22-00243-UT
• topic: Administrative Law,Corporate / Commercial,Energy & Natural Resources,Public Sector Law

572 P.3d 878

2025-NMSC-013

SOUTHWESTERN PUBLIC SERVICE COMPANY, Appellant,andEl Paso Electric Company, Public Service Company of New Mexico, Intervenors-Appellants,

v. NEW MEXICO PUBLIC REGULATION COMMISSION, Appellee,andCoalition for Community Solar Access, Renewable Energy Industries Association of New Mexico, City of Las Cruces, New Energy Economy, and Coalition of Sustainable Communities New Mexico, Intervenors-Appellees.

In the Matter of the Commission’s Adoption of Rules Pursuant to the Community Solar Act, NMPRC Case No. 21-00112-UT Southwestern Public Service Company, Appellant,

v.New Mexico Public Regulation Commission, Appellee.

In the Matter of the Commission’s Adoption of Rules Pursuant to the Community Solar Act, NMPRC Case No. 21-00112-UT Southwestern Public Service Company, Appellant,

v.New Mexico Public Regulation Commission, Appellee.

In the Matter of Implementation and Administration of the Community Solar Program, Case No. 22-00020-UT In the Matter of the Compliance Filing of Southwestern Public Service Company Pursuant to 17.9.573.9 NMAC, Case No. 22-00240-UTIn the Matter of the Application of El Paso Electric Company for Approval of Tariffs Necessary for Implementation of the New Mexico Community Solar Program and Accounting Order, Case No. 22-00243-UT Southwestern Public Service Company, Appellant,

v.New Mexico Public Regulation Commission, Appellee.

In the Matter of Implementation and Administration of the Community Solar Program, Case No. 22-00020-UT

In the Matter of the Compliance Filing of Southwestern Public Service Company Pursuant to 17.9.573.9 NMAC, Case No. 22-00240-UT In the Matter of the Application of El Paso Electric Company for Approval of Tariffs Necessary for Implementation of the New Mexico Community Solar Program and Accounting Order, Case No. 22-00243-UT

No. S-1-SC-39432

No. S-1-SC-39558

No. S-1-SC-39611

No. S-1-SC-39678

Supreme Court of New Mexico.

Filing Date: January 16, 2025

APPEAL FROM THE NEW MEXICO PUBLIC REGULATION COMMISSION

Hinkle Shanor, LLP, Dana S. Hardy, Timothy B. Rode, Santa Fe, NM, Erika M. Kane, Lead General Counsel, Austin TX, for Appellant

Russell R. Fisk, Associate General Counsel, Erin E. LeCocq, Special Counsel, Santa Fe, NM, for Appellee

Jason Marks Law, LLC, Jason A. Marks, Albuquerque, NM, Keyes & Fox LLP, Lee Ewing, Denver, CO, for Intervenors-Appellees Coalition for Community Solar Access, Renewable Energy Industries Association of New Mexico

PNM Resources, Inc., Stacey J. Goodwin, Associate General Counsel, Albuquerque, NM, Wilkinson Barker Knauer LLP, Debrea A. Terwilliger, Denver, CO, for Intervenor-Appellant Public Service Company of New Mexico

El Paso Electric Company, Nancy B. Bums, Deputy General Counsel, Santa Fe, NM, Montgomery & Andrews, P.A., Jeffrey J. Wechsler, Kari E. Olson, Santa Fe, NM, for Intervenor-Appellant El Paso Electric Company

Office of the City Attorney, Jennifer Vega, Jocelyn A Garrison, Las Cruces, NM, Stevens Law LLC, Anastasia S. Stevens, Santa Fe, NM, for Intervenor-Appellee City of Las Cruces

New Energy Economy, Mariel Nanasi, Santa Fe, NM, for Intervenor-Appellee New Energy Economy

Stephanie Dzur, Albuquerque, NM, for Intervenor-Appellee Coalition for Sustainable Communities New Mexico

OPINION

ZAMORA, Justice.

{1} In this appeal we decide whether the Community Solar Rule, 17.9.573 NMAC (7/12/2022 as amended through 10/22/2024) (the Rule), is contrary to various provisions of the Community Solar Act (the Act), NMSA 1978, §§ 62-16B-1 to -8 (2021, as amended through 2022), and is therefore “unreasonable or unlawful,” NMSA 1978, § 62-11-5 (1982). Among other things, Appellant Southwestern Public Service Company (SPS) and Intervenors Public Service Company of New Mexico (PNM) and El Paso Electric Company (EPE) (the Utilities)¹ challenge the Rule’s prohibition against subtracting transmission costs from a utility’s community solar bill-credit rate as an unlawful subsidy under the Act. See 17.9.573.20(D) NMAC; see also § 62-16B-7(B)(8) (setting forth requirements for “a community solar bill credit rate mechanism,” including that “non-subscribers shall not subsidize costs attributable to subscribers”). We hold that prohibiting the subtraction of transmission costs from the billcredit rate is a reasonable exercise of the policy-making authority delegated under the Act to the New Mexico Public Regulation Commission. We therefore affirm the Commission on that issue. See § 62-11-5. We similarly hold that the other provisions of the Rule challenged by the Utilities are neither unreasonable nor unlawful, and we affirm the Commission’s adoption of the Rule in full. See id.

{2} We also must decide (1) whether the Rule must be vacated and annulled because of possible ex parte communications after the close of the rulemaking record purportedly in violation of statute and due process and (2) whether the Commission violated the statute and due process by rejecting SPS’s original, proposed bill-credit rate without a hearing. Answering both questions in the negative, we affirm the Commission’s orders challenged in this appeal.

I. BACKGROUND

{3} This consolidated appeal centers on the Commission’s efforts to promulgate and enforce rules to implement the Community Solar Act. In brief, the Act provides for the creation and development of community solar facilities, which are subscriber-owned or operated facilities that produce solar-generated electricity, are located within a public utility’s service territory, and are interconnected to the utility’s distribution system. See § 62-16B-2(D) (defining “community solar facility”); § 62-16B-3(A)(2) (setting forth requirements for the location and interconnection of community solar facilities); § 62-16B-4(A) (providing for ownership of community solar facilities). A community solar subscriber receives a credit from the utility on the subscriber’s electric bill, calculated by multiplying a per-kilowatt-hour rate determined by the Commission by up to one hundred percent of the electricity the subscriber consumed. Section 62-16B-2(D); see also § 62-16B-2(C) (defining “community solar bill credit rate”); § 62-16B-5(A)(l) (setting forth subscription requirements). The Rule’s requirements for establishing the bill-credit rate are the subjects of several challenges in this appeal.

{4} The Act, which was signed into law in April 2021, mandates an aggressive timeline for promulgating rules to establish a community solar program. See 2021 N.M. Laws ch. 34, § 7; see also § 62-16B-7(B) (“The Commission shall adopt rules to establish a community solar program by no later than April 1, 2022.”); see also § 62-16B-7(E) (requiring a comprehensive report to “the appropriate interim legislative committee” by November 1, 2024, “on the status of the community solar program, including … an evaluation of the effectiveness of the [C]ommission’s rules to implement the [Act] and any recommended changes”). The Act also prescribes a detailed list of ten subject areas the eventual rules must address through a broadly inclusive rulemaking process. See § 62-16B-7(B); see also § 62-16B-7(D) (requiring the Commission to “solicit input from relevant state agencies, public utilities, low-income stakeholders, disproportionately impacted communities, potential owners or operators of community solar facilities, Indian nations, tribes and pueblos and other interested parties in its rulemaking process”).

{5} In response to the Act’s timeline and detailed rulemaking requirements, the Commission opened a rulemaking docket in May 2021 and contracted with a specialized consulting firm to “advise and assist with regard to the … rulemaking …, including substantive issues such as the content of any rule as well as procedural issues such as facilitating stakeholder engagement in the process.” The Commission also announced the formation, “within the Commission, [of] a Community Solar Action Team (the ‘Team’),” composed of two commissioners and unnamed representatives of the Commission’s Utilities Division Staff, Office of General Counsel, and Chief of Staff, “among others.” The Team’s stated purposes were to “take a leading role in the rulemaking process, [to] interface with [the consultant], and [to] endeavor to maximize stakeholder engagement.”

{6} After five months of soliciting input through workshops and working groups, the Commission filed its Order Issuing Notice of Proposed Rulemaking (the Notice) in late October 2021. The Notice summarized the Commission’s informal proceedings, culminating in the consultant’s comprehensive status report summarizing stakeholder input and providing recommendations for the proposed rule. The Notice also included the proposed rule itself, which the Commission acknowledged was incomplete due to “insufficient time and insufficient resources to formulate a comprehensive proposed rule in the informal proceedings.” Accordingly, the Notice included a list, recommended by the Team, of “Additional Issues to be Addressed in Formal Comment Process.”

{7} After the comment period ended, the Commission issued its Order Adopting the Rule on March 30, 2022, two days before the statutory deadline. See § 62-16B-7(B). In addition to providing the text of the final rule, the order summarized the formal comment process and identified the parties who had submitted comments during the comment period, including the Utilities. For each issue raised during the comment period, the order summarized the comments received, provided the Team’s recommendations and reasoning for addressing the issue in the final rule, and stated the Commission’s decision.

{8} A spate of motions followed, challenging the Order Adopting the Rule. In response, the Commission issued its Order on Rehearing on May 18, 2022, partially granting five motions for rehearing, reconsideration, and clarification of the Order Adopting the Rule, denying four motions seeking similar relief on other grounds, and partially granting SPS’s and EPE’s request for procedural...