On June 29th the NMPRC ordered Public Service Company of New Mexico (PNM) to immediately issue a rate credit upon the closure of the San Juan Generating Station (SJGS) and to conduct a prudence hearing during the next rate case to determine how PNM’s delayed bond issuance in violation of the Energy Transition Act be addressed. About an hour later on the same day, PNM filed an Emergency Motion requesting an “immediate emergency stay of those portions of the Final Order requiring PNM to implement rate credits in order to avoid “permanent, irreparable harm” to PNM in the form of “lost revenues” that will likely exceed $128.3 million. Today NEE filed its response to PNM’s unsurprising attempt to avoid accountability, regulation under the law, and the application of fair, just and reasonable rates.
The four-part test[1] applied by appellate courts in considering whether to stay a final order of an administrative agency is:
(1) a likelihood that applicant will prevail on the merits of the appeal;
(2) a showing of irreparable harm to applicant unless the stay is granted;
(3) evidence that no substantial harm will result to other interested persons; and
(4) a showing that no harm will ensue to the public interest.
PNM cannot meet any of these four factors.
NEE argues that there are no PNM “losses.” PNM will not be incurring any costs for the inoperable SJGS, therefore continued charges amount to unearned profit. The Hearing Examiners recommended and the PRC made the correct decision: to allow PNM’s ongoing rate base costs without a SJGS abandonment rate credit adjustment would amount to unjust enrichment, because, even as PNM admitted, there will be reductions in PNM’s cost of service from SJGS abandonment. Therefore, PNM would not be losing revenue, it would be making pure profit. PNM won’t succeed on the merits and the Company’s Motion for Stay must fail.
As our Supreme Court stated: “The mere fact that an administrative regulation or order may cause injury or inconvenience to applicant is insufficient to warrant suspension of an agency regulation by the granting of a stay. An administrative order or regulation will not be stayed pending appeal where the applicant has not made the showing of each of the factors required to grant the stay.”[2]
Why did PNM attempt to delay issuing rate credits? Evidence shows that PNM’s sleight of hand was a failed attempt to make good on a promise to Avangrid/Iberdrola. In testimony compelled by the court at NEE’s request, PNM CFO Don Tarry acknowledged that the valuation of PNM and the transaction price in the proposed Avangrid/Iberdrola merger still being pursued at the NM Supreme Court was dependent on the expected revenues from decoupling, rate case(s), Palo Verde leases, or Four Corners sale, which equaled more than $450M. But PNM hasn’t delivered on its part of the “deal” to Avangrid/Iberdrola – in fact, PNM hasn’t received a cent from the aforementioned expected income sources as illustrated below.
PNM Resources Detailed Assumptions[3]
Was the “new” PNM plan not to issue bonds and provide a rate adjustment upon closure of SJGS a clandestine financial scheme to rob the poor in order to cover for and satisfy the company’s insufficiency? We were not privy to the internal conversations, but we do know that Mr. Tarry admitted that PNM CEO Pat Vincent Collawn and Avangrid delayed the rate case and bond issuance decision, and that the PNMR Board understood that PNM’s delay was “due to the merger,” as it was explicitly presented. Mr. Tarry testified that he believed that: “the decision [to delay the issuance of the energy transition bonds and delay the rate case] was made by Ms. Pat Vincent-Collawn and Avangrid.”[4]
PNM’s complaint that it will lose half its anticipated profits if the PRC doesn’t grant its Emergency Stay must be recast from that ratepayers’ perspective. The ratepayer might paraphrase PNM’s statement as follows: “We expect to almost double our profits by continuing to bill ratepayers for a major coal plant after it’s closed. We have a tricky way of doing it, but if we can fit this camel through the eye of the PRC needle, we’ll make almost $150 million dollars without having to spend any money at all! Telling us we can’t do this is an outrage! It’s an emergency! Woodman, Spare our money tree!”
[1] Tenneco Oil Co. v N.M. Water Qual. Cont. Comm’n,105 N.M. 708, 710, 736 P.2d 986, 988, 1986-NM-033. [2] Id., (internal citations omitted.) [3] Vol. II, Tr., 5/24/2022, Tarry, pp. 342-5. (The expected earnings from these sources of revenues determine the valuation of the company and the transaction price.) [4] 50 Exhibit NEE-SC-2-2, PNM Exhibit NEE 12-11 (April 21, 2022), Updated Long Range Plan 2021-25, PNMR Board of Directors powerpoint, August 31, 2021, p. 2 of 4.
コメント