Public Regulation Commission Files Suit Against PNM Offering Clues as to the Real Problem with SB 489

Throughout the Roundhouse session, Retake called for amendments to SB 489 to prevent the artful evisceration of PRC authority to regulate energy generation in NM and to ensure PRC authority over the selection of replacement power when San Juan closes. The PRC’s suit filed last week makes clear that we were right in our concerns and provides other important lessons.

Readers Offer Insights and Suggestions and the PRC Underscores What Was REALLY at Play with SB 489

Early in the legislative session, I was assured by leadership from the coalition of enviro organizations that drove the SB 489 campaign that 489 would not permit gas as replacement power, would not circumscribe PRC authority, and would ensure PRC oversight over replacement power for San Juan.  I was also told that without 489, there was no guarantee that San Juan would close. Later in the session, one prominent 350NM leader told me that SB 489 had to be crafted in such a way that it could get through the ultra conservative Senate Corporations and Transportation Committee where Senators Clemente Sanchez and Mary Kay Papen have an iron grip. After the session, I was told the same thing by leaders from Natural Resources Defense Council and Conservation Voters of New Mexico.

As excerpts offered below from the Public Regulation Commission’s suit against PNM make clear, the intent of SB 489 was precisely to circumscribe PRC authority, allow for gas to be developed as replacement power, and ensure that PNM had 100% of its own unaudited valuation of unappreciated stranded assets were recovered without shareholders contributing a dime. The enviro organizations will tell you that PNM gave up $60M in profits they could have claimed, but to “give up” $60M to recoup perhaps over $1.3B, that is a deal any capitalist enterprise would accept. The enviro organizations would also argue that ensuring that San Juan closes in 2022, gaining $20M in worker benefits and $30M in remediation costs were major gains. While obtaining $50M in funds for remediation and worker benefits were both valuable gains, as the suit excerpts describe below, San Juan was going to close in 2022 with or without 489.  I was told that “there was no interest in the state funding either worker benefits or remediation costs, but that is more evidence of the lack of Democratic Party control over its own Senators.  We had a $1.2B surplus, why couldn’t the legislature have developed a bill for $50M to cover these costs and not force ratepayers to pay $1.3B to PNM?

So in the session immediately following a sweeping progressive House election, with win after win by younger, more progressive, and more diverse candidates, the ceiling for what could be achieved in relation to energy was set by two of the most conservative Democrats in the legislature. What’s more, other important environmental bills fell prey to the same political calculus. SB 210 Community Solar died in Senate Judiciary (thank you Sen. Martinez) and SB 374, the even more game-changing Local Choice Energy, and SB 479 the four year fracking moritorium never even got one committee hearing. What’s more, bill after bill that sought to regulate, penalize or attach royalties on the gas and oil industry all died. Only in the last few days was a deal struck to get modest royalties passed, but we had to accept a poison pill: acquiescence to the possibility of highly toxic fracked water, being treated by the gas and oil industry and then used for agricultural purposes. Again, this illustrates what happens when your boldest environmental legislation must be approved by PNM, gas and oil industry lobbyists and a handful of Democratic Senators more beholden to lobbyists than to the public interest. That our planet is running out of time and that a bold blue state still can’t pass impactful environmental legislation because of a handful of Democratic Senators, tells you all you need to know about what we need to do before the 2021 legislative session.  This is something that has dawned on several of our readers, as the quotes below indicate.

We’ll be back in 2021 and we will be campaigning as those DINO’s come up for re-election. They don’t deserve to be in the RH. They don’t represent New Mexicans best interests!!!!!”

AND

Thank you for exposing the 4 DINO’s. NM continues to be mired in the fossil fuel culture which is an addiction hard to break, but it will happen albeit a little late to garner the status of being a front runner with all the benefits that would have been brought with it.

AND

When the head of the NM Democratic Party was asked what we can do about democrats who do not vote for legislation covered by the Party Platform, she replied that the Democratic Party is a BIG TENT with lots of Diversity. Well here is the deal, if Democrats want my money and my time to organize then I want to know that the endorsement of the Democratic Candidates means these elected officials will be held accountable to the Platform and for their votes against platform issues. Not too much to ask for hours many of us give to win elections. Let the accountability begin……”

While we will have to wait until June 2020 to challenge some of these Democratic Senators, it is not too late to ask Senator Wirth to make support for the Democratic Party platform a criteria for positions of leadership in the Senate.  Under those conditions, Senator Smith would not be eligible to chair the Finance Committee, Sen. Martinez would not be eligible to chair the Judiciary Committee and Senator Sanchez would not be eligible to chair the Corporations and Transportation Committee and Sen. Papen would not be eligible to serve as Senate Pro-Tem.  This is a conversation that needs to be had.  But, readers were not only disappointed with some of our DINO politicians.

That the Sierra Club and other SO-CALLED environmental agencies are sugar-coating the DEVASTATING, ANTI-CLEAN WATER bill, HB546/SB186: Produced Water & OCD Fines, is a huge mystery and disappointment. This bill has the potential of releasing toxic water from fracking into agriculture and streams and rivers all over New Mexico. WHAT THE HELL IS GOOD ABOUT IT? They talk about the fines being a good thing, but what help is that when clean water is allowed to be polluted? There is no reversing that.
This is my personal opinion and observation, but Paul, the public is not being told the truth about the effects of some of these absolutely anti-environmental bills (produced water is toxic water waste the industry wants to sell to make even more money at the expense of us all) that passed and the sad results of those that didn’t.  Why are these organizations who claim to be pro-environment protection NOT telling the truth, even touting the bills as good legislation?  Perhaps they don’t want to offend the assholes (Democrats) who voted in favor of the oil and gas industry, but why? Who wants to donate to organizations who appear to be as gutless as the Dems who voted in favor of pollution for profit?”

AND

I, too, have been wondering what is going on with the local Sierra Club. During the Sandoval County Commission election last year, the Sierra Club threw its support behind a candidate with sketchy credentials, including but not limited to owning and operating a pit mine. Katherine Bruch did win the seat, but in a narrow victory. Thank you Lordy! She is our only sane and competent commissioner. But the Sierra Club, in the eleventh hour, sent out a mailing endorsing the other candidate. What a kick in the teeth to Katherine. Has the Sierra Club been infiltrated &/or influenced by dark money? Most troubling.”

There is much to explore here as well. I would suggest that it may be premature to  hold these enviro organizations accountable for making concessions to PNM. They understood that no truly groundbreaking environmental legislation was possible until the Senate underwent the kind of transformation that has occurred in the House in the last two elections. It is sad that 489 was the best they could do and that they could not advance other important environmental bills, but that is not the fault of those environmental organizations. But it would have been much more honest had they stated more clearly that New Energy Economy had legitimate concerns with SB 489 and that this was the best bill they could possibly pass, and that other environmental bills would have to wait until there was a more progressive Senate. Instead, they hailed SB 489 as game changing and that those seeking amendments were spreading misleading information. But don’t take NEE and Retake Our Democracy’s view on this. For validation of what happened and why, we turn to the PRC itself.

And Now From the PRC:  Annotated Excerpts from Their Lawsuit Against PNM

To understand the importance of the language excerpted from the PRC’s lawsuit against PNM, a bit of context and background info is helpful. Back in March 2017 PNM announced it would close the San Juan Generating Station. A couple months later it filed plans to do so with the PRC.  In August 2017, a “modified stipulation” was issued by the PRC accepting PNM’s plan to retire San Juan and outlining that PNM must complete a detailed plan for closing the plant and identifying a plan for replacing the power lost by closing San Juan. This plan was due by Dec. 30, 2018, 15 months after the stipulation was filed and 18 months after PNM had announced plans to close the plant. Fast forward to Dec. 30, 2018, and PNM filed what it called a “compliance” report instead of the required plan for shuttering San Juan and replacing the lost power. PNM claimed that the PRC had exceeded its authority in “forcing” PNM to close the generating station and had not afforded PNM sufficient time to provide a plan for closing San Juan. A month later, PNM filed suit asking the Supreme Court to pause the PRC process as it simply had no time to comply. According to the PRC, this appeal to the Supreme Court was riddled with misinformation but the Supreme Court granted the writ that was sought and now on March 19 the PRC has opposed that ruling. What follows are excerpts from the PRC suit.

PNM’s true interest [in advancing SB 489] has been to seek a reduction in Commission oversight over its SJGS abandonment through legislative changes. PNM has focused  its efforts on bills, unsuccessfully in the 2018 Legislative session (Senate Bill 47), and recently with Senate Bill 489 in the 2019 Legislative session which would abrogate much of the Commission’s existing  oversight  over abandonment issues such as PNM’s recovery of undepreciated investment and selection of replacement resources.”

Hmmm. It is interesting that in discussing SB 489, the PRC’s lawsuit specifically identifies the bill as PNM’s strategy for circumventing PRC authority. In seeking a Writ of Mandamus to halt PRC authority over the San Juan closure, PNM claimed that the PRC had not allowed PNM enough time to fully respond to a stipulation to which it had agreed, a stipulation that required PNM to have provided the PRC with a plan for closing San Juan along with its plans to ensure competitive bidding on replacement power and to identify replacement power options. This was to have been completed by December 30, 2018.  In its August  4,  2017 Integrated Resource Plan filing, PNM acknowledged these obligations under the Modified Stipulation:

PNM will pursue several actions associated with the SJGS abandonment. The next step will be issuing an all-source request for proposals. The intent of the RFP is to refine the mix of replacement resource types identified in this IRP (natural gas peaking, renewable energy and, potentially, energy storage) to specific projects that could be proposed for NMPRC approval in later filings. Bidders will be free to submit bids for any type and size of resource at any proposed location

The RFP will also request bids at SJGS. PNM will make its final determination on the scope and content of the RFP after discussion with the parties to Case No. 13-00390-UT as required by the final order in that case. Upon receipt of all bids (including those requested by PNM  and  any other credible proposals), PNM will repeat the capacity expansion, economic dispatch and reliability analyses performed for this IRP to identify the best combination of resources and  locations  from  the  alternatives presented. This  work will be completed in advance of PNM making the filing required by the final order in Case No. 13-00390-UT on the extent to which SJGS should continue serving PNM’s retail customers’ needs after June 30,2022.

In other words, back in August 2017, PNM had been required to file a detailed plan for closing San Juan by Dec. 31, 2018. This plan was to have included a bidding process to secure options for power to replace the power lost by closing San Juan. Instead, PNM filed a “compliance” report with absolutely none of that information provided and then turned to the Supreme Court for redress, falsely claiming that the PRC had not give PNM enough time to have prepared such a report and indicating that it was the PRC who was forcing PNM to close the plant despite there not being enough evidence to prove that this was in the best interest of ratepayers. And we know how concerned PNM is with the interests of its ratepayers.

What is the PRC’s response to PNM’s claims that the PRC had exceeded its authority in requiring to be regulated by the PRC? From their lawsuit: “PNM’s  argument that the Commission exceeded its statutory authority by “forcing” PNM to file for early abandonment of SJGS against its will borders on the absurd. PNM is bound by the terms of the Modified Stipulation and Final Order in 13-00390-UT to participate in the 2018 Review Hearing.”  Emphasis mine.

With the exception of those environmental groups coordinating with PNM to promote SB 489 (Western Resources Advocates (WRA), Coalition for Clean Affordable Energy and the Sierra Club), response filings opposing PNM’s request to delay the 2018 Review Hearing were received from New Energy Economy (NEE); Southwest Generation Operating Company (SWG); the San Juan County Entities (comprised of the Board of County Commissioners for the County of San Juan, the City of Farmington, and certain San Juan legislative representatives); as well as a joint response filed by almost all parties representing ratepayer interests, including the New Mexico Attorney General (AG); PRC Utility Division staff (Staff); the Albuquerque Bernalillo Water Utility Authority (ABCWUA); and the New Mexico Industrial Energy Consumers (NMIEC).

In other words, it was not just NEE who saw that PNM was attempting to escape PRC regulation, but a host of other organizations concerned with the best interests of the ratepayers and of the planet.  On the other hand, the same folks who told us SB 489 was earthshaking legislation, also supported PNM’s pleas for Supreme Court intervention.

More from the PRC lawsuit:  “PNM tries to portray abandonment as something the Commission is forcing PNM to do, that it is not “voluntary.”  This ignores fact that PNM has acknowledged it is not merely “planning” to abandon SJGS. It has stated that there are no circumstances under which it would continue to operate SJGS and it s in fact already taking concrete steps toward abandonment of its own interest.”  Hmmm. Keep in mind, the enviros advocating for SB 489 indicated that passage of 489 was necessary to ensure that PNM had to close the plant. Apparently, the PRC sees this very differently. In its appeal to the Supreme Court falsely claimed that the PRC was insisting upon conducting the required hearing on the PNM’s San Juan abandonement plan so as to prevent the Roundhouse from creating legislation to circumscribe the PRC’s authority when the truth is that the timing of the hearing process had been set back in August 2017.  Two more passages from the PRC suit make very clear what has been at play here.

Moreover, PNM’s asserted inability to proceed with its obligations to participate in the 2018 Review Hearing in a timely manner appears to stem from PNM’s  preference to seek legislative changes to existing law applicable to its proposed abandonment of the SJGS coal plant and thereby relieve itself of PRC oversight of its stranded cost recovery in connection with the early closure of SJGS.  PNM itself introduced the issue of the legislation it has promoted into this matter. The Commission merely points out that this Court should bear PNM’s motivations in mind when considering the basis for PNM’s claimed inability to proceed with the 2018 Review Hearing as contemplated by the Modified Stipulation.”

AND

While PNM asserts the PRC has timed its 1/30/19 Order so as to intentionally interfere with PNM’s  legislative efforts to abrogate PRC authority, the facts above belie this claim.  PNM was under an existing requirement by the Modified Stipulation to participate in the 2018 review Hearing. It was its own delay in making the 12/31/18 Filing that placed the Commission’s 1/30/19 Order action initiating the Review Hearing in conflict with the 2018 Legislative session. Moreover, throughout the legislative session, the Commission avoided taking any position with regard to SB 489.”

So, clearly the PRC shares NEE’s view that SB 489 was a guileful PNM-led strategy to circumvent PRC authority immediately after the 2018 election that changed to the composition of the PRC and made it highly unlikely that PNM would get the kind of deal it just got from the enviros and the legislature. To me, this leaves Retake with a clear charge. Shift the balance in the Senate so that environmental groups do not have to accept the best deal acceptable to PNM and gas and oil and then work with those same environmental organizations to unify and organize around the kind of bold slate of bills that would actually address the climate crisis at hand. No more modest proposals designed to meet the approval of Democrats who do not deserve Democratic seats let alone roles of any kind of Democratic Party leadership.

To review the full PRC lawsuit, click NMPRC Response in Opposition It is quite informative and while you must wade through a bit of legalese, it is only 16 double-spaced pages.

In solidarity,

Paul & Roxanne

10 thoughts on “Public Regulation Commission Files Suit Against PNM Offering Clues as to the Real Problem with SB 489

  1. Thank you for this excellent post. I have one quibble with how we talk about climate collapse. That is, the PLANET will recover. It may take 65 million years or so, but during that time the evolution of life will begin again. It is not The Planet that is at risk. It is LIFE on the planet that is going. #$ixthEntinction

  2. Agree with Barbara above. Especially after listening/reading Professor Jem Bendell’s analysis of Life’s situation on the only blue planet in the solar system, and probably beyond. Please see:
    https://jembendell.wordpress.com/ and https://www.lifeworth.com/deepadaptation.pdf and https://www.youtube.com/watch?v=_7gtPYc3kiE and then let us all get together to talk about the most important item for us to which we must dedicate 90% of our energy. FOOD!. Santafeans, and all New Mexicans, are dependent on imported food, at the rate of about 90% or more. We are also dependent on a monopolized food ‘industry’ that sells us what they want. Most of the food we are offered at the grocery stores is tainted with the ‘food industry’s’ classic poisons, and more (re: Glyphosate) https://truthout.org/articles/glyphosate-herbicides-are-altering-the-food-chain/

    Deep adaptation and deep Resilience will require from us to abandon our ‘individualism’, act in solidarity while revitalizing our FOODSHEDS. LET’S BEGIN!

  3. “No more modest proposals designed to meet the approval of Democrats who do not deserve Democratic seats let alone roles of any kind of Democratic Party leadership.” May it be so…. The time for bending over, for compromise is past. The young people know it, and those of us deeply concerned about the condition of this planet know this too. Hello Democratic Party State Central Committee —- don’t stand in the doorways, don’t block up the halls…. the times they are a changing. Leadership of the status quo will not cut it. Leadership with vision is needed.

  4. Thank you, Paul and Roxanne, for this comprehensive overview of the situation with PNM, SB489 and PRC. Based on all the background information that Retake and NEE have supplied for the past months, I had suspicions throughout the final week of hearings on SB489 and the details of the PRC suit confirm all of them. I appreciate the tremendous effort that compiling the history and salient points have required – and you nailed it down faster than any analysts. Kudos – and carry on! I’ll do my best to continue my support.

  5. Gah! It was no coincidence that the Wapo and other mass media outlets have been running articles about “Clean Natural Gas.” I dropped out of the Sierra Club years ago, as they churned out more and more corporate propaganda. In order to please the funders, they came up with an agenda even the Oil and Gas industry could support, all the while demonizing them.

    Maybe now you people will start paying attention. No heads rolled when our “new” governor or dems took over. They tip toed around every serious issue facing our state. Even the Kids, should have been a serious issue, but we got another equivalent to the “Pull Together Website.”

    Wakey Wakey Eggs and Bakey! Check out the level of corporate advertising and support our local dems are still actively promoting. Do you think the Leggo Corp cares about children, and their use of screen time? Does Wal Mart care about children well being, after they lobbied against taxes? FFS!

    Ask why the Trial Lawyers are so interested in the “Ethics Commission.” There is no “Liberal News Outlet” asking any questions, here in New Mexico. A little White Washing a little Green Washing, and keep the elephants in the room secret. Maybe start asking what some of these so called non profits and foundations have to gain.

  6. Thank you for this analysis. It helps a newcomer to NM like me. I want to be part of the solution to this.

  7. Paul this is an awesome summary that many of us suspected, although the details were unclear, from the excellent updates both you and Mariel from NEE provided during the process. PNM was getting something big from 489. I see the Governor signed this into law 3/22/19. Should we be working towards repeal? R. Martinez is my Senator and I will work against him specifically because of his holding HB 210 back in the Senate Judiciary Committee. Good suggestion about Wirth and demands to uphold the Democratic platform in order to be allowed to chair committees.

  8. This post was like the last piece in a jigsaw puzzle that we all tried to put together during the session. I had sort of gotten myself ‘ok’ with paying PNM’s extortion in exchange for a strong RPS but the complicit actions by our representatives leaves me sick.

  9. Hi Paul and Roxanne – In spite of the organization’s best and fervent intentions, and thousands of hours of dedicated work across many months, what has bubbled to the surface and now floats atop the state is the toxic slime released by the cabal of oil/gas/electricity monarchs. These conspiritors laid this elaborate scheme in the dry weeds many months before the elections of 2018.

    Its many potential contingencies were redied in advance, with most if not all alternatives already envisioned. The PRC staff, not withstanding several of its former commissioners nefarious treachery, anticipated this blowback, knowing full well the public relations cover stories that would be secreted into the public subconscious. I watched this play out across many months, trying to guess which final track the con job would take.

    What I did not anticipate was the linkages utilized by the oil/gas/electricity lobbying assualt to spread out and weaken the effects of the new political landscape. I am skeptical of the committee assignments managed by the Democratic majority. Democrats have to be either the most compromised group of nice people in the world, or the most dense. I have watched a consistent barrage of Republican chicanery since the early days of Bruce King. The style and ferocity never change. Unethical, amoral, self-serving, cunning, never-say-die.

    The only long view employed by this cabal is the one that sees the money and power flow to the coffers of the reactionaries. Mark my words, without a successful court decision on the PRC suit, and an immediate future group of amendments to 489, this group of political decisions will go down with the same infamy as the sadistic indifference and hostility that the human power elite show toward this state, this planet and this billion-year plus collection of precious biota.

    There is not enough lipstick on the planet to smear on this pig.

    Mick Nickel

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