“No” On Amendment 1

NM Constitutional Amendment 1 would eliminate the election of PRC Commissioners by voters and, instead, have them appointed by the Governor. Below, we lay out how there are far simpler ways to fix the PRC.

At the bottom of this post is a link to a video of our Oct. 5 Zoominar debate on Amendment 1. It offers a dignified debate in which both sides were able to lay out their positions in a thoughtful exchange (so refreshing these days). Please share this recommendation broadly. As this post makes clear, those favoring the amendment have lots of dark money to spend on distributing misinformation.

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NM Constitutional Amendment 1:
Wrong Fix For a Very Real Problem

We want to begin by acknowledging that there have long been real problems with the functioning of the Public Regulation Commission (PRC), problems that urgently need to be addressed. But, as this piece outlines, we feel the solution proposed would not address the most salient of the root conditions contributing to a poorly functioning PRC, but will create other unintended consequences that will foster more problems. What’s more, a 2017 National Regulatory Research Institute assessment of the PRC lays out with some specificity a better way to fix the PRC. Read on.

The Context

I can’t honestly comment on what transpired decades ago with Jerome Block, Jr., a Commissioner from Española who pushed the envelop enough to warrant multiple felonies. But that was decades ago. We can as easily site NM State Legislators who have been guilty of not just DUI’s but deplorable defenses and subtle efforts to use their position to influence the arresting officers to let their drunkenness slide due to their status. And then there is Phil Griego, who spent time in jail for misuse of public funds.There are ways to hold elected officials accountable, like the recently implemented Ethics Commission, which now reviews cases of ethics violations.

But beyond overt ethics violations, many times I’ve observed PRC Hearing Officers clearly delineate positions that were then disregarded by commissioners because of their own personal bias, with Patrick Lyons, Lynda Lovejoy and Sandy Jones all too often disregarding the Hearing Officers’ well-researched positions. But the same could be said about our legislature, which due to a myriad of causes has too often made bad decisions on bills of great import. Appointing (instead of electing) legislators has never been suggested as a remedy, likely because it is clear that such a “remedy” would not address the root conditions that contribute to those bad votes and would be a serious erosion of the democratic process. For the same reasons, we oppose Amendment 1.

Over the past two years, term limits, a better-informed electorate, and the democratic process removed the three commissioners cited above. Appointing commissioners will not prevent bad commissioners and bad decisions, but it will insulate them from being held accountable by constituents.

Nonetheless, it is indisputable that bad PRC votes have occurred for years. It is easy to see why legislators, the Governor, and voters would want to identify a means of fixing the system. Indeed, from New Energy Economy’s recent post about their opposition to the amendment, they acknowledge meeting with Speaker Egolf and Senator Wirth five years ago to explore an appointment process. They have since changed their minds, but legislators and the Governor are advancing an amendment in an effort to address the problems.

The Amendment

In the 2019 legislative session, a joint resolution was introduced, passed, and signed, asking New Mexicans to vote on a State Constitutional Amendment that would:

  • Reduce the size of the PRC from 5 commissioners to 3;
  • Eliminate elections of PRC Commissioners and allow the governor to make the appointments;
  • Create an eight-member nominating committee that would be responsible for screening candidates for commissioner;
  • Require that only 2 of the 3 commissioners are from any one political party;
  • Extend the term of office from four to six years and a maximum of 2 terms.

As outlined above, the rational for this change is that the Governor and many legislators felt that the PRC had been performing erratically, pointing to decades-old elected commissioners who were corrupt and to more recent decisions that were overturned by the courts. In mailers being funded with dark money from a Political Action Committee (PAC), Committee to Protect NM Consumers, we have seen how the public is being mis-educated on this important issue. The mailer points to how the Governor has been so adept in managing the COVID crisis due to her reliance on experts and science and that ratepayers deserve the same kind of expertise to guide PRC decisions. Before reviewing one of the dark money mailers below, ask yourself who might be so invested in this amendment that they would contribute $260,000 to pay for these mailers? And why do they refuse to identify the source of that funding?

Quite a headline. Who could be opposed to fair rates and reliable service? While the mailer has a catchy headline, much is lacking in its content. What is absent is that the amendment terminates the voters’ right to elect PRC commissioners. What is also absent is that it would allow the Governor to appoint PRC members.There is no mention of six-year terms or of reducing the number of commissioners from five to three. What’s more, there is really no discussion of why the PRC may or may not lack the expertise needed to generate better decisions. But as this recommendation lays out, the state has other options to build the expertise of the PRC, and for multiple administrations they have failed to do so. In this post we will also outline several important negative consequences that would ensue from passing this amendment.

A Better Approach to Strengthening the PRC

Clearly, the PRC has not been a highly functional regulatory agency for many years, both when commissioners were previously appointed and when elected. Only recently has the PRC begun to regulate in the interests of ratepayers, but they have had to do so under extremely difficult conditions that make good decisions very difficult to achieve.

In 2017, the National Regulatory Research Institute (NRRI) conducted an assessment of the NM PRC and offered an array of recommendations for improving its functioning. The NRRI performs this role all over the country, providing a lens on how regulatory agencies function, comparing them to national best practices. We provide a number of excerpts from that report at the bottom of this recommendation, but the gist of their recommendations are that:

  • The NM PRC relies upon funding from the General Fund to underwrite their operations instead of the fees it levees in conducting its regulatory functions. This is contrary to most regulatory agencies, causes the PRC to be dependent upon the legislature to fund its operations, and results in PRC staffing fluctuating with up and downturns of the state economy and the political biases of the majority party. If funded by fees, this would not occur and it would allow the PRC to more easily fill vacant positions and provide sustained professional development for those staff;
  • The NRRI found that, due to a lack of adequate funding, the NM PRC operates with a fraction of the expert and technical staff found in other regulatory agencies across the nation, with one technical support staff for all five commissioners, while most regulatory agencies offer at least one technical staff per commissioner. How are good decisions possible if there is just one expert advisors available to all five commissioners? Critics of the PRC have pointed to long delays in decisions. This is the more likely cause of those delays, not the commissioners being elected.
  • The fact that campaigns for PRC commissioner are publicly funded insulates them from influence from the utilities they are charged with regulating. [10.8.2020 Note: We realized that the NRRI had this a bit wrong in that public funding is an option, but not required.]

The NRRI report goes on to lay out other very specific fixes to the problems plaguing the PRC. Many of the problems accrue from lack of funding to fill long vacant positions and to support sustained professional development programs. Governor Martinez gutted the PRC (and other regulatory agencies), and the current the legislature and the Governor have failed to restore those regulatory agencies or to implement any of the NRRI recommendations. This raises questions as to why Democratic leadership seeks to ignore those recommendations and advance an amendment that in no way will address the problems identified in the NRRI report. The mailer above suggests that the PRC should be guided by experts, just as the Governor’s response to COVID has been guided by experts. Yet this administration has ignored the experts (NRRI) offering advice about how to fix the PRC.

Some Questions You Should Ask

Who might have the resources to commit over $250,000 for mailers supporting the amendment? Well, we can’t actually know who would have raised this kind of cash because the Committee to Protect NM Consumers has refused to share the source of their funds. But a good guess would be that this PAC is being funded by the utility industries that are to be regulated by the appointed PRC commissioners. That alone should raise concerns — concerns that are framed nicely by current Commissioner Steve Fischmann in his op-ed referenced below.

How can you create a Commission that reflects the geographic and cultural diversity of the state with just 3 members? You can’t. And NM has a long history of being ABQ-Santa Fe-focused in political appointments.

How can a Governor beholden to industry campaign donations possibly remain uninfluenced by those industry donors? In every election for Governor, the gas and oil and utility industries pour funds into campaigns, ensuring access and influence in all things related to their industries’ operations. The same occurs in legislative elections. Consider how the Martinez administration gutted all of NM’s regulatory agencies of funding, personnel, and capacity, undoubtedly in response to industry influence. With the election of a Democrat as governor, there was an expectation that Lujan Grisham would quickly backfill these agencies. But under the MLG administration none of those gutted agencies have been reinvigorated, and regulation of gas, oil, water, and air has been non-existent. There is a reason that our Governor famously told the NM Oil and Gas Association (NMOGA) “I work for you.”

Are there factors that contribute to the PRC lacking adequate expertise to perform its regulatory role that can be addressed more easily and more effectively than by eliminating voters electing commissioners? For this, you should review excerpts from the 2017 National Regulatory Research Institute (NRRI) below. Suffice it to say, the NRRI found that the NM PRC has been starved of resources and lacks sufficient staffing to perform its duties effectively and consistently. Appointing commissioners will do NOTHING to address this problem, but implementing the NRRI recommendations and providing adequate funding would.

Retake is not alone in opposing Constitutional Amendment 1. Senator Joseph Cervantes has stated his opposition. Former Senator Dede Feldman announced her opposition last week. Current PRC Commissioner candidate Joe Maestas spoke in opposition to the amendment in our Zoominar on Monday (click to view recording), and Steve Fischmann, another current PRC Commissioner, came out strongly against it in an op-ed published this week in the Carlsbad Current Argus:

“With Amendment 1 in place, it’s not difficult to imagine utilities leveraging contributions to Gubernatorial and legislative leadership PACs to select the commissioners that regulate them… It’s much easier to buy a seven-person nominating committee than it is to influence a million New Mexico voters. The misrepresentation of Amendment 1 on the ballot only confirms my fear that it has morphed from a good government initiative into a political power play. The Governor and legislative leaders have no business driving the selection of PRC commissioners until they insulate themselves permanently and completely from utility money.”

Steve Fischmann, PRC Commissioner

Well said.

Excerpts from the NRRI Report

Generally, it’s a good idea to incorporate findings from outside experts who you’ve hired to advise you about how to improve the functioning of an agency. As we mentioned above, in 2017 the NRRI conducted a study of the PRC. Given that the report was published in 2017, it was not a critique of the current Governor and she could have used it to justify reinvigorating the PRC. None of the recommendations below have been implemented. Instead, Democratic leadership is pressing for a Constitutional Amendment that will not address any of the concerns outlined below.

Strengthening the requirements for becoming a candidate for PRC would be a good place to start.

“Under current law, an individual is eligible to serve as a commissioner on the PRC if the commissioner is at least 18 years of age, has lived in the state for at least one year, resides in the district from which he or she is elected, has no felony convictions and meets certain professional qualifications, including satisfaction of continuing education requirements, as provided by law.”

From NRRI: “Evaluation of Public Regulation Commission Staffing and Budget Allocation”

Lack of resources and increased workload are at the heart of the problem, something that an appointed commission would not fix.

“The reality is that a reduction in PRC expenditures rarely means a commensurate decline in workload. Frequently, a state utility commission has to undertake more tasks with less money, a situation that can spiral into a situation where the commission is unable to adequately address the issues brought before it.”

From NRRI: “Evaluation of Public Regulation Commission Staffing and Budget Allocation”

Without stable funding, staffing vacancies can’t be filled quickly.

Another area of concern is the PRC currently having several unfunded technical positions, some of which are critical, for example, an electrical engineer. A problem recognized by many interviewees was the difficulty of the PRC to hire new staff and retain current staff.

From NRRI: “Evaluation of Public Regulation Commission Staffing and Budget Allocation”

The lack of adequate resources makes good regulation difficult at best.

While adequate resources do not guarantee good regulation, in their absence good regulation becomes improbable.

From NRRI: “Evaluation of Public Regulation Commission Staffing and Budget Allocation”

The NRRI report is very specific about just how under-staffed the PRC is.

“Another uniqueness of the PRC is the meager staff for advising the commissioners and others during pending cases. We consider this a serious problem that makes it difficult for commissioners to make well-informed decisions. We observe that most commissions either assign at least one technical advisor to each commissioner or have a pool of advisors that commissioners can draw upon in open dockets or other occasions… One highly unusual situation at the PRC is the sharing of a single technical advisor across the five commissioners.

From NRRI: “Evaluation of Public Regulation Commission Staffing and Budget Allocation”

The NRRI report identifies the source of the problem plaguing the PRC and points to the solution to this problem.

“New Mexico is one of a minority of states that return most of the monies from utility fees and assessments to the general fund. This has caused the PRC to rely on the State Legislature for most of its funds, which creates uncertainty and difficulty for budget planning. As remarked in one study, changing the PRC’s funding method would promote “an independent commission that operates in a stable and autonomous environment”

From NRRI: “Evaluation of Public Regulation Commission Staffing and Budget Allocation”

The NRRI report cited a separate study conducted by the NM League of Women Voters on this same issue.

“Funding the PRC with assessments on regulated industries will allow the PRC’s budget to be based on the actual cost of the regulation required by New Mexico statutes rather than being tied to tax revenues that rise and fall with the state of the economy. Money not expended in the year should not be returned to the general fund because this would in effect retain the PRC’s current position of competing with all other expenditures financed from the general fund.”

League of Women Voters of New Mexico, Study of the New Mexico Public Regulation Commission (2011-2013), Final Report. 30 July 2013. www.lwvnm.org/prcstudy/PRCStudyReport.pdf.

The NRRI report went on to describe the impact of the failure to provide stable and adequate funding.

Technical staff seems to be overwhelmed, especially when they have to handle more than one major rate case simultaneously. This certainly hurts staff morale, aggravated by the reality of little opportunities for career advancements and salary increases.

While the NRRI report cites one example after another related to insufficient funding and inadequate staffing, it also warns against interference in the operations of the PRC in NM.

Independence is essential for allowing an agency to protect the general public in the face of strong economic and political pressures. Jeopardy of a commission’s independence can originate from different parties: Utilities; the executive branch of state government; the state legislature; special interest groups; and the judicial branch.

From NRRI: “Evaluation of Public Regulation Commission Staffing and Budget Allocation”

Having a Governor appoint PRC Commissioners leads to the problem surfaced by Commissioner Fischmann above. Does a governor whose campaign relied on large contributions from industry open the door to undue influence of those industries in the appointment of those charged with regulating them? We think this is all too likely. And there is no guarantee that in the future a GOP governor wouldn’t appoint a slate of industry shills, shills who would remain in power for six years, with constituents unable to do anything to reverse the appointments.

The NRRI report also noted something referenced by Noah Long, who spoke of this during our debate on Monday. Long, Western Region Director for Climate and Clean Energy with the National Resources Defense Council, noted that NM’s PRC is one of but 13 PRC’s who elect commissioners and Long characterized this to be a politicizing factor. However the NRRI report reached the opposite conclusion: “Unlike some other elected states, however, the New Mexico commissioners receive only public funds in their campaigns.” The report went on to note that in NM, “What this suggests is that the PRC seems to be less captured by those whom they regulate than in some other elected states.” [10.8.2020 Note: We realized that the NRRI had this a bit wrong in that public funding is an option, but not required.]

In Closing

We want to again acknowledge that problems do exist in PRC functioning, but we do not believe that removing voters from the role of electing commissioners would in any way address those problems, and it would introduce unintended consequences, not the least of which would be the disenfranchisement of voters and a lack of accountability on the part of an appointed PRC. Our preference is that legislators use the 2021 legislative session to address the recommendations from the NRRI report and restore full funding to the PRC.

We welcome comments from those who agree and those who disagree with this opinion. We recognize there are problems plaguing the PRC and we are eager to explore solutions. But we do not believe that Amendment 1 is a good solution.

In solidarity and hope,

Paul & Roxannehttps

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