Why We Should Reject the Appointment of Patrick O’Connell to the New Mexico PRC

We urge Senators to reject the appointment of Patrick O’Connell to the New Mexico Public Regulation Commission (PRC) and we provide the following evidence to support this rejection.

Sections 62-19-4 and 62-19-5 of the New Mexico Statutes specify the eligibility requirements to serve on the PRC: The first requirement is: “Candidates must be independent of the industries regulated by the Commission.” Yet:

  • O’Connell was an exec at PNM for 12 years and with NM Gas Co for 8 years, both PRC-regulated entities.
  • He testified in favor of the Avangrid merger before the PRC.
  • He testified often at the PRC in support of PNM’s commitment to sustained use of fossil fuel-based energy, despite the economics clearly favoring a switch to less costly but less profitable renewables.
  • His appointment is for six years, the longest possible term. We deserve a commissioner whose allegiance is to the people, not to PNM profit.
  • Carolyn Glick has 15 years of direct regulation experience, she knows the rules, the process, the issues, and the stakeholders. She should have been the top pick.

Though Patrick O’Connell may have the required education and experience, his experience comes from deep within the organizations and cultures the PRC is charged with regulating. If approved, this appointment is the perfect manifestation of industry regulated by industry. Consider the following issues:

  1. O’Connell provided testimony to the PRC on multiple occasions on the PNM San Juan Generating Station and the Four Corners Power Plant re-acquisition cases, claiming that coal investment was cost-effective for 20 years.
  2. O’Connell supported and provided testimony in support of PNM’s re-investment in Palo Verde Nuclear Generating Station.
  3. In sworn testimony at the PRC in 2013, 2014, and 2015, O’Connell advocated for PNM’s coal reinvestment in the San Juan Generating Station.He advocated for investing $150M in pollution controls and other capital expenditures. Fourteen months later, PNM’s Board voted to close the plant, stranding PNM’s investments. With supporting testimony from O’Connell, PNM asked the PRC to approve ratepayers paying 100% of the costs.
  4. PNM decided to invest nearly a billion dollars in 2016 at the Four Corners Power Plant (FCPP) without having conducted any contemporaneous financial assessment indicating it was financially prudent to do so. El Paso Electric’s financial assessment at that time determined that it would be more prudent to invest in solar and gas instead of more coal. PNM did NO financial assessment when it decided to reinvest in FCPP and O’Connell was at the center of and testified in support of these decisions.
  5. In his Rebuttal Testimony in July 2017 regarding investing more in Four Corners (p. 1), O’Connell said, “I conclude that PNM conducted a reasonable economic analysis of the cost-justification of operating Four Corners that considered projected costs of emissions controls and other environmental regulation, as well as the projected pricing sensitivities under the coal supply agreement.” This, despite PNM’s having conducted no such analysis.
  6. In his Avangrid testimony to the PRC O’Connell stated: “Approval of the merger based on the Stipulation also serves the public interest.” The PRC Commissioners unanimously disagreed with O’Connell’s testimony.

O’Connell provided sworn testimony in support of the Avangrid/PNM merger without much evidence or demonstrable evaluation of facts. If the proposed merger comes back before the PRC for approval, how can he be impartial or free from conflict of interest? He cannot. Hence his stated commitment to recuse himself. However this leaves the PRC with just two Commissioners to decide one of the most important and contentious issues the PRC will ever hear.

But the PRC will face many other important decisions involving PNM and after a decade of testimony in support of PNM rate increases for ill-advised coal and nuclear investments, how can O’Connell be expected to be impartial in future PNM or other IOU rate cases? He cannot. How can O’Connell offer impartial judgment in cases that review cost recovery from ratepayers involving these disputed matters? He cannot.

O’Connell’s prejudgment is a violation of the public’s constitutional right to due process free from bias or impartiality. Complicating the situation is that neither of the other appointed commissioners has rate-making experience or the kind of regulatory finance experience possessed by O’Connell. If O’Connell is not approved, or if he must recuse himself on Avangrid and looming PNM rate cases, how can the other two Commissioners make decisions that involve $100’s of millions? We need to appoint the best person for the job: Carolyn Glick.

Please reject the appointment of Patrick O’Connell and ask the Governor to appoint the most qualified candidate: Carolyn Glick. Glick has 15 years of direct regulation experience as a hearing examiner at the PRC. She knows the rules, the process, and the issues. We deserve commissioners who will act in the best interests of the people of New Mexico, not in the interests of corporate and shareholder profits.