2011 NMSC 034
N.M.2011Background
- New Mexico enacted the Efficient Use of Energy Act (EUEA) requiring the PRC to identify and remove disincentives to energy efficiency by utilities.
- PRC adopted Energy Efficiency Rules (17.7.2 NMAC) requiring utilities to file proposals to remove disincentives; failure to file could bar cost recovery.
- In 2008, EUEA amendments allowed profits and incentives for energy efficiency; PRC launched rulemaking with workshops (May 2008–Jan 2009).
- Workshops produced Alternative A: Interim Adder (1 cent/kWh saved, $10 per kW reduced) for ~2 years, plus a path to a permanent solution and a Reduced Adder thereafter.
- PRC held an evidentiary hearing; utilities projected revenue losses and potential adder recoveries; Final Order adopting Alternative A issued April 8, 2010.
- AG and NMIEC appealed the Final Order; the appeals were consolidated; the court annulled and vacated the Final Order, remanding for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are the Alternative A adders rates and the balancing test just and reasonable? | NMIEC contends adders are unlawful, not cost-based, and not properly balanced. | PRC contends EUEA allows non-cost-based adders and balances public, consumer, and investor interests under EUEA. | Annul and vacate; adders not supported by record; not just and reasonable. |
| Does EUEA require cost-based ratemaking similar to the PUA when fixing rates under EUEA? | Disincentive removal must be based on cost, revenue requirements, and traditional ratemaking elements. | EUEA balancing requires discretion; cost-base not mandated for EUEA adders. | EUEA and PUA balancing harmonized; no cost-based requirement shown for adders in record. |
| Did the PRC fail to apply traditional ratemaking elements in setting the adders? | PRC did not inquire into revenue requirements, rate base, or rate of return. | PRC relied on EUEA balancing framework and did not need to conduct traditional elements. | Yes; failure to apply traditional elements; record inadequate to support just and reasonable finding. |
Key Cases Cited
- New Mexico Indus. Energy Consumers v. N.M. Pub. Regulation Comm’n, 142 N.M. 533 (2007-NMSC-053) (balancing required for just and reasonable rates; de novo statutory interpretation)
- In re PNM Gas Servs., 129 N.M. 1 (2000-NMSC-012) (ratemaking elements: costs, rate base, return; zone of reasonableness)
- Hobbs Gas Co. v. N.M. Pub. Serv. Comm’n, 94 N.M. 731 (1980) (traditional ratemaking framework and reasonableness standard)
- El Paso Elec. Co. v. N.M. Pub. Regulation Comm’n, 149 N.M. 174 (2010-NMSC-048) (ratemaking elements and investor protections in determining revenue requirements)
- State ex rel. Quintana v. Schnedar, 115 N.M. 573 (1993) (statutory interpretation and harmonization rules; pari materia approach)
- Pub. Serv. Co. of N.M. v. N.M. Pub. Util. Comm’n, 128 N.M. 309 (1999-NMSC-040) (harmonizing related statutes and legislative intent in regulation)