416 P.3d 277
N.M.2018Background
- PNM, part-owner of the coal-fired San Juan Generating Station, sought PRC approval to retire Units 2 and 3 and obtain certificates of public convenience and necessity (CCNs) for replacement capacity (Palo Verde Unit 3 and additional output from San Juan Unit 4) after EPA required New Mexico to address regional haze.
- Stakeholders (state agencies, Governor, tribes, PNM and others) negotiated a revised state implementation plan accepted by EPA that contemplated retiring two San Juan units, adding controls on the remaining units, and replacing lost capacity with resources minimizing visibility impacts.
- PNM filed CCN applications in Dec. 2013; extensive hearings followed. PNM and several parties proposed a contested stipulation; NEE and others opposed. A hearing examiner (HE) initially recommended rejection, then after a supplemental stipulation found the replacement portfolio provided a net public benefit and recommended approval.
- The supplemental stipulation included multiple consumer and policy protections (cost savings to ratepayers, commitments to add renewables, RFP/IRP-related obligations, decommissioning contributions, deadlines for further review of San Juan beyond 2022, and a Good Neighbor Fund contribution).
- The PRC adopted the HE’s recommendation, approved the supplemental stipulation/CCNs, and filed a notice proposing dismissal of protests to PNM’s 2014 IRP on the ground the CCN proceeding sufficiently addressed the IRP issues.
- NEE appealed, arguing statutory/regulatory violations (improperly substituting CCN process for IRP, flawed modeling, failure to require RFP, inadequate risk assessment, and burden-shifting); the Supreme Court of New Mexico affirmed the PRC.
Issues
| Issue | Plaintiff's Argument (NEE) | Defendant's Argument (PRC/PNM) | Held |
|---|---|---|---|
| Whether PRC violated IRP statutes by approving CCN via contested stipulation | PRC treated CCN hearing as substitute for required IRP stakeholder review and thus circumvented statutory IRP process | HE/PRC found the CCN proceedings fully considered IRP issues with public participation; dismissal of IRP protests was appropriate, not duplicative | Court: PRC lawfully exercised discretion; CCN record satisfied IRP standards and dismissal notice was proper |
| Whether PNM’s modeling (Strategist) was unreliable/manipulated | Strategist inputs were manipulated and PNM failed to show comparative, consistent cost analyses for feasible alternatives | HE credited PNM’s expert testimony that Strategist runs evaluated thousands of portfolios (solar, wind, gas, coal, nuclear) and that differing inputs were reasonable given stipulation savings | Court: HE’s technical findings were supported by substantial evidence; no basis to overturn modeling conclusions |
| Whether PRC should have required an RFP to test market alternatives | NEE: an RFP is the established method to identify the most cost-effective resources; PRC erred by not ordering one | PRC/HE: no statutory requirement to order RFPs; testimony showed an RFP could be counterproductive or impractical in context; other safeguards existed | Court: PRC reasonably declined to require RFP; HE and PRC record support that decision |
| Whether PRC shifted burden of proof or ignored intervenor analyses | NEE: HE excused PNM’s burden by dismissing intervenor expert (Van Winkle) and refusing to have PNM run his alternatives | PRC/HE: intervenor expert lacked relevant industry planning experience; PNM need not assist adversary by running their models; substantial evidence supports HE’s rejection of that testimony | Court: HE permissibly evaluated expert credibility; no unlawful burden shift; PRC decision supported by record |
Key Cases Cited
- Arizona ex rel. Darwin v. U.S. E.P.A., 815 F.3d 519 (9th Cir. 2016) (summarizes federal regional haze/SIP regulatory framework relied on to explain EPA and state roles in haze controls)