Attorney General v. PUBLIC REGULATION COM'NAttorney General v. PUBLIC REGULATION COM'N
ATTORNEY GENERAL of the State of New Mexico, Appellant,
v.
NEW MEXICO PUBLIC REGULATION COMMISSION, Appellee, and
Publiс Service Company of New Mexico, Western Resource Advocates, and Coalition for Clean Affordable Energy, Intervenors.
New Mexico Industrial Energy Consumers, Appellant,
v.
New Mexico Public Regulation Commission, Appellee, and
Public Service Company of New Mexico, Western Resource Advocates, and Coalition for Clean Affordable Energy, Intervenors.
Supreme Court of New Mexico.
*454 Gary K. King, Attorney General, Jeffery S. Taylor, Assistant Attorney General, Santa Fe, NM, for Appellant Attorney General of the State of New Mexico.
Peter Jude Gould, Santa Fe, NM, for Appellant New Mexico Industrial Energy Consumers.
Robert Y. Hirasuna, General Counsel, Margaret Kendall Caffey-Moquin, Associate General Counsel, Santa Fe, NM, for Appellee New Mexico Public Regulation Commission.
Benjamin Phillips, Ruth Fuess Keegan, Albuquerque, NM, Cuddy & McCarthy, L.L.P., Rebecca D. Dempsey, Santa Fe, NM, for Intervenor Public Service Company of New Mexico.
OPINION
SERNA, Justice.
{1} These consolidated appeals are challenges tо the Public Regulation Commission's (PRC) effort to comply with the Efficient Use of Energy Act.
I. BACKGROUND
{2} In 2005, the Legislature enacted the EUEA, requiring the PRC to "direct public utilities to evaluate and implement cost-effective programs that reduce energy demand and consumption." Section 62-17-5(B). The Legislature in Section 62-17-5(F) instructed the PRC to "identify any disincentives or barriers that may exist for public utility expenditures on energy efficiency and load management and, if found, ensure that they are eliminated."
{3} In response to this mandate, the PRC promulgated its Energy Efficiency Rules at
{4} In 2008, the Legislature amended the EUEA to allow utilities both to earn a profit on energy efficiency development and receive an incentive for instituting energy efficiency programs. See § 62-17-5(F). In response to the 2008 amendments to the EUEA, the PRC issued an order to conduct a rulemaking proceeding to amend
{5} The workshops produced a proposed rule known as "Alternative A" to amend
{6} The PRC requested public comment on Alternative A and scheduled an evidentiary hearing on the economic justificatiоn of Alternative A. The PRC stated that evidence and comments collected during the workshops would not be part of the evidentiary record for the rulemaking process.
{7} At the evidentiary hearing, the three investor-owned utility companies in New Mexico, Public Service Company of New Mexico (PNM), Southwestern Public Service Company (SPS), and El Paso Electric Company (EPE), each presented projected revenue the utility anticipated losing due to its energy efficiency programs and the projected recovery the utility would experience if the PRC werе to adopt Alternative A. SPS estimated that it would lose $2.52 million in revenue the first two years that Alternative A would be in effect, but recover $9.57 million from the Interim Adder. PNM estimated that it would lose $9.36 million in revenue the first two years that Alternative A would be in effect, but recover $12.15 million from the Interim Adder. EPE estimated thаt it would lose $2.53 million in revenue the first two years that Alternative A would be in effect, but recover $1.36 million from the Interim Adder. From these estimates, the PRC concluded that in the first two years, the Interim Adder contained in Alternative A would result in SPS receiving a profit of *456 $7.05 million, PNM a profit of $2.79 million, and EPE not receiving a profit, but failing to recover $1.16 million of its lost revenue. Each utility testified that Alternative A was a reasonable compromise that removed the disincentives to implementing energy efficiency programs. Evidence was received from several other parties, both in support of аnd opposition to Alternative A.
{8} The PRC issued a Final Order amending
II. DISCUSSION
A. Standard of Review
{9} "We review administrative orders to determine whether the Commission's decision is arbitrary and capricious, not supported by substantial evidence, outside the scope of the agency's authority, or otherwise inconsistent with law." N.M. Indus. Energy Consumers v. N.M. Pub. Regulаtion Comm'n (NMIEC),
{10} "Statutory interpretation is an issue of law, which we review de novo." NMIEC,
the provisions of a statute must be read together with other statutes in pari materia under the presumption that the legislature acted with full knowledge of relevant statutory and cоmmon law. Thus, two statutes covering the same subject matter should be harmonized and construed together when possible, in a way that facilitates their operation and the achievement of their goals.
State ex rel. Quintana v. Schnedar,
B. Just and Reasonable Rates
{11} The New Mexico Public Utility Act (PUA) defines "rate" as
every rate, tariff, charge or other compensation for utility service rendered or to be rendered by a utility and every rule, regulation, practice, act, requirement or privilege in any way relating to such rate, tariff, charge or other compensation and any schedule or tariff or part of a schedule or tariff thereof.
{12} The PRC determined that the EUEA does not require the adder rates contained in Alternative A to be cost-based. The PRC reasoned thаt by not specifying how to determine the amount of profit each utility would earn from its energy efficiency programs, the Legislature intended to leave the method of that determination to the PRC's discretion. On appeal, the PRC also suggests that the EUEA's use of the word "profit" rather than "investmеnt," when "profit" is not used in any other ratemaking statute, demonstrates the Legislature's intent to allow rates created under the EUEA to ignore the cost-based requirement of rates created under the PUA. The crux of the PRC's argument is that a rate created under the EUEA does not need to follow the ratemaking principles that must be followed when creating a rate under the PUA.
{13} When the PRC sets a rate, that rate must be "just and reasonable."
{14} We now look to the language of the EUEA to determine whether the Legislature intended a different method of determining whether a rate is "just and reasonable" when the rate is created under the EUEA. In both the legislative findings of the EUEA, Section 62-17-2(E), and the declared policy of the EUEA, Section 62-17-3, the Legislature states that disincentives to energy efficiency programs should be removed "in a manner that balanсes the public interest, consumers' interests and investors' interests." When listing the requirements of the PRC under the EUEA, the Legislature explicitly directs the PRC to identify and remove disincentives to energy efficiency programs "in a manner that balances the public interest, consumers' interests and investors' interеsts." Section 62-17-5(F).
{15} The balancing language used in the EUEA is almost identical to the balancing language used under the PUA. Both require the PRC to balance the public interest, consumers' interests, and investors' interests. We read the EUEA in harmony with the PUA to conclude that when the PRC sets a rate, the Legislature intended the balancing requirement of the EUEA to be the same as the balancing done under the PUA to determine just and reasonable rates. Cf. NMIEC,
C. Alternative A's Adder Rates
{16} Having determined that the balancing test to determine "just and reasonable" rates is the same for rates created under both the PUA and EUEA, we turn to whether the PRC followed the required balancing test in its Final Order. When determining the investor's interest, the PRC takes into account the utility's intеrest in recovering its prudently incurred costs and earning a reasonable return on its capital investments. In re PNM,
{17} The PRC "is vested with considerable discretion in determining whether a rate to be received and charged" falls within the zone of reasonableness. Hobbs Gas Co. v. N.M. Pub. Serv. Comm'n,
{18} Here, the PRC concluded that rates created under the EUEA do not need to be cost-based. The PRC did not inquire into any of the utilities' revenue requirements, nor any of the traditional elements of the ratemaking process. At the evidentiary hearing, the utilities merely presented evidence on what the impact of Alternative A would be. Without inquiring into a utility's revenue requirements, we fail to see how the PRC could adequately balance the investors' interests against the ratepayers' interests when adopting Alternative A. The PRC's adoption of the adder rates was arbitrary and unlawful in that they were not evidencebased, cost-based, nor utility specific. We conclude, therefore, that the PRC's Final Order is inconsistent with the law because the PRC had no basis in the record for determining that the adder rates contained in Alternative A wеre "just and reasonable."
III. CONCLUSION
{19} We therefore annul and vacate the PRC's Final Order due to the lack of a lawful basis in the record to support its decision. We remand this case to the PRC for further proceedings in accordance with this Opinion.
{20} IT IS SO ORDERED.
WE CONCUR: CHARLES W. DANIELS, Chief Justice, PETRA JIMENEZ MAES, RICHARD C. BOSSON, and EDWARD L. CHÁVEZ, Justices.
NOTES
Notes
[1] The PRC's Final Order also considered and rejected an Alternative B, which is not relevant to this appeal.