Should PNM or ratepayer foot the nuclear bill?

The New Mexico Supreme Court ruled Thursday to send a longstanding case between Public Service Company of New Mexico and the Public Regulation Commission regarding rate hikes back to the PRC for a second round of considerations.

Though the Supreme Court annulled the commission's initial order denying PNM the right to charge ratepayers with costs associated with the purchase of expiring leases at Palo Verde Nuclear Generating Station in Arizona and future decommissioning costs, anti-nuclear advocates still consider this a win.

The 2016 Public Regulation Commission decision was based on the finding that the utility acted with imprudence in the purchase by failing to consider other alternatives to the Palo Verde assets or demonstrating that Palo Verde was the most cost alternative option. The elected board voted that ratepayers should therefore not be subjected to paying for a potentially poor investment by the utility.

The commission's order also denied PNM the right to charge ratepayers for future decommissioning costs of the nuclear plant, including any environmental clean up costs that would be required.

In the Supreme Court opinion released earlier today, the court upheld the commission's findings that PNM made sloppy choices in renewing the leases. The opinion states "the failure to reasonably consider alternatives was a fundamental flaw in PNM's decision making process."

Yet the court annulled the commission's final order in its entirety because it found that by forcing the utility to shoulder the entire bill for future decommissioning costs, the commission denied PNM the "due process of law."

Even though this means the case goes back to the PRC, the commission will have to come up with a new order that is "consistent with this opinion," the Supreme Court states. PNM lost the appeal on all arguments but one.

"This is a huge victory because it says that the PRC has the authority and the constitutionally mandated responsibility to regulate PNM," says New Energy Economy Director Mariel Nanasi, who brought arguments against PNM in the PRC's initial hearing on the case.

"If you would have spent that money on solar and wind closer to Santa Fe and Albuquerque, there would be many more benefits," Nanasi tells SFR by phone. "It doesn't make sense at all for ratepayers to be investing in nuclear in Arizona when we could have this alternative that is cheaper, better for the environment, safer for our water, better for New Mexico jobs, and that doesn't have this nuclear waste associated with it."

For its part, PNM also sees the case as a partial victory.

"We are pleased with the ruling in favor of PNM on one of the four key issues we appealed to the court. We are disappointed with the outcome of the appeal of the other three issues.  We are reviewing the court's opinion and assessing options on how to proceed," PNM tells SFR in an emailed statement. "At the conclusion of the 2015 rate case, the disallowed revenue items were never in customers' rates and were never collected. Today, customers' rates are being collected in accordance with the subsequent 2016 rate order that was never part of this appeal. "

As SFR reported earlier this month, PNM and New Energy Economy are among parties still waiting on the Supreme Court's ruling on a case heard on May 7 regarding whether PNM gave independent energy producers a fair chance to bid on new solar projects in the utility's 2018 renewable energy portfolio procurement plan. As in the Palo Verde case, Nanasi argued that ratepayers were getting the short end of the deal due to PNM's failure to consider a wide variety of options for producing New Mexico's electricity. An industry group also appealed the case for different reasons.