Santa Fe-based nonprofit advocacy organization New Energy Economy and cosigners filed a lawsuit with the New Mexico Supreme Court on Monday to challenge sections of the Energy Transition Act, the new law that puts the state on track to 100% renewable resources and legislates the controversial abandonment of the coal-powered San Juan Generating Station.
The suit claims that seven distinct sections of the act violate the constitutional rights of ratepayers by restricting the authority of the Public Regulation Commission to regulate the costs of closing down the San Juan Generating Station, which will be charged to ratepayers by the Public Service Company of New Mexico, the statewide utility provider known as PNM.
Six other entities, including environmental groups, consumer advocacy groups, and a Navajo Nation Council delegate, have cosigned the lawsuit to express concern over the lack of oversight that the PRC has over PNM under the law.
"The Public Regulation Commission is tasked with regulating industries to ensure fair and reasonable rates, and to assure reasonable and adequate services to the public; yet a portion of the Energy Transition Act has removed this constitutional mandate. Although we are supportive of the clean energy transition initiatives in the ETA, we must maintain the power of the PRC to do their job," writes Adam Carlesco, a staff attorney for suit cosigner Food and Water Watch, in a petition to the court. "If these issues are not addressed now, ratepayers will be left to foot the bill to decommission fossil fuel and nuclear facilities, foisting the cost of the state's energy transition upon the general public instead of the corporations that have profited for decades."
The lawsuit asks the Supreme Court to void the sections of the ETA that dictate the securitization of PNM's debts and the powers of the PRC, and to "direct the PRC in its application of the ETA, to revert to the exercise of its traditional regulatory review of all of the matters dealing with undepreciated investments, abandonment and decommissioning, and the setting of reasonable rates for ratepayers," as stated in the suit.
In other words, if the case goes through, the parts of the bill that dictate how PNM would pass costs to ratepayers would be found unconstitutional and the independently elected PRC would be able to regulate PNM's rates as usual.
"PNM would have to prove that those are legitimate costs. And then, the PRC would have its arsenal of consumer protection tools to decide how much PNM is allowed to charge ratepayers going forward for decommissioning and other costs," New Energy Economy Executive Director Mariel Nanasi tells SFR. "The PRC would have the authority to ask, 'Will this result in just, fair, and reasonable rates? Does this fairly balance the interest of shareholders and ratepayers? Was this based on a prudence investment?'"
Nanasi says that the case will not impact any other portions of the ETA, such as the Renewable Portfolio Standards or replacement power, because the law allows that portions may be found unconstitutional and severed from the legislation without throwing out the law in its entirety.
"We deeply admire the governor's commitment to a clean energy economy, and we appreciate the hard work that legislators and advocates put into the ETA," New Energy Economny wrote in a press release earlier today.
In recent weeks the PRC moved to address replacement power separately from the issue of securitization and abandonment of the San Juan Generating Station by putting the latter in a docket that was filed before the ETA went into effect and that could exclude the law from applying to these portions. Reasons given by the PRC for doing this include concern that ratepayers will be unfairly charged for the costs of the closure.
The decision by the Supreme Court in the suit filed Monday will determine how the PRC handles the case going forward.
A PNM spokesman who contacted SFR late Tuesday says the company had not yet reviewed the filing, "but we are confident that all aspects of the Energy Transition Act are constitutional and the Legislature's energy policies will be upheld."