Commentary: In PRC Commissioner Stephen Fischmann’s January 17thNew Mexican op-ed, “Adjustments Will Protect New Mexico Consumers,” he argues that New Mexico needs to “fix” two parts of recently-passed energy laws. He is flat out wrong and what makes matters worse is why he’s wrong: Fischmann is wrong on the most basic facts. It’s worth noting that Commissioner Fischmann opposed last year’s statewide Constitutional Amendment which New Mexican voters overwhelmingly approved, transforming our state’s Public Regulation Commission from an elected body of politicians to one comprising qualified experts on energy, utilities, and telecommunications.
Fischmann is wrong about the need to “fix” NM’s leading environmental laws. The laws are fine. The problem is commissioners that don’t know what they are doing.
New Mexico’s recent energy laws have been extremely successful in supporting clean energy and protecting ratepayers at the same time. As PNM’s San Juan coal-fired generation case under the Energy Transition Act showed, coal plant pollution will be stopped, millions in economic development will be provided to impacted communities, hundreds of megawatts of renewable energy will replace the coal plants, and rates will drop nearly ten percent. In media outlets and trade journals around the country, New Mexico has been recognized as a national leader in electricity policy because of the ETA.
Fischmann’s first “fix” isn’t needed. He argues the ETA stripped the PRC of that authority to disallow imprudent coal plant costs by utilties. But that’s simply not true. Fischmann even signed a PRC order establishing that the Commission retained its authority under the ETA to review and address utility imprudence:
[A]s required by the ETA, the decision would establish a process to adjust PNM’s base rates in the future to reconcile any differences between the estimated costs recovered in the bonds and PNM’s actual costs. This process would include the opportunity to review the reasonableness and prudence of costs that have not, prior to this case, already been reviewed for reasonableness and prudence.
With the exception of New Energy Economy, no party to the San Juan case, including PNM, challenged this finding. Fischmann has either neglected to read the order he signed, or he forgot what he did. In either case, the problem is not the law, it’s the commissioner.
Fischmann’s second “fix,” to decoupling, again shows that he lacks an understanding of what he is proposing. He argues that decoupling takes away a utility’s risk, so the PRC should reduce the utility’s earnings to reflect that lower risk. He is wrong.
Decoupling requires a utility to lower rates when sales go up (e.g. hotter years), and increase rates when sales drop (e.g. cooler years or because of energy efficiency). That ensures customers pay no more than what the PRC approved, and also means that in hotter years customers will pay less, and utilities will earn less. In other words, decoupling changes, but does not eliminate, the risks and rewards of utility service. And it does so in a way that helps customers. Many states have adopted decoupling and most have found that either it does not affect a utility’s risks at all, or that the impact is trivial. What Fischmann’s fix would do, though, is discourage New Mexico utilities from providing important and successful energy efficiency programs, that save customers money because they use less energy. That makes no sense..
There’s the old adage “if it ain’t broke don’t fix it.” Fischmann’s unnecessary fixes should be rejected. It’s not New Mexico law that needs to be fixed, it’s regulators that don’t understand their job.
There’s another adage that is relevant: garbage in, garbage out. This is the same PRC that tried to charge Facebook--and its thousands of jobs—$60 million for a transmission line that Facebook was going to pay for anyway; rejected a community solar proposal by El Paso Electric that would have lowered rates for low income residents; and refused to implement the nation-leading ETA law that catapulted New Mexico into the nation’s leader on clean energy, until the Supreme Court required them to do so.
Thankfully, voters decided to replace our broken, unqualified PRC with a professional, qualified body starting in 2023. We look forward to that transition.