This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
The case concerns the prudence of costs incurred by the Public Service Company of New Mexico (PNM) in its 10.2% ownership interest in the Palo Verde Nuclear Generating Station. The New Mexico Public Service Commission (PSC) reviewed the rate treatment of these costs in a three-phase process. The Attorney General (AG) challenged the PSC's decision to approve a stipulation between PSC staff and PNM, arguing it was procedurally flawed and unsupported by substantial evidence (paras 1-3).
Procedural History
- In the Matter of the Adjudication of Alternatives to the Inventorying Ratemaking Methodology, and/or Plans for the Phasing in of Public Service Company of New Mexico's Excess Generating Capacity (No. 18,381 and No. 18,415): The PSC's decision to exclude certain generating capacities from PNM's rate base was affirmed (para 2).
- PSC Prudence Order, 110 P.U.R. 4th 69 (NMPSC 1990): The PSC approved a stipulation between its staff and PNM, disallowing $90 million from PNM's rate base and imposing performance standards on Palo Verde operations (paras 3, 23).
Parties' Submissions
- Appellant (Attorney General): Argued that the PSC improperly terminated a hearing on the merits by approving a stipulation negotiated between PSC staff and PNM, excluding the AG from settlement negotiations. The AG contended this violated due process and that the prudence order lacked substantial evidence (paras 3-6).
- Appellees (PSC and PNM): Asserted that the AG was given ample opportunity to participate in settlement negotiations and hearings. They argued that the stipulation was fair, just, and reasonable, supported by substantial evidence, and consistent with public interest (paras 4-8, 16-18).
Legal Issues
- Did the PSC violate due process by approving a stipulation negotiated between its staff and PNM without the AG's participation?
- Was the PSC's prudence order supported by substantial evidence?
- Did the PSC have the authority to approve the stipulation under its statutory powers?
Disposition
- The Supreme Court of New Mexico affirmed the PSC's prudence order in its entirety (para 28).
Reasons
Per Sosa CJ (Montgomery and Franchini JJ. concurring):
Due Process: The Court found that the AG was given reasonable notice, an opportunity to participate in settlement negotiations, and a full opportunity to present his case during the five-week hearing on the stipulation's fairness. The AG's exclusion from settlement negotiations did not violate due process as he was afforded procedural safeguards during the hearing (paras 4-6, 16-17).
Substantial Evidence: The Court held that the PSC's prudence order was supported by substantial evidence, including testimony and discovery presented during the hearings. The stipulation was independently reviewed and found to be fair, just, and reasonable (paras 18, 23-24).
Statutory Authority: The Court determined that the PSC had broad statutory authority to regulate utility rates and approve settlements. The PSC's rules explicitly allowed staff to negotiate settlements, and this practice was consistent with national regulatory standards (paras 7-8, 13).
Public Interest: The Court emphasized that the PSC's decisions across the three phases of the case, including the prudence order, served the public interest by excluding imprudent expenditures and reducing PNM's rates. The AG did not challenge the $90 million disallowance or the performance standards imposed on Palo Verde operations, further supporting the fairness of the outcome (paras 23-26).
The Court concluded that the PSC acted within its authority, followed proper procedures, and reached a decision that promoted the public good (paras 25-28).