This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
El Paso Electric Company (EPE) purchased Renewable Energy Certificates (RECs) from Public Service Company of New Mexico (PNM) to comply with the Renewable Energy Act (REA). These RECs represented renewable energy generated by PNM but did not include the actual energy. EPE sought to recover the costs of these RECs through its automatic adjustment clause, which the New Mexico Public Regulation Commission (Commission) approved. The New Mexico Industrial Energy Consumers (NMIEC) challenged this approval, arguing that REC costs do not qualify for automatic adjustment clause recovery under the Public Utility Act (PUA) (paras 1, 7-8).
Procedural History
- NMPRC Case No. 04-00306-UT: The Commission approved EPE's 2004 renewable energy transitional procurement plan but deferred the issue of cost recovery mechanisms (para 7).
- NMPRC Case No. 05-00355-UT: EPE filed its 2005 renewable energy procurement plan, seeking approval for automatic adjustment clause recovery of REC costs. The Commission approved this recovery method in its Final Order (paras 8, 10).
Parties' Submissions
- Appellant (NMIEC): Argued that RECs do not constitute "purchased power" under the PUA and are therefore ineligible for automatic adjustment clause recovery. They contended that the Commission exceeded its authority by categorizing REC costs as "closely related to purchased power," which would render statutory limitations meaningless (paras 14, 29).
- Appellee (Commission): Asserted that RECs are "closely related to purchased power" and that the Commission has broad discretion in rate-setting. They argued that automatic adjustment clause recovery is efficient, cost-effective, and consistent with the REA and PUA (paras 15-16, 30).
- Real Party in Interest (EPE): Supported the Commission's position, emphasizing that RECs are integral to renewable energy compliance and that automatic adjustment clause recovery is the most reasonable and economical method (paras 16, 30).
Legal Issues
- Whether the "rate-making process" under the REA includes automatic adjustment clause recovery for REC costs.
- Whether REC costs, without the purchase of the associated renewable energy, qualify as "purchased power" under the PUA.
- Whether the Commission exceeded its authority by categorizing REC costs as "closely related to purchased power" for automatic adjustment clause recovery.
Disposition
- The Supreme Court of New Mexico held that EPE's REC costs are not eligible for automatic adjustment clause recovery and vacated the Commission's Final Order (para 2).
Reasons
Per Serna J. (Chávez CJ., Maes, and Bosson JJ. concurring):
- The Court interpreted the "rate-making process" under the REA to include both general rate cases and automatic adjustment clauses, depending on the type of cost involved. However, automatic adjustment clauses are limited to "taxes or cost of fuel, gas or purchased power" under the PUA (paras 18-22).
- Substantial evidence did not support the conclusion that EPE's REC costs constitute "purchased power." The RECs represented renewable energy but did not include the actual energy, and both EPE and the Commission admitted that RECs are not "purchased power" (paras 23-28).
- The Commission exceeded its authority by categorizing REC costs as "closely related to purchased power" to justify automatic adjustment clause recovery. The Court emphasized that the PUA's limitations on automatic adjustment clauses are clear and cannot be expanded by the Commission (paras 29-33).
- The Court acknowledged the efficiency and cost-effectiveness of automatic adjustment clause recovery but noted that these considerations do not override statutory limitations. The Court suggested that legislative action may be needed to harmonize the REA and PUA (paras 34-35).