Proposed Optional Clean Energy Standard

Notes PRC Meeting 10-4-12

By James Crawford

We attended a regular Public Regulation Commission (PRC) meeting on October 4, 2012. The main reason we went was to participate in the workshop on proposed Optional Clean Energy Standard for NM. This was the first regular PRC meeting that we have attended and it was interesting. All of the commissioners were present except for commissioner Marks who participated by telephone. Some of my observations about the meeting were:

  • The meeting was well run and parliamentary procedures followed well. The public had opportunity to comment where appropriate.
  • One item of business was dealing with a formal complaint by some members of the Jemez Mountains Electric Cooperative about corruption and asking for an audit. It turns out PRC does not have authority to order an audit as requested but they did agree to consider the issues in the upcoming rate case hearings. The interesting thing was that the coop is being affected by increasing demands for rights of way payments across pueblo lands that may bankrupt the cooperative or at least drastically increase rates.
  • Another item of business was discussion of a 3.45% surcharge on our phone bills to fund the State Rural Universal Service Fund. Look on your phone bill and you will see it along with a similar charge for a similar federal program. The SRUSF is to ensure availability of local telecommunications at affordable rates in rural areas. Rural rates are to be equal to urban rates. This is another spread the wealth program that I was shocked to find out about. The SRUSF has a balance of around $2 million and is administered by a third party by the name of Solix, Inc. The increased surcharge is needed because the fund may run out of money. However, the PRC recently transferred $1 million to another share the wealth program called Lifeline Telephone Assistance Program which helps low income folks pay their phone bills. The surcharge passed 4 to 1 with Commissioner Lyons voting no. He has concerns about who is getting the money and that much of it is not going to rural areas.

The regular meeting adjourned and then the workshop commenced.

The workshop was to comment on a proposed Optional Clean Energy Standard for NM

This proposal was brought upon a petition by Steven Michel of Western Resource Advocates and 32 other environmental groups. The proposed rule is basically the same proposal previously considered, approved, and repealed by the Environmental Improvement Board. It is basically the New Energy Economy proposal we tracked through 3 years of EIB hearings.

The proposal provides for electric companies to sign up for “voluntary” carbon reduction. Once they sign up, they are committed to a 3% per year reduction of CO2 emissions for the next 20 years. The “voluntary” commitment is irrevocable. It also includes Michel’s standard language about credits with no way to administer such a program. One new wrinkle to increase costs is a requirement to provide supplementary payments to the energy efficiency fund over and above that required by the Energy Efficiency Act. The extra contribution increases every year forever since there is no end date.

Comments were requested on PRC authority to implement and about the rule itself. Comments that I made on the proposal follow:

Authority: The first question was whether or not PRC has statutory authority to implement the proposed clean energy program. I have no legal background but I suspect there is no authority for PRC to control emissions. The PRC staff only has to review the litany of litigation involving this proposal under EIB which challenges even EIB’s authority to implement this program. A key piece of legislation (HB78) was defeated in the 2009 legislature which was meant to clear up EIB’s authority to regulate CO2 emissions. Authority for this kind of rule is murky at best.

The Rule: This proposal is ridiculous on its face with the same serious flaws it has always had.

  • It puts the fox in charge of the hen house. Utility companies will be basically setting our rates. “Utilities would be guaranteed reimbursement of all reasonable costs” (Findings and Conclusions 1), (17.9.571.11). Companies can invest in emissions reduction investments whether needed or not and pass the cost on to us ratepayers guaranteed. This could easily set up unfair rates between companies and between NM and adjoining states.
  • Optional is not really optional. Once a utility signs on, they are making an “irrevocable” (17.9.571.7 N) commitment for the next 20 years to reduce CO2 emissions 3% per year (17.9.571.8 A). That is an irrevocable commitment to reduce CO2 emissions by 60% or in a practical sense stop producing electricity.
  • The 60% reduction cited above includes no provision for population and load growth. The 60% reduction is based on CY 2014 emission levels. As population and load increase over the next 20 years, the effect of the 60% reductions on a utility’s ability to produce electricity will in reality be much greater. There is no possible way for renewables to fill this gap.
  • Who will certify and account of the credit provisions (17.9.517.9)? PRC is certainly not equipped to do this. There are no 3rd parties locally who can certify credits. This was one of the big bones of contention when this same proposal was in front of EIB. NMED was not equipped for the complexity of certification and accounting for credits. NMED was going to have to rely on certification by the state of California. Without certification, accounting and auditing, carbon credits are an invitation to fraud.
  • Electric rates will skyrocket under this proposal. There is no plausible scenario where rates will go down.
  • The rate increase is made even worse by the ever increasing required additional low income energy efficiency contribution that starts at $50 and increases $1 per year forever (17.9.571.7 G).

Rate Rape: Commissioner Lyons used this term to describe what is going on with the State Rural Universal Fund. However, it is an excellent term to describe what is happening to us average ratepayers from all angles. This clean energy standard proposal is just one of many examples of rate rape such as:

  • NM Renewable Portfolio Standard
  • Diversified renewable portfolio standard
  • Efficient Use of Energy Act
  • Regional Haze Rules
  • State Rural Universal Service Fund
  • Winter disconnect moratoriums
  • Plethora of EPA regulations
  • Pending proposal to give PRC authority to allow utilities to establish socialized rates based on level of income
  • Etc., etc, etc. The list is endless as we find out about new regulations and programs.

This proposal has already seen more daylight than it should have. It should immediately be relegated to the trash heap of discarded petitions.

Following are some of my observations on other comments presented at the workshop:

  • SW Public Service Company and El Paso Electric had reviewed the proposal and were prepared with some good comments. They dissected the cited legal authorities, pointed out conflicts with other regulations both local and national, and pointed out the inability of PRC to administer a credit program.
  • PNM and the other companies were unprepared and gave very tepid comments. PNM even suggested some kind of joint action between PRC and EIB.
  • The attorney general’s representative suggested that PRC did not have authority to control carbon emissions and that to do so would create conflicts in other rate cases.
  • The PRC staff member said the PRC could possibly have some jurisdiction but probably not.
  • The usual enviro doctor told us about all the Indians dying because of the San Juan Generating Station
  • A greenie from CO unloaded on us over the phone about wind and solar salvation and water availability. It is always nice to have folks from next door telling us what to do!
  • Steve Michel gave us all the reasons why this will save the planet and not cost us a dime.