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PNM official denies attempt to double-bill customers

  • May 25, 2022
The Santa Fe New Mexican

May 25—Public Service Company of New Mexico faced tough questions from the public Monday and Tuesday about when and how it decided not to issue low-interest bonds at the same time it leaves the coal-fired San Juan Generating Station later this year.

Two hearing examiners for the state Public Regulation Commission oversaw the first two days of a four-day public hearing on the issue. The case involves about $360 million in low-interest bonds that eventually will be issued through the 2019 Energy Transition Act, mainly to cover PNM's remaining costs at the San Juan power plant in northwestern New Mexico.

Some organizations contend PNM has gone back on its pledge to issue the bonds when it abandons the San Juan plant and will issue them instead when it gets approval for new customer billing rates from the commission late next year or in early 2024.

They accuse PNM of aiming to collect payments from customers for the San Juan Generating Station through ongoing monthly bills, and then collecting payments again with the issuance of the $360 million in bonds as soon as they raise rates. The accusation, then, is that PNM would double-bill customers for the capital costs it still owes at the San Juan plant.

PNM expects to leave the power plant in two phases this year, in the summer and fall. Among the issues in the case are whether those bonds must be issued at the same time PNM departs from the power plant, and whether customers at the same time would get a rate adjustment for payments they already have made for the San Juan debt.

PNM has denied it intends to double-bill.

PNM Resources President and Chief Operating Officer Don Tarry said Tuesday as far as he knew, it always was the utility's intention to issue the bonds when the next rate adjustment takes place, now 12 to 18 months away.

One of the hearing examiners Monday made it clear he believed PNM had told the Public Regulation Commission it would issue the bonds when it left the plant. Anthony Medeiros said prior hearings and testimony led the commission to believe this was the case.

"PNM informed the commission that the issuance of the bonds ... would be shortly after the abandonment" of the plant, Medeiros said.

"That's the information that we based our decision on, right?"

Medeiros continued his point while Henry Monroy, a vice president of PNM Resources, was testifying. He told Monroy it was a "moral hazard" for one organization to enter into an agreement with another and then change the plan based on its internal knowledge without informing the other party.

PNM was "sitting on information about when it's going to issue the bonds based on changed circumstances," he said.

"Did PNM ever consider whether it was creating a moral hazard?" Medeiros asked Monroy.

Monroy said he wasn't aware of such a conversation.

Mariel Nanasi, head of the nonprofit New Energy Economy in Santa Fe, asked Tarry similar questions Tuesday. "PNM did not notify anyone that the issuance of the San Juan securitization bonds were going to be delayed other than the PNMR Board of Directors ... and a few others at PNM, is that correct?" she asked. "PNM did not communicate the bond issuance delay to the PRC."

"Not that I'm aware of," Tarry responded. But he said he didn't think it should be a surprise.

PNM had planned to request a rate increase previously, Tarry and others have said, but the coronavirus pandemic and other factors delayed this.

"We've always considered them together," Tarry said of the bond issuance and the rate increase. "My belief is they were always grouped together."


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