Energy advocates call Supreme Court ruling a win for utility customers

May 14—A recent New Mexico Supreme Court decision is a win for New Mexicans paying for electricity in the eyes of an energy activist organization. Another clean energy advocate called it a win-win for both utilities and customers, which can be a rare occurrence.

They ultimately think the court opinion will protect people from paying more for electricity, possibly even lowering bills.

On Monday, the court released a unanimous opinion that overturned an order from the New Mexico Public Regulation Commission relating to how utilities can recover energy costs through the Efficient Use of Energy Act.

The Efficient Use of Energy Act lays out how utilities can recover costs for energy efficiency and load management programs — with approval from the PRC — since programs encouraging lower energy usage would decrease utility revenues. It's called revenue decoupling.

In a 2020 PRC case, the Public Service Company of New Mexico filed a request with the PRC to recover energy efficiency costs, asking for a full return of all revenue through customer bills.

However, the PRC in its interpretation of the Efficient Use of Energy Act decided in 2022 that PNM isn't guaranteed a full decoupling but rather a partial decoupling, meaning the utility would only get to recover some of the lost revenue.

PNM, the Coalition for Clean Affordable Energy and the Renewable Energy Industries Association of New Mexico appealed the PRC decision.

The state Supreme Court disagreed with the PRC's interpretation. The Efficient Use of Energy Act provides for full decoupling, according to the court decision released Monday.

"We see no injustice, absurdity or contradiction in that clearly expressed legislative intention," Justice Michael E. Vigil wrote in the opinion.

However, the court wrote, the PRC still has the power to ensure rates are fair, just and reasonable, which is part of the commission's mission statement.

"The commission must balance the interests of the public, consumers, and investors before approving a full revenue decoupling mechanism ... by ensuring that the mechanism will result in just and reasonable rates," the opinion states.

And that's exactly what the PRC aims to do.

"We appreciate the guidance from the state Supreme Court and will continue to work to uphold the law and serve New Mexicans by ensuring just and reasonable rates that fairly balance the public interest," PRC spokesperson Patrick Rodriguez said via email.

Cara Lynch is an attorney at the Coalition for Clean Affordable Energy. She said the court case boils down to two main things.

The first, she said, is the Efficient Use of Energy Act means full decoupling.

And the second and more nuanced, Lynch said, is a mandate for full decoupling doesn't remove the PRC's role to ensure utility rates are just and reasonable.

"Various parties had argued that the commission's role in determining just and reasonable rates was limited by a mandate for full decoupling," she said.

She said it's a win-win for utilities and utility customers.

"Ratepayers will not likely see an increase in their current bills due to energy efficiency, and now utilities will not see energy efficiency as getting in the way of their business model," she said.

New Energy Economy Director Mariel Nanasi voiced a similar sentiment. Nanasi, whose organization intervened in the case, said she thinks the opinion will lead to New Mexicans paying less for electricity while participating in energy efficiency or load management programs.

"So the case was overturned in front of the commission, but the most important public economic protection for ratepayers was upheld," she said.

Lynch said the PRC now needs to revisit the order to amend it to recognize full decoupling.

PNM spokesperson Kelley-Ranae Huber said in an email that PNM is going to assess options regarding potential filings for the commission's final decision.

"We appreciate the New Mexico Supreme Court's guidance regarding decoupling mechanisms and respect the need for the New Mexico Public Regulation Commission to engage in its process for issuing a final order that is consistent with the court's opinion," she said.