Tuesday, March 19, 2019

State Regulators to Re-examine PNM’s EIM Membership

By Hudson Sangree

New Mexico’s Public Regulation Commission vacated an order earlier this month that had paved the way for Public Service Company of New Mexico (PNM) to join CAISO’s Western Energy Imbalance Market by the spring of 2021.

The move surprised many. The effort for PNM to join the EIM was largely uncontroversial and received unanimous support from the PRC’s five elected commissioners on Dec. 20. But the commission decided to revisit its decision after Albuquerque’s water agency protested the December ruling and after two new commissioners were sworn in this year.

PNM doesn’t need the commission’s approval to join the EIM because it does not involve the transfer of any of the company’s assets and market participation is strictly voluntary.

Proponents say New Mexico’s ample wind and solar power would be a valuable addition to the Western Energy Imbalance Market. | U.S. Department of Energy

The case (18-00261-UT) instead dealt with PNM’s request for an order governing the accounting treatment of costs related to joining the EIM. The commission’s December order authorized PNM to recover its expenses in a future rate case.

Now, however, PNM and some environmental groups worry the PRC’s latest move could delay PNM’s membership in the EIM for another year and cost ratepayers $10 million in projected annual benefits.

“Until a new order is issued, PNM will not undertake efforts to join the Energy Imbalance Market,” Western Resource Advocates argued in an emergency motion to the PRC. “Likewise, because it takes two years of preparation to join the EIM, there is a queue to join and a deadline of April 1 in each year, unless the commission issues an order quickly. … New Mexico will lose one year of substantial economic and environmental benefits.”

The Coalition for Clean Affordable Energy joined WRA in its motion, and the Natural Resources Defense Council said in a news release that the commission’s action was a “step backwards” in state efforts to use more renewable energy.

PNM said in it was disappointed by the commission’s move.

“PNM’s decision to join the EIM was dependent on the commission’s December 2018 approval,” Thomas Fallgren, vice president of generation, said in a statement emailed to RTO Insider. “PNM has suspended all work on the Energy Imbalance Market due to today’s actions. Any further delays or changes of the December order may jeopardize our ability to reap the customer benefits.”

In a brief order Feb. 6 vacating its December ruling, the PRC did not explain the reasons for its action. It merely said it had the legal authority to rehear the case at the request of the Albuquerque Bernalillo County Water Utility Authority.

The water utility had argued that the cost-recovery decision was made too hastily by a commission that included members near the end of their terms.

“The procedural record in this case establishes that the commission only had hours to review the hearing transcript, evidence introduced into the record during the hearing, briefs filed by the [water authority], PNM and staff, and the proposed order on accounting treatment,” the water utility’s lawyers wrote in their brief.

“Given the time for this review and the voluminous record to review, a thorough review by commissioners of this material was impossible as a practical matter,” it said. “Such a rush to judgment by departing commissioners is problematic and should not bind the present commission to an ill-advised course of action.”

The water utility contended PNM should be required to file quarterly reports on its EIM benefits and shouldn’t be guaranteed a return on investment, with ratepayers bearing the risk.

“It is axiomatic that the commission is the surrogate for the marketplace, and if PNM were operating in the marketplace, rather than as a regulated monopoly, it would not be guaranteed recovery of its investments,” the water utility’s lawyers wrote in a Jan. 17 application to reopen the case.

Further action by the PRC is pending. It remained unclear if the commission will hold another hearing or, as Western Resource Advocates urged, decide the case on the record before it to expedite a decision.

CAISO, which did not comment on the PRC’s action, says the EIM has generated $565 million in benefits for its members since its founding in November 2014.

The EIM’s membership consists of CAISO, PacifiCorp, Arizona Public Service, Idaho Power, NV Energy, Portland General Electric, Puget Sound Energy and Powerex. The Los Angeles Department of Water and Power, the Sacramento Municipal Utility District and four other entities, including PNM, are scheduled to join between 2019 and 2021.

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