A group of organizations is challenging as unconstitutional provisions in New Mexico’s recently enacted renewable energy law and has asked the state’s high court to intervene.

Gov. Michelle Lujan Grisham in March signed into law the Energy Transition Act (ETA), which requires zero-emission energy in 26 years.

However, Santa Fe, NM-based nonprofit New Energy Economy (NEE) and six groups in a lawsuit filed with the New Mexico Supreme Court claim the law removes some of the authority given to the Public Regulation Commission (PRC) in the case New Energy Economy Inc. et al. v. New Mexico Public Regulation Commission, No. S-1-SC-37875.

The PRC is charged with protecting ratepayers. Investor-owned utility Public Service Company of New Mexico (PNM), which operates as a monopoly in parts of the state, serves ratepayers but it also is obligated to generate profits for its shareholders.

In addition to mandating utilities provide emissions-free power by 2045, the ETA includes a financing mechanism to ease the economic consequences of shuttering PNM’s coal-fired San Juan Generating Station by 2022.

And that is the crux of the lawsuit.

“New Mexicans have only one shield against monopoly predation and that’s review and regulation by the PRC,” said NEE executive director Mariel Nanasi. “That constitutional protection cannot be bargained away by legislators, no matter how noble their overall goals...

“The ETA exposes ratepayers to hundreds of millions of dollars in costs that would, under its provisions, escape regulatory oversight and be arbitrarily assigned to ratepayers rather than utility stockholders. This would be unconstitutional, costly and unfair.”

According to the lawsuit, seven provisions of the ETA “effectively eliminate regulatory oversight of decisions” by PNM.

PNM and other owners of the San Juan plan could recover investments in the plant by selling bonds that would be paid off by utility customers. In addition, the bonds would fund severance packages and job training for employees displaced by the closure of the plant and the coal mine used for supply.

“The ETA at its core addresses two critical energy goals for New Mexico: establishing new minimum requirements for the conversion to renewable energy resources, and adopting a mechanism for securitizing costs associated with the abandonment of old plants.”
The plaintiffs want to compel the PRC to disregard “certain unconstitutional provisions that effectively give the utility unbridled discretion to charge ratepayers whatever amount the utility decides it should receive as compensation when it closes an old plant: as an undepreciated investment, “and the amount it should receive for costs associated with decommissioning such plants.”

According to the lawsuit, sections of the ETA violate the right to due process guaranteed in the U.S. Constitution and provisions of the New Mexico Constitution and state law.

However, the NEE supports ETA’s overall aim to establish a renewable portfolio standard (RPS).

“We deeply admire the governor’s commitment to a clean energy economy, and we appreciate the hard work that legislators and advocates put into the ETA,” Nanasi said. “Our suit seeks to remedy specific constitutional and procedural problems that harm New Mexican ratepayers and jeopardize the regulatory process, while leaving the renewable portfolio standard in place...

“We believe the RPS will remain a significant achievement for the Lujan Grisham administration and the people of our state.”