PRC must protect consumers against utilities

"The PRC did not investigate why PNM’s project is so expensive and appeared unaware that costs are substantially lower elsewhere."

From the Las Cruces Sun-News, Jan. 21, 2018. by Steve Fischmann. 

In a state ravaged by poverty, keeping a lid on the cost of power is critical to struggling households and our ability to attract business and create jobs. Yet, New Mexico’s electric utilities continue a barrage of rate increase demands to pay for new investments - often in dying technologies. This in a state showing little or no growth.

As the state agency responsible for regulating electric utilities, the PRC appears impotent against the assault. They have lots to explain as we look back on 2017 and ready ourselves for the future.

The PRC recently approved PNM’s new solar generating facility at a whopping $45 per MWh despite the fact that lower bids were outstanding.

The PRC did not investigate why PNM’s project is so expensive and appeared unaware that costs are substantially lower elsewhere.

PRC, please explain!

Two new El Paso Electric gas-fired power plants that are needed for only 50 peak demand hours per year were put into operation with PRC approval at a cost of $170 million. The required energy could have been purchased on the spot market in 2017 for about $600,000. The PRC did not require El Paso Electric to compare the cost of purchasing guaranteed open market energy deliveries to the cost of building and operating the new plants.

PRC, please explain!

PNM and El Paso Electric each spend about $100 million annually on new power lines and substations. Utilities across the country have proven that big savings can be achieved by investing in energy efficiency, battery storage and peak demand shaving instead.

The PRC does not require utilities to justify the need for new power lines and substations, or to show that they are the most cost-effective way to meet power system needs. Utilities simply notify the PRC of the projects and get an average 10% annual return on the investments in their next rate increase filing. With an investment life of 40 or more years, they have one powerful incentive to overbuild.

PRC, please explain!

PNM and El Paso Electric’s legally mandated 20-year plans show construction of new gas facilities and continued operation of coal facilities at a cost of $50-$70 per MWh. Recent Colorado bids for clean wind and solar with storage range from $21-$36 per MWh. Renewables with storage can often provide comparable or superior service to fossil fuel plants.

Energy storage is treated as a novel experiment in PNM and EPE planning.

Meanwhile, utilities in the Carolinas, California, Arizona and even New Mexico’s own Los Alamos are already implementing multiple money saving uses for these technologies.

Incredibly, neither company has any comprehensive strategy to deal with the potentially huge impacts of an impending electric car boom.

PRC, please explain!

The PRC can and must do better. Adjusting priorities, requiring more transparency from utilities, better training of staff, and bringing increased order to case and information flow can go a long way towards fixing the situation.

The public deserves an agency that understands 21st century utility regulation and protects the public interest. Good governance demands it.

Steve Fischmann is a Democratic candidate for District 5 PRC commissioner and a former New Mexico state senator.

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