"Steve Fischmann, a former state senator from Las Cruces who's challenged the company's long-range plan, contended the company could rely on more solar-generation and purchased electricity instead of building new natural gas-fueled power stations."
From Las Cruces Sun-News, September 23, 2016. by Diana Alba Soular
LAS CRUCES - Las Cruces and Doña Ana County officials on Tuesday rehashed what they hailed as a big success against utility El Paso Electric Co.'s proposal for high rate hikes in southern New Mexico.
But they said their work in advocating for Doña Ana County residents isn't over because cases of a different — but related — nature are still pending before New Mexico utility regulators and the private company is planning to file another rate hike request next year.
El Paso Electric Co. didn't make a presentation to the joint meeting of the City Council and the County Commission at the Doña Ana County Government Center, but did confirm that an additional rate case is planned in New Mexico to pay for new infrastructure.
In July, a slight rate increase did take effect as a result of the New Mexico Public Regulation Commission's decision on a rate case earlier in the year. But they were much less than the electric company initially sought, advocates emphasized. The company had asked for a $8.6 million revenue increase per year, but was granted a $1.1 million increase. For residential ratepayers, it had asked for a 9 percent increase, but received about a 1.3 percent hike.
The utility serves about 94,500 customers in south-central New Mexico.
The city attorney's office said the city spent about $400,000 contesting the rate-hike proposal. The county legal department, which also formally intervened in the proceeding before the PRC, said the county spent about half of that: A total of $86,504 was spent on attorney's fees and $110,266 was spent on expert witness fees.
Presenters Tuesday told city and county officials that their involvement in the rate hike case led to the smaller rate hike. Had the company's assertions in the case been unchallenged, the increases could have been substantially bigger, they said.
"This is the first case in my memory or anyone's memory whether there was strong intervention in an El Paso Electric Co. case," said Jason Marks, a former PRC commissioner, told the city council and county commission.
Several elected officials expressed support for the city and county continuing to hire attorneys and experts to intervene in El Paso Electric proceedings. However, there was disagreement about whether they should rely on the same attorney and share the fees, or use separate legal counsel and pay fees independently.
Las Cruces Mayor Ken Miyagishima said he favors the city continuing to pay the expense. While the city spent $400,000 in the rate case, the ultimate savings to ratepayers was $75 million over 10 years, he said.
"I think we need to stay the course and keep our teams intact," he said.
Attorney Nann Winter is representing both the city and the county in three pending cases at the PRC. Consumer advocates said they've focused their attention on one case in particular, which deals with a long-term infrastructure plan by El Paso Electric, which they believe could have future ramifications to customers' rates.
The 20-year plan, called the Integrated Resource Plan, is likely to reach a hearing before the PRC in the start of 2017, Winter said.
Merrie Lee Soules, who's an intervenor in the case, said the long-range plan is a crucial document that can factor into future rate hike proposals. That's because if a proposed new power-generating facility is incorporated into the plan, it becomes an "assumption" going forward. So, anyone challenging a rate hike to pay for the given infrastructure would have to argue against it in the formal proceeding, rather than the company having to justify the need for it, she said.
"They'd have to prove that it's not a good idea," said Soules, also the Democratic candidate for U.S. representative in southern New Mexico.
Soules said the company's profit margin hinges upon having "non-depreciated" assets, essentially new power-generating facilities. That doesn't give incentive to maintain existing facilities that still function — and have unused generating capacity — but have depreciated in value, she said. She likened the situation to deciding to buy a new personal vehicle, rather than keeping an older vehicle that's functional.
"I'd rather keep the old car and drive it," she said.
El Paso Electric Co., in its plan, states that the "majority of EPE's generating facilities have been in service for a significant number of years." Out of 17 active power-generating units across both major and minor generation plants, nearly 50 percent are slated to be retired in the 2020s, 12 percent are set to be retired in the 2030s, 18 percent are scheduled to be retired in 2040s, and 24 percent are scheduled to be retired in the 2050s, according to the plan. One facility can contain multiple generation units.
EPE spokesman George De La Torre said the average age of the local generating facilities is 47 years old, "and they are reaching or have reached their useful life cycle, which requires us to invest in newer, more efficient units."
"We maintain our existing facilities with the objective of extending their useful life as much as possible," he said. "However, there comes a point where the units becomes so inefficient that the cost to run and maintain no longer make financial or operational sense. We are also seeing a change in customer demand that requires the need for new technology that can start up quickly to meet the growing usage of renewables, which can cause fluctuations at a moment’s notice.
"We have a responsibility to meet the energy demand of our customers and that requires that we continue to make cost-effective investments in order to do so. It is also important to note that we cannot build new units without (Public Regulation) Commission approval first, and that process is fully vetted, very similar to a rate case."
The demand spikes from people who use solar-generated systems happen when the weather is cloudy or it's nighttime, and homes must turn to the electric company for power, De La Torre said.
Critics also have taken aim at the plan for not including specifics about boosting renewable energy sources. The plan states that 1 percent of the company's energy mix in 2014 stemmed from company-owned renewable energy generation, while 2 percent was from purchased renewable power.
De La Torre said those figures are for the company's operation in both states. When New Mexico alone is considered, the company met a 2015 requirement to have 15 percent of its energy portfolio stem from renewable sources, he said. He contended the Integrated Resource Plan is "a broader process which encompasses all resource planning by EPE, not simply renewables."
"EPE needs to procure a generation mix that is dependable," he said, noting that solar-generation units on homes don't produce electricity 24-7. "Recently, EPE completed a fleet of natural gas-fired local generating plants with quick start and cycling capabilities that was evaluated and approved by the Commission in EPE’s IRP process. That process also resulted in EPE procuring power from a large solar generation plant. These new gas-fired plants reach full generating capacity within 10 minutes from a cold start, and have replaced less efficient generation which could take up to 7 hours to be fully functioning."
Another rate-hike case
In addition to the IRP case, an El Paso Electric case related to renewable energy and a case tied to street-light charges are pending at the PRC, according to Winter. The next rate hike case by the company is likely to be filed in February, with the objective of new rates taking effect in January 2018, she said.
De La Torre confirmed the company is expecting to file "new rate cases in Texas and New Mexico in early 2017 in order to recover the cost of two of the new generating units at the Montana Power Station, which began operating in 2016, and to remove the cost of operating the Four Corners coal plant, which EPE exited this year."
Steve Fischmann, a former state senator from Las Cruces who's challenged the company's long-range plan, contended the company could rely on more solar-generation and purchased electricity instead of building new natural gas-fueled power stations. He urged the city and county to "stay involved" in the multiple PRC cases.
Several elected officials praised Winter's work, saying the city and county should stay engaged in the interventions at the PRC level.
"I believe what we've most come away with is we need to continue our efforts," said County Commission Chairman Wayne Hancock.
Hancock also said he thinks the county should look into creating a renewable energy district.
Commissioner David Garcia said there's no way residents in a number of the county's colonias would have had the resources to challenge El Paso Electric's rate hike case, which is why the county's involvement is important.
"We better be on the watch out to every move that they have," he said.
Miyagishima suggested the city council and county commission meet in December to get another update on the electric company's cases.
Diana Alba Soular may be reached at 575-541-5443, [email protected] or @AlbaSoular on Twitter.
El Paso Electric generating facilities
• Palo Verde Nuclear Generating Station near Phoenix — EPE has a 15.8 percent ownership of Units 1, 2 and 3 of the station
• The Rio Grande Power Plant (natural gas-fueled)
• Newman Power Plant (natural gas-fueled)
• Montana Power Station (natural gas-fueled)
• Copper Power Plant (natural gas-fueled)
• Five solar-generation systems located at the Rio Grande Power Plant, Newman Power Plant, Wrangler Substation, the El Paso Community College Val Verde Campus, and the rooftop of EPE's headquarters in El Paso
Source: El Paso Electric Co.'s proposed Integrated Resource Plan