A. At any hearing involving an increase in rates or charges sought by a public utility, the burden of proof to show that the increased rate or charge is just and reasonable shall be upon the utility.
B. Unless the commission otherwise orders, no public utility shall make any change in any rate that has been duly established except after thirty days' notice to the commission, which notice shall plainly state the changes proposed to be made in the rates then in force and the time when the changed rates will go into effect and other information as the commission by rule requires. The utility shall also give notice of the proposed changes to other interested persons as the commission may direct. All proposed changes shall be shown by filing new schedules that shall be kept open to public inspection. The commission for good cause shown may allow changes in rates without requiring the thirty days' notice, under conditions that it may prescribe.
C. Whenever there is filed with the commission by any public utility a complete application as prescribed by commission rule proposing new rates, the commission may, upon complaint or upon its own initiative, except as otherwise provided by law, upon reasonable notice, enter upon a hearing concerning the reasonableness of the proposed rates. If the commission determines a hearing is necessary, it shall suspend the operation of the proposed rates before they become effective but not for a longer initial period than nine months beyond the time when the rates would otherwise go into effect, unless the commission finds that a longer time will be required, in which case the commission may extend the period for an additional three months. The commission shall hear and decide cases with reasonable promptness. The commission shall adopt rules identifying criteria for various rate and tariff filings to be eligible for suspension periods shorter than what is allowed by this subsection and to be eligible for summary approval without hearing.
D. If after a hearing the commission finds the proposed rates to be unjust, unreasonable or in any way in violation of law, the commission shall determine the just and reasonable rates to be charged or applied by the utility for the service in question and shall fix the rates by order to be served upon the utility or the commission by its order shall direct the utility to file new rates respecting such service that are designed to produce annual revenues no greater than those determined by the commission in its order to be just and reasonable. Those rates shall thereafter be observed until changed, as provided by the Public Utility Act [Chapter 62, Articles 1 to 6 and 8 to 13 NMSA 1978].
E. Except as otherwise provided by law, any increase in rates or charges for the utility commodity based upon cost factors other than taxes or cost of fuel, gas or purchased power, filed for after April 4, 1991, shall be permitted only after notice and hearing as provided by this section. The commission shall enact rules governing the use of tax, fuel, gas or purchased power adjustment clauses by utilities that enable the commission to consider periodically at least the following:
(1) whether the existence of a particular adjustment clause is consistent with the purposes of the Public Utility Act, including serving the goal of providing reasonable and proper service at fair, just and reasonable rates to all customer classes;
(2) the specific adjustment mechanism to recover tax, gas, fuel or purchased power costs;
(3) which costs should be included in an adjustment clause, procedures to avoid the inclusion of costs in an adjustment clause that should not be included and methods by which the propriety of costs that are included may be determined by the commission in a timely manner, including what informational filings are required to enable the commission to make such a determination; and
(4) the proper adjustment period to be employed.
F. Except as otherwise provided by law, any increase in rates or charges for a public utility as defined in Paragraph (3) of Subsection G of Section 62-3-3 NMSA 1978 based upon cost factors other than taxes or cost of fuel, gas, purchased power or acquisition of water resources shall be permitted only after notice and hearing as provided by this section. For the purposes of this subsection, "acquisition of water resources" does not include the purchase or other permanent acquisition of water rights. The commission shall enact rules governing the use of tax, fuel, gas, purchased power or water resource acquisition adjustment clauses by such utilities that enable the commission to consider periodically at least the following:
(1) whether the existence of a particular adjustment clause is consistent with the purposes of the Public Utility Act, including serving the goal of providing reasonable and proper service at fair, just and reasonable rates to all customer classes;
(2) the specific adjustment mechanism to recover tax, gas, fuel, purchased power or acquisition of water resource costs;
(3) which costs should be included in an adjustment clause, procedures to avoid the inclusion of costs in an adjustment clause that should not be included and methods by which the propriety of costs that are included may be determined by the commission in a timely manner, including what informational filings are required to enable the commission to make such a determination; and
(4) the proper adjustment period to be employed.
G. The commission may eliminate or condition a particular adjustment clause if it finds such elimination or condition is consistent with the purposes of the Public Utility Act, including serving the goal of providing reasonable and proper service at fair, just and reasonable rates to all customer classes; provided, however, that no such elimination or condition shall be ordered unless such elimination or condition will not place the affected utility at a competitive disadvantage. The commission rules shall also provide for variances and may provide for separate examination of a utility's adjustment clause based upon that utility's particular operating characteristics.
H. Whenever there is filed with the commission a schedule proposing new rates by a rural electric cooperative organized under the Rural Electric Cooperative Act [Chapter 62, Article 15 NMSA 1978] or by a foreign distribution cooperative, the rates shall become effective as proposed by the rural electric cooperative or the foreign distribution cooperative without a hearing, except as provided in this subsection. The rural electric cooperative or the foreign distribution cooperative shall give written notice of the proposed rates to its affected patrons in New Mexico at least thirty days prior to the filing with the commission. Upon the filing with the commission of a protest setting forth grounds for review of the proposed rates signed by the lesser of one percent of or twenty-five members of a customer rate class of the rural electric cooperative or foreign distribution cooperative and if the commission determines that there is just cause for reviewing the proposed rates on one or more of the grounds of the protest, the commission shall suspend the rates and conduct a hearing concerning the reasonableness of any proposed rates filed by a rural electric cooperative or a foreign distribution cooperative pursuant to Subsections C and D of this section. The protest shall be filed no later than twenty days after the filing with the commission of the schedule proposing the new rates. The hearing and review shall be limited to the issues set forth in the protest and for which the commission may find just cause for the review, which issues shall be contained in the notice of hearing. The provisions of this subsection shall not be construed to affect commission authority or procedure to regulate the sale, furnishing or delivery by wholesale suppliers of electricity to rural electric cooperatives or foreign distribution cooperatives pursuant to Section 62-6-4 NMSA 1978. In addition to the adjustments permitted by Subsections E and G of this section, the commission may authorize rate schedules of rural electric cooperatives and foreign distribution cooperatives to recover, without notice and hearing, changes in the cost of debt capital incurred pursuant to securities that are lawfully issued. This subsection shall not apply to any foreign distribution cooperative that proposes rates for any of its customer rate classes in the state that are higher than the rates it charges to the same or substantially similar customer rate class in the state under the laws of which the foreign distribution cooperative is organized. For the purposes of this subsection:
(1) "foreign distribution cooperative" means a rural electric distribution cooperative corporation serving its members at retail and transacting business in New Mexico pursuant to the authority granted under Section 62-15-26 NMSA 1978;
(2) "member of a foreign distribution cooperative" means a retail customer in New Mexico serviced by a foreign distribution cooperative; and
(3) "member of a rural electric cooperative" means a member as defined by the Rural Electric Cooperative Act.
History: 1978 Comp., § 62-8-7, enacted by Laws 1991, ch. 251, § 1; 1998, ch. 108, § 48; 2003, ch. 416, § 4; 2007, ch. 186, § 1; 2011, ch. 155, § 1; 2011, ch. 170, § 1.
ANNOTATIONSRepeals and reenactments. — Laws 1991, ch. 251, § 1 repealed former 62-8-7 NMSA 1978, as amended by Laws 1985, ch. 221, § 2, relating to change in rates, and enacted the above section, effective April 4, 1991.
Compiler's notes. — Sections 62-8-1 to 62-8-9 of the Public Utility Act are still effective as the repeal of Chapter 62, Article 6 by Laws 1998, Chapter 108, Section 82, effective July 1, 2003 Chapter 108, Section 82 was repealed prior to taking effect by Chapter 23, Section 1, Laws 2003. Although Laws 2003, Chapter 336, Section 8, amended Laws 1998, Chapter 82, as amended, an amendment of a repealed section is ineffective. See Quintana v. N.M. Dep't of Corrs., 100 N.M. 224, 668 P.2d 1101 (1983). Laws 2003, Chapter 416, Section 5 also repealed Laws 1998, Chapter 108, Section 82, as amended, a second time, however, that repeal is of no effect as the section had previously been repealed by Chapter 23, Section 1, Laws 2003.
2011 Multiple Amendments. — Laws 2011, ch. 155, § 1 and 2011, ch. 170, § 1 enacted different amendments to this section that can be reconciled. Pursuant to 12-1-8 NMSA 1978, 2011, ch. 170, § 1, as the last act signed by the governor, is set out above and incorporates both amendments. The amendments enacted by Laws 2011, ch. 155, § 1 and 2011, ch. 170, § 1 are described below. To view the session laws in their entirety, see the 2011 session laws on NMOneSource.com.
Laws 2011, ch. 170, § 1, effective July 1, 2011, in Subsection G, permitted foreign distribution cooperatives to increase rates, without a hearing, if the proposed rates are not higher than the rates the cooperative charged in the state in which it is organized; permitted the commission to suspend the cooperative's rates if there is a protest by the specified number of customers; and added definitions of "foreign distribution cooperative" and "member of a foreign distribution cooperative".
Laws 2011, ch. 155, § 1, effective July 1, 2011, added Subsection F to permit water utilities to increase rates, without notice and hearing, based on taxes, the cost of fuel, gas and purchased power, and the cost to purchase or acquire permanent water rights.
The 2007 amendment, effective July 1, 2007, in Subsection G, required that a petition for hearing be signed by the lesser of one percent or twenty-five members of a customer class.
The 2003 amendment, effective July 1, 2003, substituted "that are lawfully issued" for "the issuance of which are approved by the commission" following "pursuant to securities" in Subsection G.
The 1998 amendment, effective January 1, 1999, deleted "as provided in this section" near the beginning of Subsection A; in Subsection B, substituted "that" for "which" at the beginning and inserted "and other information as the commission by rule requires" near the middle; rewrote Subsection C; in Subsection E, substituted "April 4, 1991" for "the effective date of this section" near the middle and deleted "and regulations" preceding "shall enact rules" near the end; and added Subsection F, redesignated former Subsection F as Subsection G and made minor stylistic changes in Subsection G.
Franchise fees are not items included in adjustment clauses. — Franchise fees charged by counties pursuant to Section 62-1-3 NMSA 1978 are not within the jurisdiction of the public regulation commission by analogy to fuel and purchased power adjustment clauses, over which the commission has jurisdiction under Section 62-8-7 NMSA 1978. El Paso Elec. Co. v. N.M. Pub. Regulation Comm'n, 2010-NMSC-048, 149 N.M. 174, 246 P.3d 443.
Denial of due process. — Where PNM appealed the New Mexico public regulation commission's (commission) denial of recovery in its rate base for the repurchase of 64.1 MW of capacity and certain lease renewals at Palo Verde nuclear generating station (Palo Verde), and where the commission found that PNM's actions in renewing and reacquiring the leases exposed ratepayers to costs associated with nuclear decommissioning responsibilities that likely would not have been incurred had an alternative resource other than nuclear been selected and denied recovery for all future nuclear decommissioning costs, the commission denied PNM's right to due process of law, because PNM was not given sufficient notice of a potential permanent disallowance of all recovery for its future contributions to the nuclear decommissioning trusts and was not afforded an opportunity to be heard on the issue.. Public Serv. Co. of N.M. v. N.M. Pub. Regulation Comm'n, 2019-NMSC-012.
Adequate public notice. — Where a public utility applied for an emergency fuel and purchased power cost adjustment clause; the public regulation commission published a public notice of the proceedings which stated that the public utility had asked the commission to implement the proposed fuel and purchase power cost clause and to include conditions to mitigate the impact on customer bills during peak periods and incentives to the public utility to control costs, that the public utility contended that it was experiencing serious cash flow problems, that it was at risk of losing its investment grade rating, that it was experiencing a loss of overall financial integrity, and that the lack of a fuel and purchased power cost adjustment clause would result in the downgrading of the public utility's credit rating, and that because of the serious concerns raised by the public utility regarding its imminent financial crisis, the commission had established an expedited procedural schedule for reviewing the emergency fuel and purchased power cost adjustment clause; and the commission subsequently decided that the public utility's financial condition was not relevant to the issue of whether the commission should grant the emergency fuel and purchased power cost adjustment clause, the notice properly informed the public of the arguments raised in the public utility's application and of the expedited procedural schedule, was not inadequate or misleading, and did not deny the intervenors procedural due process. Albuquerque Bernalillo Cnty. Water Util. Auth. v. NMPRC, 2010-NMSC-013, 148 N.M. 21, 229 P.3d 494.
Expedited procedural schedule. — Where a public utility applied for a rate increase and a fuel and purchased power cost adjustment clause; a hearing examiner appointed by the public regulation commission issued a recommendation that the application for the fuel and purchased power cost adjustment clause be denied; the public utility then applied for an emergency fuel and purchased power cost adjustment clause; the commission severed the emergency application from the underlying rate case and determined that the commission would take administrative notice of any evidence relevant to the emergency application that was in the underlying rate case; intervenors participated in the underlying rate case; because the public utility contended that it was facing an immediate and critical financial crisis due to the lack of appropriate recovery of rapidly escalating fuel and purchased power costs, the commission established an expedited procedural schedule for reviewing the public utility's application which required the intervenors to file testimony within nine days after notice of the proceeding had been published; and the commission subsequently granted the intervenors two extensions of time which extended the time period in which the intervenors were required to file their responsive testimony from 12 to 42 days, the commission's denial of the intervenors' additional requests for extensions of time was not arbitrary, capricious or unreasonable and did not deny the intervenors procedural due process. Albuquerque Bernalillo Cnty. Water Util. Auth. v. NMPRC, 2010-NMSC-013, 148 N.M. 21, 229 P.3d 494.
Failure of commissioners to attend public hearings on matters on which they vote. — Where a public utility applied for an emergency fuel and purchased power cost adjustment clause; the public regulation commission held public hearings on the public utility's application; two members of the commission who voted in favor of the public utility's application did not personally attend many of the public hearings; and the intervenors did not present any evidence to support their claim that the two commissioners failed to review the evidentiary record prior to voting, the intervenors failed to show they were denied their procedural due process right to a full and fair hearing. Albuquerque Bernalillo Cnty. Water Util. Auth. v. NMPRC, 2010-NMSC-013, 148 N.M. 21, 229 P.3d 494.
Failure of commissioners to recuse themselves. — Where a public utility applied for an emergency fuel and purchased power cost adjustment clause; the public utility contended that it was facing an immediate and critical financial crisis due to the lack of appropriate recovery of rapidly escalating fuel and purchased power costs; at a hearing that was held before the commission held public hearings on the merits of the public utility's application, two commissioners argued that in view of the public utility's financial crisis, the commission should grant the public utility interim relief on its application; the intervenors filed a motion requesting that the two commissioners recuse themselves from participating in the proceeding on the grounds that they had prejudged the merits of the public utility's application; and the two commissioners declined to recuse themselves, the intervenors were not denied their procedural due process right to a fair and impartial hearing. Albuquerque Bernalillo Cnty. Water Util. Auth. v. NMPRC, 2010-NMSC-013, 148 N.M. 21, 229 P.3d 494.
To require a utility to offset its fuel and purchased power costs against cost-savings in other areas would undermine the direct and automatic nature of the cost recovery system inherent in the fuel and purchased power cost adjustment clause authorized by Subsection E of Section 62-8-7 NMSA 1978. Albuquerque Bernalillo Cnty. Water Util. Auth. v. NMPRC, 2010-NMSC-013, 148 N.M. 21, 229 P.3d 494.
Recovery of costs of prudency review audit. — Where a public utility applied for an emergency fuel and purchased power cost adjustment clause; the public regulation commission approved the fuel and purchased power cost adjustment clause and required the public utility to pay the costs of an independent prudency review of its fuel and purchased power costs by auditors selected by and under the direction of the commission; and after issuance of the commission's order approving the fuel and purchased power cost adjustment clause, the commission issued a request for proposals to select a qualified auditor which summarized the scope of the audit and the scope of the prudence review, the independent audit provided for sufficient regulatory oversight. Albuquerque Bernalillo Cnty. Water Util. Auth. v. NMPRC, 2010-NMSC-013, 148 N.M. 21, 229 P.3d 494.
Filing schedule of rate changes. — Where a public utility applied for an emergency fuel and purchased power cost adjustment clause; the public utility notified the public regulation commission of its proposed rate changes in the application; the public was notified of the proposed rate changes when the commission published notice of the proceedings; the commission's final order granting the fuel and purchased power cost adjustment clause required the public utility to file new schedules for the fuel and purchased power cost adjustment clause within five days after the date of the final order; and the public utility filed new schedules six days before the fuel and purchase power cost adjustment clause went into effect, the public utility complied with the substantive requirements of Subsection B of Section 62-8-7 NMSA 1978. Albuquerque Bernalillo Cnty. Water Util. Auth. v. NMPRC, 2010-NMSC-013, 148 N.M. 21, 229 P.3d 494.
Regulation 17.9.550.17(A)(2) NMAC does not require a showing that fuel and purchased power costs are volatile or fluctuate more than some other cost of providing service. Albuquerque Bernalillo Cnty. Water Util. Auth. v. NMPRC, 2010-NMSC-013, 148 N.M. 21, 229 P.3d 494.
Substantial evidence supported finding that costs fluctuate and cannot be determined in a rate case. — Where a public utility applied for an emergency fuel and purchased power cost adjustment clause and the public utility provided testimony that prices for all fuels had increased substantially and had become more volatile compared with past years, fuel and purchased power prices and off system sales were difficult to predict for rate setting purposes, financial markets downgrade the credit rating of public utilities that do not have fuel and purchased power cost adjustment clauses, natural gas will be an increasing percentage of the public utility's fuel base, purchased power agreements will have variable fuel costs based on natural gas prices, natural gas prices have evidenced 50% to 60% price swings, and the public utility's long term contracts for nuclear fuel and coal were not fixed price contracts, the commission's findings that the public utility's fuel and purchased power costs periodically fluctuate and cannot be precisely determined in a rate case were supported by substantial evidence. Albuquerque Bernalillo Cnty. Water Util. Auth. v. NMPRC, 2010-NMSC-013, 148 N.M. 21, 229 P.3d 494.
Purchased power. — Renewable energy certificates unaccompanied by the purchase of the renewable energy that the certificates represent do not constitute purchased power and the renewable energy certificate costs cannot be recovered through the automatic adjustment clause. N.M. Indus. Energy Consumers v. N.M. PRC, 2007-NMSC-053, 142 N.M. 533, 168 P.3d 105.
The commission exceeded its authority when it determined that renewable energy certificates costs were closely related to purchased power and recoverable through the automatic adjustment clause. N.M. Indus. Energy Consumers v. N.M. PRC, 2007-NMSC-053, 142 N.M. 533, 168 P.3d 105.
Rate requests carried out under this section. — This section is the provision under which the overall purpose of Section 62-8-1 NMSA 1978 is carried out for the given instance of a rate request. Otero Cnty. Elec. Coop. v. N.M. Pub. Serv. Comm'n, 1989-NMSC-033, 108 N.M. 462, 774 P.2d 1050.
Commission is vested with considerable discretion in determining whether a rate to be received and charged is just and reasonable. Hobbs Gas Co. v. N.M. Pub. Serv. Comm'n, 1980-NMSC-005, 94 N.M. 731, 616 P.2d 1116.
Discretion to review rates efficiently. — The statutory scheme vests broad discretion in the commission to review utility rates in an efficient and reasonable manner. Otero Cnty. Elec. Coop. v. N.M. Pub. Serv. Comm'n, 1989-NMSC-033, 108 N.M. 462, 774 P.2d 1050.
Commission may change rates by unilateral action followed by hearing. — This section contains express language conferring power on the commission, by unilateral action, to make a change in rates, providing hearing on what is a fair and reasonable rate follows in due season on proper notice and an opportunity is made for all interested parties to be heard. Potash Co. of Am. v. N.M. Pub. Serv. Comm'n, 1956-NMSC-091, 62 N.M. 1, 303 P.2d 908.
Including increase in contract rate. — Where the commission had entered an order authorizing a public utility to enter into a contract and to continue to charge the gas rate therein specified until further order and on the ex parte petition of the utility subsequently entered an interlocutory order making a rate increase to be effective until the commission could hold a hearing to determine and set a new and proper rate, the commission was moving strictly in conformity with the act creating it to determine one of the major questions submitted to its jurisdiction - a question of rates. Potash Co. of Am. v. N.M. Pub. Serv. Comm'n, 1956-NMSC-091, 62 N.M. 1, 303 P.2d 908.
Action on rate change not required within nine months. — With respect to rate changes, this section does not make it mandatory for the commission to act within any specific time; it merely provides that if the commission fails to act within the nine-month suspension period, the utility may put the proposed rates into effect. Public Serv. Co. v. N.M. Pub. Serv. Comm'n, 1979-NMSC-042, 92 N.M. 721, 594 P.2d 1177.
Commission may not order refund passed on to consumers. — Commission has no express or implied statutory authority to order the flow-through of refunds to electric company from power supplier to consumers. N.M. Elec. Serv. Co. v. N.M. Pub. Serv. Comm'n, 1970-NMSC-097, 81 N.M. 683, 472 P.2d 648.
Where refund is not trust fund for consumers. — Where refund was ordered paid over to power company by the federal power commission without any restrictions, and there was nothing in the order indicating an intention on the part of the commission to create a "trust fund" for the benefit of the ultimate consumers, the refund did not constitute a trust fund belonging to company's customers. N.M. Elec. Serv. Co. v. N.M. Pub. Serv. Comm'n, 1970-NMSC-097, 81 N.M. 683, 472 P.2d 648.
Commission's order held unsupported by substantial evidence. — Where gas company seeking rate increase proposed to trend the general plant account items by using a nationally recognized index, but the commission instead inserted its own method - to simply use the untrended original cost, although the witness who strongly supported this approach admitted that he did not know whether this would accurately establish the reproduction cost of the items, the court held the commission's order was unreasonable, being unsupported by substantial evidence. Southern Union Gas Co. v. N.M. Pub. Serv. Comm'n, 1972-NMSC-072, 84 N.M. 330, 503 P.2d 310.
Assignment of issue to separate proceeding. — The commission may assign an issue raised in a rate request hearing to a separate proceeding. Otero Cnty. Elec. Coop. v. N.M. Pub. Serv. Comm'n, 1989-NMSC-033, 108 N.M. 462, 774 P.2d 1050.
Burden of proof on utility. — The legislature has granted the commission discretion to place the burden of proof on the utility in any rate proceeding. Otero Cnty. Elec. Coop. v. N.M. Pub. Serv. Comm'n, 1989-NMSC-033, 108 N.M. 462, 774 P.2d 1050.
Law reviews. — For note, "The Public Service Commission: A Legal Analysis of an Administrative System," see 3 N.M.L. Rev. 184 (1973).
For note, "Conservation, Lifeline Rates and Public Utility Regulatory Commissions," see 19 Nat. Res. J. 411 (1979).
For article, "Cost of Service Indexing: An Analysis of New Mexico's Experiment in Public Utility Regulation," see 9 N.M.L. Rev. 287 (1979).
For article, "Survey of New Mexico Law, 1979-80: Administrative Law," see 11 N.M.L. Rev. 1 (1981).
For comment, "Regulation of Electric Utilities and Affiliated Coal Companies - Determining Reasonable Expenses," see 26 Nat. Res. J. 851 (1986).
Am. Jur. 2d, A.L.R. and C.J.S. references. — Change of rates by public utility while another rate is undetermined, 16 A.L.R. 1219.
Joinder or representation of several claimants in action to recover overcharge, 1 A.L.R.2d 160.
Public utility's right to recover cost of nuclear power plants abandoned before completion, 83 A.L.R.4th 183.
73B C.J.S. Public Utilities § 17.