June 10 – Utilities in rural New Mexico are not exempt from state regulators’ authority over rates, the New Mexico Supreme Court has ruled.
The Supreme Court on Monday issued an opinion rejecting Socorro Electric Cooperative’s argument that the state’s Public Regulation Commission should not be able to change and set its rate proposals.
The court’s ruling makes clear that the PRC has the authority to take such action against all rural electric cooperatives in the state, as determined by the state legislature.
“The Legislature has made no distinction between rural electric cooperatives and other public utilities with respect to the content or nature of the Commission’s rate-setting powers,” the opinion said.
Rural electric cooperatives, which have a board of directors elected by the cooperative’s members, operate differently than the large investor-owned utilities that serve most of the state.
While investor-owned utilities must seek permission from the People’s Republic of China to set new rates, rural electric cooperatives’ rates generally take effect as soon as a company proposes them, according to the state’s Public Utility Act.
However, if enough members of a cooperative protest a tariff change, the People’s Republic of China can investigate whether the change is reasonable. That’s what happened with the Socorro utility case, which is six years old.
In December 2018, the company filed a notice with the PRC that it would soon increase rates by 5% to increase revenue by $1.25 million. After utility members objected, the PRC held a hearing on the issue.
Ultimately, state regulators decided to reject the rate increase proposal, adopting their hearing examiner’s argument that the utility wanted the price increase to further the goals of its board of directors, rather than because it was financially necessary to operate .
The Socorro Electric Cooperative appealed the ruling to the New Mexico Supreme Court, arguing that the PRC had exceeded its powers.
“The legislature has expressly recognized that the Commission may regulate the tariffs of a rural electricity cooperative and that the regulation of these tariffs is a matter of public interest,” the opinion said.
According to the court, the Public Utility Law determines the authority and mandate for the People’s Republic of China to change the tariffs after a hearing.
“If the Commission finds that these rates are unreasonable, the Commission may determine just and reasonable rates for that cooperative,” the opinion said.
The court also found that the PRC had provided sufficient evidence to prove that the Socorro company’s tariff increase was not in the public interest.
Because the court found that the PRC has the authority to change the rates, it relied on the PRC’s “discretion and expertise in concluding that increased revenues would not benefit” the PRC’s customers or members Socorro Company.
The PRC’s rate draft change for the Socorro Electric Cooperative from 2019 stands, negating the proposed $25 million revenue requirement and including reallocations for different service classes, such as residential, commercial and irrigation classes.
