Dive Brief:

• New Mexico Gov. Michelle Lujan Grisham, D, intends to pursue restructuring of the state's utility regulatory body, she announced at an energy summit Tuesday.

• Both the governor and the state legislature have expressed frustration over the state's high electricity rates and slow adoption of renewables, and think reforming the commission could quell some of these issues. Those concerns were exacerbated in July when the commission moved to circumvent a portion of the state's comprehensive Energy Transition Act, Tripp Stelnicki, director of communications for Lujan Grisham told Utility Dive.

• In 2019, the legislature passed a joint resolution that would put a measure on the ballot to amend the state's constitution to reduce the New Mexico Public Regulation Commission (PRC) from five to three members, and have those members appointed rather than elected. However, if passed in 2020, the amendment wouldn't go into effect until 2023, and the governor is concerned clean energy progress could be stalled in that time, according to Stelnicki.

Dive Insight:

New Mexico has undergone a dramatic shift on clean energy since the November election of Lujan Grisham. In March, the governor signed the ETA requiring the state, which at the end of 2018 was generating 80% of its electricity from fossil fuels, to hit zero-emissions electric power by 2045.

Another portion of the ETA, seen as critical by stakeholders in the legislative process, is the securitization provision, which sets aside $320 million in commission-approved capital costs to help mitigate the financial impact of retiring Public Service Company of New Mexico's (PNM) San Juan coal plant. How that plant would be retired was a major issue for lawmakers in the state concerned by ratepayer burden and the economic impact on the city of Farmington where the plant is located.

Some of the funds saved by securitizing those stranded assets have been set aside to help transition that community under the state's law.

But in July, the commission voted 4-1 to bypass the ETA and instead split the plant's retirement plan into two parts — replacement and abandonment — placing the abandonment portion of the proceeding into a docket opened in January, before the ETA was implemented. Stakeholders say this move threatens the securitizaton portion of the ETA, and the money it would set aside for the impacted community.

The commission is "standing in the way of $22 million in savings for ratepayers in New Mexico, $20 million for direct severance and training for plants and mine workers in New Mexico, $20 million to assist the community in San Juan County that's grappling with the changing energy market and that the [ETA] accommodates," said Stelnicki. "That's one item on a growing list of decisions that this office feels are throttling job creation."

But the commission is not necessarily opposed to the ETA, New Mexico Commissioner Cynthia Hall told Utility Dive.

"I think the energy transition has turned out to be a very good thing for New Mexico in general for several reasons," she said, including an "outstanding" renewable portfolio standard, as well as the funding put in place to transition the San Juan community.

"It's true that the bill was … a policy decision by the legislature to resolve the problem of closure costs independent of the PRC. So that was a departure from the ordinary practice, but we don't live in ordinary times right now," she said.

Though Commissioner Hall voted in favor of the commission's decision to look at the abandonment of San Juan through the January docket, she said the move was strategic, in order to preserve her ability to seek reconsideration of the vote. 

Overall, she is also supportive of restructuring the PRC.

"I've advocated for appointed commissioners for quite some time," she said, adding that she thought it was a "mistake" when they transitioned from appointed to elected positions.

"My recollection is that the commissioners seemed to have better preparation for the job ... when they were industry professionals," she added. "They had a higher level of competence."

Commissioner Valerie Espinoza declined to comment and the three other commissioners did not respond to Utility Dive's requests for comments by time of publication.

Lujan Grisham intends to take input from legislators and other stakeholders over the next couple of weeks "preparing for a rock solid legislative proposal in time for January that will effectively address the governance hurdles that have been demonstrated by that commission," Stelnicki said.