SENATE BILL

55th legislature - STATE OF NEW MEXICO - first session, 2021

INTRODUCED BY

Bill Tallman and Elizabeth "Liz" Stefanics and

 Antoinette Sedillo Lopez

AN ACT

RELATING TO PUBLIC UTILITIES; REINSTATING REGULATORY AUTHORITY OVER PUBLIC UTILITIES FOR PLANT ABANDONMENT COSTS TO PROTECT RATEPAYERS; AMENDING A SECTION OF THE RENEWABLE ENERGY ACT PERTAINING TO COST RECOVERY; AMENDING THE ENERGY TRANSITION ACT; PROVIDING ADDITIONAL REQUIREMENTS FOR APPROVAL OF A FINANCING ORDER; CONFORMING FINANCING ORDER APPEAL AND REHEARING FILING DEADLINES WITH COURT RULES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. Section 62-16-6 NMSA 1978 (being Laws 2004, Chapter 65, Section 6, as amended) is amended to read:

     "62-16-6. COST RECOVERY FOR RENEWABLE ENERGY AND EMISSIONS REDUCTION.--

          A. A public utility that procures or generates renewable energy shall recover, through the rate-making process, the reasonable costs of complying with the renewable portfolio standard. Costs that are consistent with commission approval of procurement plans or transitional procurement plans shall be deemed to be reasonable.

          B. The commission shall not exclude from such cost recovery reasonable interconnection and transmission costs and costs to comply with electric industry reliability standards incurred by the public utility in order to deliver renewable energy to retail New Mexico customers.

          C. If a public utility has been granted a certificate of public convenience and necessity prior to January 1, 2015 to construct or operate an electric generation facility and the investment in that facility has been allowed recovery as part of the utility's rate-base, the commission may require the facility to discontinue serving customers within New Mexico if the replacement has less or zero carbon dioxide emissions into the atmosphere [provided that no order of the commission shall disallow recovery of any undepreciated investments or decommissioning costs associated with the facility]."

     SECTION 2. Section 62-18-5 NMSA 1978 (being Laws 2019, Chapter 65, Section 5) is amended to read:

     "62-18-5. FINANCING ORDER--ISSUANCE--TERMS OF BONDS-- REPORTS TO COMMISSION OF DISBURSEMENT OF BOND PROCEEDS--REVIEW AND AUDIT OF RECORDS.--

          A. The commission may approve an application for a financing order without a formal hearing if no protest establishing good cause for a formal hearing is filed within thirty days of the date when notice is given of the filing of the application for the financing order. If a hearing is held, the commission shall issue an order granting or denying the application for the financing order to a qualifying utility that is abandoning a qualifying generating facility and an order on an accompanying application of the qualifying utility for approval to abandon the qualifying generating facility within six months from the date the application for the financing order is filed with the commission. For good cause shown, the commission may extend the time for issuing the order for an additional three months.

          B. Failure to issue an order approving the application or advising of the application's noncompliance pursuant to Subsection E of this section within the time prescribed by Subsection A of this section shall be deemed approval of the application for a financing order and approval to abandon the qualifying generating facility, if abandonment approval was requested as part of the application for the financing order pursuant to this subsection. The commission shall issue an order acknowledging the deemed approvals within seven days of the expiration of the time period described in Subsection A of this section.

          C. If an application for a financing order is accompanied by a request for approval of new resources, this section provides an alternative time frame to that provided in Subsection C of Section 62-9-1 NMSA 1978, and the time frame specified in this section shall govern, unless the request has been deferred to a separate proceeding pursuant to Subsection D of Section [4 of the Energy Transition Act] 62-18-4 NMSA 1978.

          D. The issuance of a financing order shall be the only approval required for the authority granted in the financing order.

          E. The commission [shall] may issue a financing order approving the application if the commission finds that:

                (1) the qualifying utility's application for the financing order complies with the requirements of Section [4 of the Energy Transition Act] 62-18-4 NMSA 1978. If the commission finds that a qualifying utility's application does not comply with Section [4 of the Energy Transition Act] 62-18-4 NMSA 1978, the commission [shall] may advise the qualifying utility of any changes necessary to comply with that section and provide the applicant an opportunity to amend the application to make such changes; [Upon those changes being made, the commission shall issue a financing order approving the application] and

                (2) recovery of energy transition costs by the qualifying utility through the issuance of energy transition bonds provides tangible and quantifiable benefits to ratepayers greater than would be achieved absent the issuance of energy transition bonds; the assets and investments at issue were prudently incurred; the amount of energy transition costs requested fairly balances the interests of investors and consumers; approval of the application will result in rates that are fair, just and reasonable; and approval of the application is in the public interest. If the commission determines, after hearing, that it is necessary to modify or adjust the energy transition costs requested in order to meet the requirements of this paragraph and uphold consumer protections, the commission shall make those changes to the requested amount before the financing order is issued.

          F. A financing order shall include the following provisions:

                (1) approval for the qualifying utility or assignee to issue energy transition bonds as requested in the application, to use energy transition bonds to finance the maximum amount of the energy transition costs as requested in the application, as may be adjusted pursuant to Paragraph (6) of Subsection B of Section [4 of the Energy Transition Act] 62-18-4 NMSA 1978, and to use the proceeds provided in Subsection A of Section [10 of the Energy Transition Act] 62-18-10 NMSA 1978;

                (2) approval for the qualifying utility to recover the energy transition costs, as may be adjusted pursuant to Paragraph (6) of Subsection B of Section [4 of the Energy Transition Act] 62-18-4 NMSA 1978, requested in the application through energy transition charges;

                (3) approval of the energy transition charges necessary to recover the authorized energy transition costs, to be imposed through a non-bypassable energy transition charge as a separate line item on the qualifying utility's customer bills, assessed consistent with energy and demand cost allocations within each customer class, subject to update pursuant to the notice filing contemplated by Paragraph (6) of Subsection B of Section [4 of the Energy Transition Act] 62-18-4 NMSA 1978 and subject to the application of the adjustment mechanism as provided in Section [6 of the Energy Transition Act] 62-18-6 NMSA 1978, until the energy transition bonds issued pursuant to the financing order and the financing costs related to those bonds are paid in full;

                (4) approval of the adjustment mechanism in compliance with Section [6 of the Energy Transition Act] 62-18-6 NMSA 1978;

                (5) a description of the energy transition property that is created by the financing order that may be used to pay, and secure the payment of, the energy transition bonds and financing costs authorized to be issued in the financing order;

                (6) approval to enter into necessary or appropriate ancillary agreements;

                (7) approval of any plans for selling, assigning, transferring or conveying, other than as a security, an interest in energy transition property; and

                (8) approval of the proposed ratemaking process and method included in the application pursuant to Paragraphs (10) and (11) of Subsection B of Section [4 of the Energy Transition Act] 62-18-4 NMSA 1978.

          G. A financing order shall provide that the creation of energy transition property shall be simultaneous with the sale of the energy transition property to an assignee as provided in the application and the pledge of the energy transition property to secure energy transition bonds.

          H. A financing order shall authorize the qualifying utility to issue one or more series of energy transition bonds for a scheduled final maturity of no more than twenty-five years for each series; provided that a rated final maturity may exceed twenty-five years. With such authorization, the qualifying utility shall not subsequently be required to secure a separate financing order prior to each issuance.

          I. The commission may require, as a condition of the financing order and in every circumstance subject to the limitations set forth in Subsection A of Section [7 of the Energy Transition Act] 62-18-7 NMSA 1978, that, during any period in which energy transition bonds issued pursuant to the financing order are outstanding, an assignee that is a non-utility affiliate and issues energy transition bonds shall provide in the affiliate's articles of incorporation, partnership agreement or operating agreement, as applicable, that in order for a person to file a voluntary bankruptcy petition on behalf of that assignee, the prior unanimous consent of the directors, partners, managers or members, as applicable, shall be required. Any such provision shall constitute a legal, valid and binding agreement of such shareholders, partners or members of the assignee and is enforceable against such shareholders, partners or members.

          J. A financing order may require the qualifying utility to file with the commission a periodic report showing the receipt and disbursement of proceeds of energy transition bonds and any other documents necessary for the qualifying utility to implement the financing order. Upon issuance of the energy transition bonds, the qualifying utility shall file an advice notice with the commission, subject to review by the commission for errors and corrections, that identifies the actual energy transition charges to be included on customers' bills, effective fifteen days from the date the advice notice is filed.

          K. A financing order may authorize the commission to review and audit the books and records of the qualifying utility and of an assignee that is a non-utility affiliate and issues energy transition bonds, relating to energy transition property and the receipt and disbursement of proceeds of energy transition bonds.

          L. After review and approval by the department of finance and administration with regard to reasonableness of contracts for services, a financing order may authorize the commission to impose a fee on the qualifying utility to pay commission expenses for contract bond counsel accredited by a nationally recognized association of bond lawyers to provide advice and assistance to commission staff in reviewing an application for a financing order and the structure and marketing of the proposed energy transition bonds.

          M. The provisions of this section shall not be construed to limit the authority of the commission to:

                (1) investigate the practices of or to audit the books and records of a qualifying utility; [or]

                (2) issue such further orders as may be necessary to effectuate the provisions of the Energy Transition Act; or

                (3) exercise the commission's plenary jurisdiction over rates or limit a qualifying utility's recovery of reasonable costs."

     SECTION 3. Section 62-18-8 NMSA 1978 (being Laws 2019, Chapter 65, Section 8) is amended to read:

     "62-18-8. AGGRIEVED PARTIES--REQUEST FOR REHEARING-- JUDICIAL REVIEW.--

          A. A financing order shall be issued as a separate order from any other order issued by the commission on a requested approval in the application proceeding and is a final order of the commission. A party aggrieved by the issuance of a financing order may apply to the commission for a rehearing in accordance with Section 62-10-16 NMSA 1978; provided that such application shall be due no later than [ten] thirty calendar days after issuance of the financing order. An application for rehearing shall be deemed denied if not acted upon by the commission within [ten] twenty calendar days after the filing of the application.

          B. An aggrieved party may file a notice of appeal with the supreme court in accordance with Section 62-11-1 NMSA 1978; provided that such notice shall be due no later than [ten] thirty calendar days after denial of an application for rehearing or, if rehearing is not applied for, no later than [ten] thirty calendar days after issuance of the financing order. The supreme court shall proceed to hear and determine the appeal as expeditiously as practicable."

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