Advocate Puts Full Court Pressure on Utilities

Advocating for a distributed, democratized clean energy transition involves a never-ending series of legal and regulatory battles.

For this episode of the Local Energy Rules Podcast, host John Farrell is joined by Mariel Nanasi, executive director of New Energy Economy. They discuss New Energy Economy’s efforts before lawmakers, regulators, and courts to protect consumers from the nefarious plans of New Mexico’s investor-owned utilities.

Listen to the full episode and explore more resources below — including a transcript and summary of the conversation.

Episode Transcript

Mariel Nanasi:
It’s a sad situation because that’s what we see. It’s not only that they’re the single greatest cause of climate disruption, and it’s not only that there’s so much income inequality as a result of the energy domination of these fossil fuel interests, but they also undermine democracy. And they have so much money that they can literally buy legislators.

John Farrell:
Trying to defend the public interest in an electricity system run by for-profit monopoly companies can be like a game of whack-a-mole. No one knows this metaphor better than Marielle Nanasi, executive director of New Energy Economy. When we spoke in March of 2024, we discussed the numerous ways she has had to intervene to protect New Mexicans from the predatory actions of its largest electric company PNM, including from a merger with multinational company Avangrid, and in the utility’s own words, was to establish a beachhead in the state. I’m John Farrell, director of the Energy Democracy Initiative at the Institute for Local Self-Reliance. And this is Local Energy Rules, a podcast about monopoly power, energy democracy, and how communities can take charge to transform the energy system. Mariel, welcome back to Local Energy Rules.

Mariel Nanasi:
Thank you so much for having me.

John Farrell:
I wanted to start off just by asking you, because I’ve been asking this of all my guests and didn’t get a chance to the first time you were on, about how did you get into this work? How did you become this leader of New Energy Economy and investing so much of yourself and your life in fighting monopoly utility power?

Mariel Nanasi:
Well, it was sort of organic, I will say. First I thought, well, all we have to do is tell the utility, hey, you got to switch to solar. And they would because it makes sense because we have the sun Zia on our flag in New Mexico and it’s cheaper and why wouldn’t they want that? And that led me down the rabbit hole of what has been my life for the last 15 years and realized that in fact the monopolies, the monopoly utilities, they don’t hate solar because of any ideological reasons. They hate solar because it works and it’s contrary to the capitalist model. And in the monopoly model, as you and your listeners probably know, the way they make money is by spending more money and getting what’s called an ROE – return on equity when they spend more money. So when they spend more money, they get an average of 10% guarantee on top of that.

So we did a deposition of the general manager of the San Juan coal plant, one of the dirtiest coal plants that was operational for so long until we finally closed it in 2022. And he said, look, we had two budgets. There was an operations and maintenance budget where they don’t make that ROE and there’s another budget. It’s a capital budget. And for that they make this essentially a 10% ROE. At the time it was 9.575% for PNM. So we were encouraged by senior management to move as many things from our O&M operations and maintenance budget to the capital budget. In fact, there’s a person whose job, whose sole job at the utility is to do that, is to figure out ways to move projects, move any kinds of things that they’re trying to fix. And so he says, let me just give you an example.

He says, you have a car and you have to put in oil twice a year and that costs you 30 bucks each time, but if you don’t do it, your engine dies in five years, it dies. It’s like kaput, it won’t work because you have failed to take care of it because you failed to do your due diligence to keep it running. But he says, but the utilities love that because they don’t make any ROE on the oil that you have to put in, that $30 twice a year. But when that engine breaks, oh boy, do their eyes start glistening, right? We have to spend $5,000 for a new engine and not only do we have to spend $5,000, but then we get a 10% return on that. And guess what? We’re not going to just pay it in a year or two. We’re going to act like a bank and we are going to depreciate it over 40 years. So that whole time of depreciation, we get to keep on getting from rate payers that ROE, that 10%. And if you look at their investment presentations that they make, all of the utilities are the same. They have a whole bar just for the ROE that alone – and sometimes it’s more money from rate payers in that bar of depreciation than even the actual energy that is produced. That’s what a crazy utility electric system we have. They are bankers and that’s how they treat this situation.

John Farrell:
Mariel, I’m so glad you started with this story because when the kind of context for this episode for me was watching you, witnessing, hearing stories of you essentially playing whack-a-mole with these utility proposals that are all centered around this idea of how do we make more money and squeeze more money out of the system. So I think you laying the groundwork for how they’re motivated to do this and how crazy it is, is really helpful for understanding then all the different examples that I’m interested in having you talk about. So let’s see if we can pivot to one of them here. You were just talking about the San Juan coal plant, so it closed in 2022. You settled the case with the utility PNM about getting refunds for rate payers. Can you talk about why you needed to get a refund? What were they doing after this plant had closed that they were still collecting money and why did you have to fight them to get it back?

Mariel Nanasi:
I just want to first say I’m so proud of this. First of all, I’ve never settled anything with PNM ever, and this is the first settlement in October, 2023. And what happened was under the ETA, the Energy Transition Act, the deal was when they closed the plant, they were going to issue these securitized bonds. And we were supposedly, because solar is so much cheaper than coal, even with the securitized bonds of them getting a hundred percent of their undepreciated investments, which is another crazy concept, they were going to close, they did close the plant and they said, we owe them after 50 years of a coal plant running, we still owe them allegedly $357 million. How could that be? It can only be because they kept on reinvesting in these capital projects and then longing the depreciation schedule so much that there was still $350 million that we owe them. The plant probably didn’t even cost that as much to begin with 50 years ago and we still owe them that. So that’s a crazy thing.

But anyway, I opposed that. I said we shouldn’t get that money, but the ETA was passed and said, oh, by some liberal organizations, they said, okay, yeah, neoliberal organizations said, oh yeah, we’re going to give PNM everything. They want all their profit, we’re going to give it to them just so that they’ll close the coal plant. They closed the coal plan in 2022 and they’re supposed to issue these bonds and they didn’t do it. And so we and other organizations filed a motion for rule to show cause against them and we won and we won in front of the hearing examiners then in front of the commission and then it was pending in front of the Supreme Court and PNM was like, Hey, we want to issue those bonds now two years later.

And what happened was is that Wall Street said there’s a Supreme Court appeal pending and it’s a cloud hanging over, so we’re not going to issue bonds while this is happening. So then PNM came to us and said, hey, we want to settle this Supreme Court appeal. And I was like, okay, well if you want to do that, you will pay us a hundred percent of what you stole from us, which was a refund that they were supposed to give us starting at the day of closure. And they hadn’t done that. And we won. We won 115 million refund. I think it’s the largest refund ever, maybe certainly in New Mexico history, but maybe in US history, $10 a month average residential rate payers received from PNM and it’s still ongoing right now. That’s significant.

John Farrell:
I want to just touch a little bit for people who are maybe not super familiar with the whole idea of securitization. There’s an article linked to on ILSR’S website that kind of explains this process, but the idea was like you said, the utility’s capital is costly, right? They earn this 10% return on it. So you say essentially like, well, we’ll pay you all that undepreciated value in that plant and that was in that Energy Transition Act, but you’re forced to refinance it basically with public bonds at a lower interest rate. So it’ll save everybody money. You’ll get a hundred percent of the money you want, but at least rate payers will be better off because you’ll have closed this dirty plant and you’ll have refinanced it for cheap. But they sat on it for two years and didn’t bother to refinance it, still collecting on your rate payers. Right?

Mariel Nanasi:
And the thing was that some of the organizations that supported the ETA, the Energy Transition Act, they said, oh, it’s going to result in customer savings. I said, no, it won’t. And they said, oh, yes it will. It will because of what you just said, because instead of paying a nearly 10% return at that time, we think we can get bonds for two to 3%. Well, that’s not the case anymore. And so one of the other things that we won in this settlement, just so you know, this is pretty important. Bond rates just a couple of months ago were like 6%. So that wasn’t going to save them much at all, and it wouldn’t have amounted to any savings. And one of the things that we settled for was not only that they had to do a refund, but a cap on the bonds that rate payers had to pay up to 5.5%. And so they did get bonds, PNM did get bonds, and some of them were lower than that, but some of them were more than that and shareholders had to pay that, not rate payers. So even though some of their bonds were at a 6% or more than that, only rate payers were capped at paying 5.5% of that. So that’s another good win.

John Farrell:
I love how, one of the things I respect so much about your work, Mariel, and why I wanted to have you on is to help people understand that the range of the fights that you have to have to get the clean energy future that we want is extraordinary. It’s not just about can you build this power plant or not, or do you close this power plant? It’s about how much of the value of that power plant will the utility still recover? At what rate will the customers have to continue to pay for it? How many times will you have to go to court to force them to do what you’ve already agreed that they will do? I mean, I think to me it helps illustrate for people who have heard broadly that this monopoly utility model is problematic. It helps people understand you just have to fight and you fight and you fight so many times in order to get just one simple thing like closing a plant and making sure that rate payers are done paying for it years and years and years of investments for just that.

Mariel Nanasi:
Years and years and years, years and years and years. So you’re so right. And perseverance is part of this whole package of being an activist and that, and the thing is, is that it’s hard work, but perseverance is critical. It’s critical because yeah, they write their own laws, they write their own orders and then they don’t even follow ’em. And then you have to go into court, like you said, or go into the regulatory arena and get them to just do what they said that they were going to do. It’s outrageous. It’s outrageous. And mostly they’re thieves. And the thing is that you have to keep calling them out on it. And it’s definitely frustrating, but sometimes you win and then it’s really fun.

John Farrell:
So let’s talk about another one of your wins. We got a little taste of this. You came on a really awesome convening that we did virtually about energy democracy with Seth Berry, who was involved in a campaign in Maine. I think Jean Su, who has done some antitrust work on utilities, was also on that. So that was on, we rebroadcast that on episode 154 of Local Energy Rules. But you talked about this merger between Avangrid, which coincidentally was the same utility conglomerate that owned the utility in Maine that Seth Berry was fighting, and the utility that you’re often at loggerheads with here PNM. You talked about, I’m just going to touch real quick on a few things that you mentioned about the thing. So you talked about the fact that essentially Avangrid and their parent company, Iberdrola, saw this as a beachhead, if you will, to getting access to captive customers in the United States, that there was going to be huge financial rewards for executives compared to what the customers were likely to get. And that also that they were basically, even though they were in this negotiation and trying to prove to the commission there that they were worth allowing this merger to happen, were in the middle of disconnecting a whole bunch of people in the middle of Covid. So just a little bit of context there. Feel free to add more in terms of what was at stake with this merger, but then please feel free to talk about how did you set up to fight this?

Mariel Nanasi:
It was Avangrid’s to lose, and they did. And they did because they couldn’t overcome their own track record of outages and unreliability, diminished service quality, more than 65 million in penalties, violations, failure to abide commission rules and laws in other places, but also here, here. And I’ve never seen this, by the way, a $10,000 fine was meted against them for discovery violations here during this case. Then the risk of subsidization of non-utility activities, which is what you were referring to about the beachhead, and that literally was the word, and that I had to look that up. That came out of the mouth of the then CEO of Iberdrola. And basically the question to him in cross-examination was, why are you coming to New Mexico? And he said, well, we want to establish a beachhead. And when you look up, that’s a military term about where they’re going to land and then from which they’re going to attack.

And that’s what they were going to do. They were going to bulldoze New Mexico for their own profit. And that’s what they have done everywhere else that they have been. And sometimes, I mean that literally bulldoze, like they did in Maine, bulldoze a pristine forest to have a transmission line, not for the benefit of Maine, but for the benefit of their sale of electricity to Massachusetts, which was not going to help Mainers and literally went through this pristine forest and bulldoze them. And so I just want to tell you a little trick, not trick, but I put a picture in a brief, I’ve never done that before, but I put a picture of the bulldozed forest in Maine in my closing brief in that case, and I was like, basically, do you want this here? Because that’s what you’re going to get. That is what you’re going to get. And they didn’t object because it was an actual picture of what they had done in Maine and hey, it was just another way of arguing. And seeing is believing. And that was a pretty heavy picture of a bulldozed pristine forest.

But they wanted to come here and use the monopoly power to extract renewables. And they’re not opposed to nuclear and gas either. So actually they have more nuclear and gas than they have renewables. They were going to do that and send the profits – It’s bad enough that PNM sends the profit to Wall Street, but they wanted to send it to Spain. And I was like, no, no, no, no. And really it was a whole lesson learning when we fought them, and I said this on that webinar, reporters were like, Mariel, everybody is falling and giving in and taking their Christmas tree ornament gift that Avangrid is promising them, you’re going to lose. They have the money and you’re going to lose.

And I said, well, I’m going to just speak the truth and I’m going to put that out there and I’m going to hope that the commission does care about the public interest and care about New Mexico’s future. And we won, and then we won in the Supreme Court. And that happened on January 3rd, 2024. And a great way to usher in this new year, probably the biggest victory of my life, 8 billion merger. And it took a lot of energy. I probably have never worked so hard. I worked 10, 12 hours a day every single day for about 10 months straight every single day, every weekend, every day I worked. And it was a huge effort. I have a great team and we also did a lot of work on the ground and in educating people about how bad of a company this company is and how immoral they are. And look, we won.

John Farrell:
I wanted to ask you a question about that because one of the things that I think about a lot is that the premise of our monopoly utility system was utilities will be protected from competition and we will rate regulate them in the public interest. So the idea behind a public service commission or a public utilities commission is that those folks are elected are appointed with the job of doing essentially what you were doing. So I guess one thing I’m kind of curious about is you clearly got a public interest outcome. The evidence that you presented caused the commission and then the court to agree with you that this was not in the public interest. Did you ever get paid for that? I mean, I know some states have intervener compensation where you can get reimbursed for your costs, but people can’t see you shaking your head. We’ve got video, we’re not recording that part. So you didn’t get paid for this and you basically did the work that the commission is supposed to do on its own, which seems to be a pretty common story unfortunately, when it comes to getting the public interest out of this monopoly system.

Mariel Nanasi:
Yeah, I think that you raise a really important question, and that is the capture. The capture by the utilities, by the monopolies of their regulators. We see it here and we hear about it all over the United States, and usually the public interest standard is so basically you could just walk all over it and it doesn’t really mean anything, doesn’t hold any water. And we just lucked out with a really good hearing examiner, one who was courageous, one who cared about New Mexico more than he cared about his own career. I mean, plus we did do a great job and gave him tons of facts. I mean, this didn’t come out of nowhere, right? But still, the odds were totally against us. There’s been no merger that has ever been denied before. It was a big mountain to climb, and we also had an excellent commission. And so unfortunately now it’s not an elected position, it’s an appointed position.

But we just won something last week and also on the public interest standard, and that was the gas company, a different monopoly, but one that’s supposed to be regulated, also was proposing a discretionary project, liquified natural gas facility that was going to be sited right outside of Albuquerque. And we thought this was a crazy idea and we organized it like crazy. So our first thing was having a meeting in a local library. I’d never even been to the library before, but we had 60 community members show up, and that was really cool. We probably knew two people in the room. And then we followed up with a petition gathering that got 700 signatures to the gas company, and then we got a Bernalillo County resolution. So we met with the commissioners there who said on the Bernalillo County Commission, and explained to them how dangerous and risky this LNG plant was.

And then they held hearings and dozens more people from the community, people who had never ever done any activism in their lives, came out and it was recorded on television, television for an energy thing. So that was amazing too. And then a dozen local legislators from that area also wrote to the Public Regulation Commission, plus we cross examined the shit out of them and did a great job in the hearing. And it was rejected on March 14th. And we proved that it was not cost effective and that they hadn’t done an adequate alternatives analysis. But it takes a lot of effort. It takes a lot of effort. I mean, I’m telling you these stories and it’s fun to tell you, but the truth is that it takes a lot of time and you have to love digging because that’s what this is about. You love digging because they usually don’t do a good job, and they usually are arrogant and assume that no one will look into what they’ve done, which is mostly true.

And because of what you said, because, and a lot of PRC staff or regulatory staff, they’re overwhelmed. They don’t do hard investigations. It’s just sort of like bureaucratic and they don’t, we take a much more politically feisty position like we want to get justice and we want to win, and what is it going to take for us to win? So we go from winning backwards and figure out what are the things that we need to do to prove our case. And that’s what we keep on trying to do. And sometimes we’re lucky and we win.

John Farrell:
We are going to take a short break. When we come back, I ask Mariel about the utilities ploy to change how their regulators were selected, the fight to enable community solar, and the battle to protect rate payers from imprudent investments in an aging coal plant. You are listening to a Local Energy Rules podcast with Mariel Nanasi, executive director of New Energy Economy in New Mexico.

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John Farrell:
Mariel, you threw this off the cuff in talking about having a good commission for the decision about the merger, about how the commission used to be elected. And it’s not anymore. I feel like here is another whack-a-mole example of how the utility plays in this game. So can you talk about how that changed?

Mariel Nanasi:
Well, we had a great elected commission, and then Wall Street was complaining that the utilities weren’t going to be getting enough because we kept on winning. And so basically there was a whole effort to, which was a whole another disinformation or misinformation campaign to change the Constitution as a matter of fact, and have a vote. And Michelle Lujan Grisham was involved in this. So there was a PAC that PNM gave to, the PAC ran whole campaign that said, don’t you want a professional commission? And well, who would not want that, right? That’s such a dumb question. And everybody said, well, yeah, when they said, okay, well then vote number one, whatever it was, vote yes on constitutional amendment number one, sort of similar to the sort of scare tactics that happened in Maine, reversing it, which was to get rid of the monopoly utility and have public power.

Aren’t you so scared that they won’t be able to do it? It’s too complex. All this stuff, government doesn’t work. Whatever the themes are that they play with, and they have so much money, how much money did Avangrid and the other utility put into those campaigns? Tens of millions of dollars to 1 million that the nonprofit, I think, put into that campaign. And the same thing with this. They put in a million dollars to change the PRC from elected. Like, Hey, what are Democrats doing? Taking away your vote in 2020? What was it, 2020 I think it was. That was the year changed. So that’s what Democrats did, and PNM led the PAC, literally the PAC, political Action Committee to change. And now – but it was fun because I just want to tell you that the very beginning of this new elected commission, none of them were lawyers.

Not that lawyers are so great, but you need to have at least one on the commission. And they met with Avangrid behind closed doors, and we made a big deal, front page news, all the big papers. We totally went to town on outing them. So they knew that New Energy Economy was going to stand up and call them to task. And Avangrid lost a big thing in the Supreme Court, which is ultimately what led to them pulling out of their appeal and which is why we won. But the commission also learned something very important. The new appointed commission knew that they better follow the law because if they didn’t, New Energy Economy was going to out them for doing so, and that is what happened. And so that’s in some ways why we won the LNG fight. I mean, it’s not directly related, but we were definitely willing to do the work, make our case, and if you were not going to do the right thing, we’re going to appeal you. But it takes a lot to do that, and we don’t get paid. We have to fundraise on top of that. So it’s a big deal.

John Farrell:
I want to ask you about community solar because here’s an example of something good that was passed by the legislature in order to support the expansion of solar. You kind of early on about PNM, that in some of your early work, you kind of thought, oh, utilities will look at solar and see the logic and they’ll be all for it. And it obviously has not been the case. So you’ve got a bill passed, you’re going to have to remind me what year it was, but in order to facilitate this idea of more dispersed ownership of solar, solar at small and medium scale was kind of all over the place in New Mexico. And it sounds like the utilities were not a fan.

Mariel Nanasi:
No, they weren’t a fan at all. And I mean, it took us, here we are in one of the sunniest states in the country, if not the world, and we passed Community Solar in 2021, and they blocked community solar legislation I think for about eight years. Every year we tried it, and then they even added provisions in the community solar law – that because they have so much money, this is another problem with monopoly utilities.

I need to digress for a second because this is a really important point that I think people should know about, and that is because they make so much money. So in New Mexico PNM alone, it’s not the only investor owned utility, but PNM makes about 210 million a year just pure profit. And that goes to their senior management and then to shareholders on Wall Street. But some of that money they use for lobbying. And in New Mexico, it’s like a cheap date. So $2,500, you can get a legislator to do pretty much what vote your favor basically. And so that’s really a sad situation, and it’s a sad situation because that’s what we see. It’s not only that they’re the single greatest cause of climate disruption, and it’s not only that there’s so much income inequality as a result of the energy domination of these fossil fuel interests, but they also undermine democracy and they have so much money that they can literally buy legislators. And we see that. I mean, this is not just, I think, I don’t know what the current number is, but at one point, I know it was something like for every US Congress person, there were 13 energy lobbyists. And so when you want to know why haven’t we done anything about climate disruption and have any real laws and rules and regulation that are enforced to stop them from the destruction of our planet, I mean, what could be more important than that? It’s because they buy people off.

And so we see that in New Mexico. That’s why it took them eight years, us eight years, people would just not vote for community solar or say, make up crazy ideas and then had no basis in reality. All we wanted to do is open the door just a tad on their monopoly utility domination. Really. We wanted to say, hey, instead of just rooftop solar, which they also fought for three years, finally we got the ability to do that. Hey, we want to have community solar. So for people who are renters or can’t put solar on their house, we want to get together and basically have rooftop solar, but sort of in mass with our friends and with our other partners and be able to have one system that serves us all and that we would get a credit on our bill for the subscription that we buy in community solar.

That’s what the basic premise is. And so we passed it in 2021. And what have the utilities done ever since? Delay, delay, delay, obstruct, obstruct, obstruct. We just won last week a case in the Supreme Court where they weren’t saying that the rules were unfair to them, but they said, oh, the commission, the good one violated our due process rights, all these important valuable legal principles, but had no bearing, none, zero. There was no basis, no legal basis for their appeal. And when we were preparing, I just will tell you, when we were preparing for oral argument, one of the lawyers said, well, how long is this going to take the Supreme Court to write their opinion? And I said, I think they’re going to rule that day. And they said, that day? They haven’t been doing that in any case, Mariel, that’s crazy. It’ll probably be somewhere between two and six months.

Well, guess what? That day, last Monday, they ruled. We argued in the morning and at four o’clock that afternoon, they ruled against the utilities and they said, we do not want to frustrate the implementation of the community solar program any longer. And the Supreme Court got it. The Supreme Court got it. And all we had to do is explain that this is what their plan was, and that essentially they were conspiring – all three of the investor owned utilities that’s, I’m going to name ’em, Southwest Public Service, El Paso Electric and PNM, were just throwing up these barriers so that the community solar program would be delayed. And now it’s three years later. We don’t have any community solar that has been started yet because of all these delays and hopefully now, but they still keep on threatening to… you were involved with me, John, in another case that was about implementation and what should the rules be? And they’re delaying it too.

So hopefully we will persist and get this program finally up and running. But the real thing is that they see community solar as a threat to their monopoly. And it is. And it is because community solar will be cheaper than their dirty energy production. And yeah, maybe solar developers are going to make some profit, but they’re not going to, nobody who works for a community solar development makes 9 million a year. And so there’s a lot of room for them to make profit and for us to pay less in electricity rates with community solar. And so then people are going to go, what? You’re paying a stable electric rate at that rate. Sometimes they say 10 to 25%, 25% cheaper than our current PNM rates. Why wouldn’t anybody choose that? They would. And that’s the real threat of community solar. It’s good for people’s checkbook, pocketbook, whatever, however you want to say that. It’s cheaper, it’s less costly, and it’s good for the planet. And by the way, you’re doing it in community, in community with others who believe in the same principles and values as you do. So that’s what the threat is about.

John Farrell:
We’re going to run out of time before we can cover all of the things that you’ve had to fight against. And frankly, almost all these are just in the last five years, and I know your career has been longer than that. I do want to ask you about the four corners coal plant and the bad investments because it kind of ties back to that energy transition act, this idea of like, well, if you’d retire the bad stuff, then you’re going to get paid for it. I think what’s fascinating here is that you really tried to dig into this idea about prudency. I want to bring up that term just to help people understand, but the key then, one of the cornerstones of this idea of utility utilities being regulated is the idea that the public regulators overseeing them evaluate whether or not the money they’re spending to make a profit on was actually spent well or not. And in this case, it was not spent well, and you’ve been fighting to convince the commission to say so because it would mean that they’re not allowed then to collect from rate payers on those investments. So could you talk a little bit about what has been going on there and maybe how it relates to that 2019 law and what you’ve been able to accomplish?

Mariel Nanasi:
Thank you. This is one of the most, I was talking about perseverance. We’ve been fighting this for seven years and it ain’t over. So I just want to say that prudence is like, were you responsible? Were you responsible when you invested in whatever investment acquisition that you made? And the basic premise under utility laws, if a utility invests prudently, then they get to get cost recovery. And what does that mean? That means that we have to pay them back. We have to compensate them for the prudent investment that they make. That’s the general idea. And so it’s like when you make a decision about what you want for lunch, do I want soup or a salad? Obviously with something like that, it’s just a feeling, but you weigh it, even that and that you just do it in your head and then you make your decision.

And as you become an adult, my favorite word is discernment. And hopefully we have discernment as we get older. And what does that really mean? That means we weigh our options. And what that means is, is that when we’re buying something that’s not just lunch but is a car or a house, we start to compare it with other options, right? Consider our alternatives. That’s basically what discernment is. And in fact, that’s baked into the law. And we solidified that in 2019 when we won a Supreme Court case that says that it was for another thing, another PNM investment in other resources. It was actually Palo Verde Nuclear generating resources. We won in front of the Supreme Court. First we won in front of the hearing examiner, then we won in front of the commission, a bad commission. Then we won in front of the Supreme Court.

All three levels said that PNM, that it was a fundamental flaw for PNM to fail to consider the alternatives when investing resources and that they were in fact imprudent. And if they are prudent, rate payers, that’s us, customers should be held harmless for the imprudent actions of utility management. This is the gold standard of utility law. It’s the a plus. And so PNM back in 2013, over 10 years ago, invested in the Four Corners coal plant. But think about 2013 and 2014, that time period in 2012, everywhere in the United States, coal plants were closing. So this was not like, oh, some anomaly. Everyone was, that was what was on the minds. Why? Because one of the good things that Obama did was he passed the Clean Power Plan and basically it said, hey, you are either going to put on expensive pollution controls or you’re going to come up with alternatives.

So, but PNM, they didn’t do an analysis of what it would cost to have alternatives, which at that time would’ve been solar and gas, frankly, not solar and batteries like now. But at that time, solar and gas was going to be cheaper than reinvesting in this climate altering coal plant that it was also really poor performing and tons of other bad stuff about it, which I don’t have time to go into. But again, they thought, no one’s going to pay attention. No one’s going to look into why we did what we did. And we did. And I said to them, this is a good thing. If you want to think about, and I did this in the LNG case too, by the way. I said, give me all your emails, PNM, between you and your board of directors and also your senior management, by the way, about why you invested in this four corners plant.

And then they gave me 4,000 pages of emails and documents. Well, that’s a lot. And I went through them and I found the needle in that haystack. And what it said was, hey, we have the San Juan generating station just 10 miles away, and we don’t want to cause a distraction. That’s a quote. We don’t want to cause a distraction with the PRC. And so let’s just re-up in Four Corners because we want to continue with our, which they’re the operator of their coal plant, the San Juan generating station. Well, that’s not a legal reason. That is not, is it cost effective for rate payers that there’s no basis for that. That’s their own self-interest. And I found that out. And that came out, and we just won in January of 2024 of finally a ruling that PNM was imprudent when it invested in four corners.

And what did I tell you before? Rate payers were supposed to be held harmless. So that means any harm from that bad investment, our rates should have been lowered because of it. But in fact, no, this commission, this commission, and I’m appealing it, this commission ruled, okay, well, we’re going to only give you a 32% disallowance. We found that the harm was $240 million, but we’re only going to make rate payers be free of 84 million of that and rate payers, you’re going to be stuck with the rest of it. And I don’t think that’s fair. And so we filed an appeal just a couple of days ago and we’re going to say, Hey, Supreme Court, you ruled that rate payers are supposed to be held harmless for the imprudent actions of utility management. Make them pay for it, not us.

John Farrell:
I think one of the things that I admire the most about the work that you’ve done is this ability to really, you get into these legal proceedings and you get discovery, which for people who aren’t living in the legal world, means you get to look at documents, request documents from the utility, and then of course you read through them. I mean, you just talked about going through 4,000 pages. Do you have any advice for organizations that do this kind of intervention about should you be getting an attorney and should you be appealing more things and should you be looking for documents? Because it feels to me that at the heart of a lot of your victories is this willingness to go in and really fight to the bitter end, if you will, but in a way that is really fact-based. You’re just out there seeking for what is the evidence here about whether utility did things according to the law, according to the best practice, and you just keep finding that they don’t.

Mariel Nanasi:
They don’t. And I just will just say, I think the answer, the simple answer is yes. And I just want to say a very quick example. Just like we found that four corners, they invested in it for their own reasons, and it had nothing to do with what was cost effective, which is the standard for investment for rate payers just found that out in the LNG case. So the LNG case that we just won, they were telling rate payers, okay, well, this plan is going to cost $3 more a month. Well, I asked the same question, the same question in discovery to the gas company, and I said, we want all your communication with your parent company, which happens, this one happens to be a foreign corporation in Canada called Amira. And what did it say? It said, we want to build this LNG plant to increase our revenues, and we want to nearly double our what’s called rate base, which is what we all pay, all the customers pay together. That’s called rate base.

So the conglomerate of us, and what they said is right now, New Mexico gas rate payers pay $800 million to the gas company, all of us together. And in four years, they expected to raise rate base to 1.23 billion. And they said that the primary reason for that increase, this is their words, the primary increase was a result of the LNG facility that they proposed. So that went completely against their $3 a month. Oh, it’s just a little $3 a month thing. Don’t worry about it. And then when we confronted them and put that into evidence, that is one of the reasons, one, that we proved that it was not cost effective, and then essentially that they lied to customers when they were talking among themselves to their parent about and bragging how much money they going to make for their shareholders. Oh, that’s where the real juice is. That’s where the facts are.

And so that’s to your point about going in. Yeah, I think that it’s lawyers for the people though, not just lawyers, but lawyers for the people who are willing to do the work and get the discovery and ask the tough questions about, because for them, it’s all about how much money they want to make, and they don’t give a shit about the climate, and they don’t give a shit about poor people, and it’s heartbreaking. And so you have to keep raising these issues. This is what’s at stake for us.

John Farrell:
Well, Mariel, it is always a pleasure to talk to you and to hear about the amazing work that you’re doing. So thank you again for joining me on this podcast and talking about the great work that you’re doing, and for people who want some inspiration about ways to fight the utilities, check out New Energy Economy in New Mexico and Mariel’s work and her wonderful community of practice with folks down there, they are really leading on holding utilities accountable in a way that the rest of us should follow.

Mariel Nanasi:
Thank you, John. Thank you so much for all your work.

John Farrell:
Thank you so much for listening to this episode of Local Energy Rules with Mariel Nanasi, executive director of New Energy Economy. On the show page, look for a link to New Energy Economy’s website to learn about their activist DNA aimed at fighting fossil fuel and nuclear power extraction, and sharing a vision of community-based energy solutions. We’ll also have links to Mariel’s prior appearances on Local Energy Rules, including a rebroadcast of our Democratizing Power Event on episode 154, Mariel’s discussion of the problems with state carbon free policies in episode 72, and our discussions of a public power campaign in Santa Fe to try to tap the Saudi Arabia of solar on episodes 39 and 14. Local Energy Rules is produced by myself and Maria McCoy with editing provided by audio engineer Drew  Birschbach. Tune back into Local Energy Rules every two weeks to hear how we can take on concentrated power to transform the energy system. Until next time, keep your energy local and thanks for listening.

 

Protecting Customers from Expensive Coal and Gas

The investor-owned utility model incentivizes capital expenditures, such as investments in power plants, because this spending has a guaranteed return on equity. By digging through thousands of utility executive emails, Nanasi caught Public Service Company of New Mexico (PNM) red-handed — the utility had invested in the Four Corners coal plant out of self-interest and it was not a prudent investment for the company’s captive customers.

The truth is that it takes a lot of time and you have to love digging, because that’s what this is about. You love digging because they usually don’t do a good job, and they usually are arrogant and assume that no one will look into what they’ve done.

In a separate case before the New Mexico Supreme Court, New Energy Economy and its consumer advocate allies won a $115 million refund from PNM. The utility had failed to issue low-interest securitized bonds for the San Juan Generating Station, resulting in “illegal windfall profits at the expense of New Mexican families.” PNM customers will receive an average of 10 dollars per month as part of the settlement.

Defeating a Massive Utility Merger

When international conglomerates Avangrid and Iberdrola tried to merge with PNM, Nanasi and New Energy Economy stepped in to fight the merger. They gathered support from New Mexicans and demonstrated why the merger was not in the public interest. The Public Regulation Commission found that the risks in merging the companies outweighed the benefits to ratepayers, but Avangrid and Iberdrola appealed this decision to the New Mexico Supreme Court.

On January 2, 2024, Avangrid announced that it had dropped its plans for the merger and withdrew its appeal. Nanasi describes blocking this eight billion dollar merger as one of the biggest victories of her career.

It was Avangrid’s to lose, and they did. They [lost] because they couldn’t overcome their own track record of outages and unreliability, diminished service quality… They were going to bulldoze New Mexico for their own profit. That’s what they have done everywhere else that they have been.

Thwarting the Utility Conspiracy to Delay Community Solar

The New Mexico legislature enabled community solar in 2021, but the program has yet to get off of the ground. Nanasi explains how utilities, which view distributed solar as a threat to their profits, have opposed the bill from the start.

Most recently, the state’s three investor-owned utilities appealed to the New Mexico Supreme Court to vacate the community solar rules. New Energy Economy and other distributed solar advocates argued that the utilities had no legal grounds for their appeal. In March, the Court agreed with the advocates, issuing a same-day decision ordering the implementation of community solar without further delay.

What is it going to take for us to win? We go from winning backwards and figure out what are the things that we need to do to prove our case. And that’s what we keep on trying to do. And sometimes we’re lucky and we win.

Episode Notes

See these resources for more behind the story:

Explore the New Energy Economy website.
Listen to the Local Energy Rules rebroadcast of ILSR’s Democratizing Power event.
Learn more about Nanasi’s work from her previous interviews on the Local Energy Rules podcast: episode 72, episode 39, and episode 14.
Learn more about power plant securitization.

For concrete examples of how towns and cities can take action toward gaining more control over their clean energy future, explore ILSR’s Community Power Toolkit.

Explore local and state policies and programs that help advance clean energy goals across the country using ILSR’s interactive Community Power Map.

This is the 209th episode of Local Energy Rules, an ILSR podcast with Energy Democracy Director John Farrell, which shares stories of communities taking on concentrated power to transform the energy system.

Local Energy Rules is Produced by ILSR’s John Farrell and Maria McCoy. Audio engineering by Drew Birschbach.

This article originally posted at ilsr.org. For timely updates, follow John Farrell on Twitter, our energy work on Facebook, or sign up to get the Energy Democracy weekly update.

Featured Photo Credit: iStock