NM High Court Rules Utilities Must Offer Post Hoc Refunds for Excessive Rate Hikes

The New Mexico Supreme Court found on December 12 that the New Mexico Public Regulation Commission (NMPRC) can order the state’s largest electric utility to reimburse customers, should it be determined that a rate hike is unlawful after it is implemented, according to a report in the Albuquerque Journal.

The court found that it was unacceptable that the NMPRC currently has no refund mechanism – and opted to require paybacks when a utility over-collects from customers, the Journal reported.

The high court ruling came after the five justices had rejected an emergency motion filed by the nonprofit environmental group, New Energy Economy – which asked the court to place a hold on part of a rate increase (Docket No.15-00261-UT) that went into effect in October for Public Service Co. of New Mexico (PNM) customers.

On September 28, the NMPRC had, by a 3-2 vote, approved an annual revenue increase of $65.7 million – or roughly half of the initial amount for which the utility had requested. The commission staff said they anticipated that the approved rate hike would increase electricity rates of the average customer by 7.6 percent, with residential customers seeing an increase of about 9 percent

Had the New Energy Economy motion before the court been successful, PNM customers would have seen their bills decrease by between $1.50 and $3.50 per month, the local news outlet said.

Chief Justice Petra Jimenez Maes stated that, while the motion was denied, the New Mexico Public Regulation Commission should seek reimbursement on behalf of customers from PNM, should the court determine that the rate increase is unlawful in an expedited case that will be heard in the new year.

Pending the court’s decision, it had been unclear whether the NMPRC could compel PNM to rebate customers for rate hikes that already had gone into effect.

The hearing hinged on New Energy Economy’s ability to prove both that they were likely to be successful in their appeal and that the rate hikes currently in effect are causing “irreparable harm” to customers.

Justices pointed to case law that indicated that economic hardships do not qualify as irreparable harm because they can be reversed by simply paying those who have been harmed.

For its part, PNM argued that the potential for irreparable financial harm was equal for both the company and its ratepayers, the newspaper stated, because the utility could be missing out on millions of dollars in unpaid rates now, if the court later were tp choose to increase the approved rate hike.

However, that line of reasoning did not appear to sway the justices.

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