Socorro Electric Cooperative

It’s been six months since the Public Regulation Commission ordered Socorro Electric Cooperative to adopt a new rate structure. In that time, the co-op has delayed implementing the rates while waiting for the New Mexico Supreme Court to hear its side of the story.

The co-op is appealing in the higher court because it does not believe that the PRC's Final Order is lawful.

As noted in the PRC’s new rate structure, New Mexico Tech will benefit from the decrease in its electric bills as a result of the 1.9 percent decrease in the large commercial rate and the economic development rate. The City of Socorro indicated a delay of the rate implementation would harm it because it expected to see benefits from the PRC's Final Order in the form of new, cost-based LED rates as well as the economic development rate and relief from the co-op’s improper collection practices.

The PRC found the joint response from the City, Tech, and Socorro resident Donald Steinnerd persuasive; thus, co-op’s request for delay implementing the new rates was denied.

In his response to the PRC’s decision, Socorro Mayor Ravi Bhasker said that by denying the co-op's rate request, the Public Regulation Commission was looking out for the people of Socorro.

“These decisions are a huge win for the people of Socorro and sends a message across the state that the boards of rural electric cooperatives must serve all their members, not the other way around,” Bhasker said. “I am proud to say that the PRC made both of these determinations based on the collective efforts of the City, New Mexico Tech, and PRC Staff.”

In its original argument, the co-op contended that its members would suffer irreparable harm if the stay were not granted because if the Supreme Court ruled in its favor, the cooperative would have to undo the adjusted rates, and that would cost the co-op a substantial amount of money. Also, the co-op noted no harm would ensue if the stay were granted.

"The Commission … finds allowing the Final Order to take effect will not irreparably harm SEC, however, the stay of the Final Order would harm both the city and Tech," the PRC order noted. "…the Motion should be denied because there is not a likelihood that SEC will prevail on the merits of its appeal, and the evidence in the record demonstrates SEC will not suffer irreparable harm unless the stay is granted.”

The higher court has not heard the case yet, but that didn’t stop the City and New Mexico Tech, et al. from filing a motion with the PRC on April 3 to compel the co-op to quit stalling.

Despite a response motion by the co-op on April 13 to wait until the Supreme Court decides on the co-op's motion to stay the Final Order, the PRC ruled on April 15 that the co-op must comply with its Final Order within 60 days or risk a penalty of at least $185,000 levied against the Board of Trustees.

The commission’s “Order granting the City of Socorro, Tech, and Staff’s joint motion to compel Socorro Electric Cooperative to comply with the Final Order and order assessing fines for non-compliance” was decided during its monthly meeting.

In the order, the PRC ruled that the co-op has violated the order by “its deliberate non-compliance with the final order for 185 days.”

Accordingly, it can fine the co-op $1,000 per day for the 185 days of non-compliance – which comes to $185,000 – plus additional fines of $1,000 a day for each subsequent day of violations.

The order stipulated that fines “shall be borne by SEC’s Board of Trustees and are not recoverable in rates.” The PRC, however, is giving the Board of Trustees some wiggle room by giving it 60 days to comply with the recommended rate structure.

Co-op General Manager Joseph Herrera said the co-op would abide by the ruling, and that members will see the new rates within the next two months.

The co-op said in an April 15 press release that it “recognizes and respects the process in place for requesting utility rate changes before the PRC, but because the PRC’s Final Order inappropriately ignored the authority of SEC’s democratically elected Board of Trustees and was not in the best interests of SEC’s members.”

Board of Trustees President Anne Dorough made clear the co-op's position on the legality of the PRC's action at the board's October 2019 meeting when she read a paragraph from the New Mexico statute regarding public utilities.

“Section A, Paragraph 3, says, ‘Experience has also proven that rural electric cooperatives are substantially different from investor-owned utilities, particularly relative to setting rates. Under the Rural Electric Cooperative Act, rural electric cooperatives are nonprofit membership corporations whose members have direct control over the cooperative's rates through an elected board of trustees,’” Dorough said. “Which would indicate the board is supposed to set the goal and the rates for the cooperative.”

The ruling by the PRC stems from an initial application in 2018 by the co-op to implement a rate increase of 5.06 percent, or $1,249,993 in revenue annually.

“You may recall that the PRC also recently denied SEC’s request to raise your rates by $1.25 million," Bhasker said. “Instead, the PRC granted SEC a zero percent rate increase.”

Bhasker added that if the co-op’s appeal to the Supreme Court goes their way, “SEC will not only get their $1.25 million increase, they will also be free to increase electric rates whenever they please, with no oversight or consumer protections.

“By actively protesting SEC’s rate increase since 2018, the City has already kept over $2 million of your money out of the hands of a Board of Trustees that is not looking out for your interests,” Bhasker said. “Worse, SEC continues to spend your money defending its very poor decision not to comply the PRC's Rate Order denying them the million dollar rate increase they requested. “

Herrera told The Chieftain that residential customers will see an increase of $1.50 on the system charge.

“This means that more than 10,000 SEC residential rate class members will see an increase in their electric costs to pay for the benefit of reduced rates that will be received by only 178 SEC Commercial rate class members, which includes New Mexico Tech.”