Jan. 9 deadline set, PRC questions why $948,000 fine should be forgiven

Socorro Electric Cooperative’s (SEC) noncompliance with the state’s Public Regulation Commission (PRC) entered new territory last week. It’s a territory PRC Commissioner Gabriel Aguilera said could “hold meaningful precedent” because it is a rare situation where the Commission orders something and a company simply refuses.

During last week’s meeting in Santa Fe, the PRC called upon Socorro Electric Cooperative to provide an accounting of the mis-collected amounts due to SEC’s failure to file their rates; seek SEC’s proposed plan to correct those amounts; and lastly order the cooperative to show why they should not be subject to the Commission’s imposed fines. As of last week, the failure to comply with the fine that has accrued to $948,000.

Socorro Electric has been ordered to respond to the PRC by January 9, 2025. Supreme Court rules In June 2024, the New Mexico Supreme Court ruled rural New Mexico utility companies are not exempt from state regulators’ authority over rates.

The court rejected an argument from Socorro Electric Cooperative that the state’s PRC shouldn’t be able to change and set its rate proposals. The court’s decision made it clear that the PRC has the authority to take such action with all rural electric cooperatives in the state, as set forth by the state Legislature.

The court’s opinion stated, “The Legislature has not distinguished between rural electric cooperatives and other public utilities with respect to the substance or nature of the Commission’s ratemaking powers.”

Rural electric co-ops, which have a board of trustees elected by cooperative members, work differently from the major investor-owned utilities that serve most of the state. While investor owned utilities must seek permission from the PRC to enact new rates, rural electric co-ops’ rates generally go into effect as soon as a company proposes them, per the state’s Public Utility Act.

However, if enough members of the co-op protest a rate change, the PRC can investigate if the change is reasonable. That’s what happened with the Socorro Electric Cooperative, which dates back to 2018.

In December 2018, the Socorro Electric Cooperative filed a notice with the PRC that it would soon increase rates by 5% to raise revenue by $1.25 million. After 33 SEC members objected, the PRC conducted a hearing on the matter.

Ultimately, state regulators decided to reject the rate-increase proposal, adopting an argument from their hearing examiner that the utility wanted the price increase to advance the objectives of its board of trustees rather than needing it financially to operate.

The Socorro Electric Cooperative appealed the ruling to the New Mexico Supreme Court, arguing the PRC had exceeded its scope of authority.

“The Legislature has expressly recognized that the Commission may regulate a rural electric cooperative’s rates and that the regulation of these rates is a matter of public concern,” the opinion states.

The Public Utility Act lays out authority and mandate for the PRC to change rates following a hearing, according to the court.

“If the Commission finds those rates are unreasonable, then the Commission may fix just and reasonable rates for that cooperative,” the opinion states.

The court also found that the PRC provided enough evidence to prove the Socorro utility’s rate increase wasn’t in the public interest.

Since the court ruled that the PRC has the authority to change the rates, it deferred to the PRC’s “discretion and expertise in concluding that increased revenues would not benefit” the customers or members of the Socorro utility.

The PRC’s rate design change for the Socorro Electric Cooperative from 2019 stands, which denied the proposed $25 million revenue requirement and included reallocations for different service classes, like residential, commercial and irrigation classes.

Publisher’s note: The Albuquerque Journal’s archives contributed to the story’s history.