Ruling means Las Cruces-area customers won’t face retroactive charges tied to overturned 2021 rate order

Organ Mountain News report

SANTA FE - Customers in Las Cruces and across southern New Mexico will not see their electric bills increase to cover losses El Paso Electric incurred under rates that were later overturned, the New Mexico Supreme Court ruled Friday.

In a unanimous opinion, the Court rejected the utility’s attempt to recover millions in losses from 2021 to 2023 through future rates, a move that would have effectively charged customers after the fact.

The decision means the rates customers paid during that period will stand as final, even though the Court previously ruled in 2023 that regulators had violated El Paso Electric’s due process rights when setting those rates.

El Paso Electric had asked the state’s utility regulator, the New Mexico Public Regulation Commission, to allow it to recoup those losses by adding them to rates that took effect in January 2024. The commission denied that request, and the Supreme Court upheld that decision.

At the center of the case is a long-standing legal principle known as the prohibition on retroactive ratemaking — the idea that regulators cannot change the price of past transactions once rates have already been set and paid.

“We agree with the Commission that the rule against retroactive ratemaking prohibits [the utility’s] request,” the Court wrote in its opinion.

The justices explained that allowing El Paso Electric to recover those losses now would amount to retroactively changing what customers should have paid between June 2021 and June 2023 — something the law does not allow.

The ruling draws a clear line for utilities appealing rate decisions: if they want to avoid potential losses while a case is pending, they must take steps during the appeal process.

Specifically, the Court noted that utilities can ask for a stay of a rate order or request interim rates that can later be adjusted. El Paso Electric did not pursue those options while challenging the 2021 rates.

Because the utility continued operating under those rates during the appeal, the Court said it cannot now go back and recover the difference.

The case stems from a 2020 rate application by El Paso Electric and a 2021 decision by the Public Regulation Commission setting the company’s rates. In 2023, the Supreme Court vacated that order, finding that regulators had improperly excluded certain costs and assets from the utility’s rate base.

After the case was sent back to the commission, El Paso Electric proposed a mechanism to recover losses it said it incurred while the earlier rates were in effect. Regulators rejected that proposal, allowing recovery only for a limited period after the Court’s 2023 ruling but not for the earlier two-year span.

In Friday’s opinion, the Supreme Court affirmed that approach and declined the utility’s request to overturn decades of precedent.

The Court emphasized that ratemaking is inherently forward-looking and that allowing retroactive changes would undermine predictability and fairness for both utilities and customers.

For ratepayers, the outcome means there will be no additional charges tied to that earlier rate dispute — and no retroactive adjustments appearing on future bills.