The ruling affirms regulators’ approval of about $5.7 million in storm-related electricity costs already recovered from southern New Mexico customers after the 2021 energy crisis.

Damien Willis, Organ Mountain News

LAS CRUCES - The New Mexico Supreme Court on Monday upheld state regulatory decisions allowing El Paso Electric to recover millions of dollars in electricity costs tied to Winter Storm Uri, the 2021 energy crisis that disrupted power and natural gas systems across Texas and parts of the Southwest.

In a unanimous opinion, the Court rejected a challenge brought by the city of Las Cruces over approximately $5.7 million in costs tied to electricity purchased from the Palo Verde Nuclear Generating Station during the storm. The Court concluded the New Mexico Public Regulation Commission acted lawfully in allowing the utility to pass those costs along to customers through an approved pricing formula.

However, El Paso Electric spokesperson Jacob Reyes told Organ Mountain News the costs discussed in the case have already been recovered from customers in prior years and will not result in new charges tied to the Court’s ruling.

“Yes, this money has already been recovered,” Reyes said in an email Monday night. “There is no customer impact.”

Winter Storm Uri brought extreme cold, widespread power outages and natural gas supply disruptions to Texas and neighboring states in February 2021. While southern New Mexico avoided the large-scale blackouts seen in Texas, the storm triggered major regional energy price spikes and prompted a series of utility and regulatory disputes that have continued through the courts for years.

According to the Court’s opinion, El Paso Electric relied in part on power generated by the Palo Verde nuclear facility in Arizona to maintain uninterrupted electric service during the storm period.

The dispute centered on a longstanding “proxy price” formula approved by regulators to calculate the cost of electricity generated at the nuclear plant. Las Cruces argued the PRC acted improperly in allowing the utility to use that formula during the Uri emergency, while the utility and regulators maintained the pricing method had been repeatedly approved in earlier rate cases.

Justice David K. Thomson, writing for the unanimous Court, concluded the PRC’s decisions were supported by substantial evidence and reflected a rational connection between the facts and the agency’s actions.

“The Commission’s final orders established the requisite ‘rational connection between the facts found and the choices made,’ and were supported by substantial evidence,” the opinion states.

The Court also adopted a new standard giving what it described as a “high level of deference” to the PRC’s interpretation of its own prior orders, calling the issue one of first impression in New Mexico.

The justices concluded El Paso Electric reasonably relied on the Palo Verde facility during the storm and upheld the PRC’s finding that the resource was the most cost-effective option available to maintain service during the crisis.

The Court’s decision leaves intact the PRC’s earlier approval allowing El Paso Electric to spread the storm-related costs over a 12-month period rather than collecting them in a single month, an approach regulators said helped reduce potential “rate shock” for customers.

Damien Willis is founder and editor of Organ Mountain News. If you have a personal story to share or a lead we should follow up on, reach out at OrganMountainNews@gmail.com or connect with him on X at @damienwillis.