Utilities tell court PRC overstepped in new IRP rule; commission says rule is procedural

Carol Clifford, counsel for the appellants, opened oral argument before the court saying investor-owned utilities are appealing an order by the New Mexico Public Regulation Commission that "radically amends the integrated resource plan rule" long used in the state. Clifford told the court the commission has "set aside this court's test" and instead looks to what she described as a "web of authority" spanning multiple statutes to justify new oversight of procurement and requests for proposals.

Clifford said the amended rule requires utilities to incorporate competing IRPs and allows the commission to impose extensive conditions on procurement. "There are 10 conditions for the request for proposal and nine conditions for bid evaluation," she said, and the rule inserts an "independent monitor" as "the eyes and ears of the commission" during the RFP, bid-evaluation and resource-selection processes. The utilities argue those changes place the commission in the position of directing procurements, raising separation-of-powers and procedural due-process claims.

Counsel pressed that the IRP statute is a planning statute intended to be developed by the utilities and to inform later procurement proceedings, and that prior decisions — including the court's treatment of the Renewable Energy Act and the New Energy Economy matter — limit the commission's authority to order procurements under an IRP. Clifford said the amended rule, by treating alternative plans from intervenors as part of the utility filing and by changing the acceptance/approval dynamic under section 9, denies utilities a hearing and compels them to accommodate changes proposed outside the hearing room.

Erin Loke, appearing for the Public Regulation Commission with Robert Lundine, told the court the rule preserves a utility-driven IRP and that the commission's oversight is narrow and procedural. "The IRP rule limits the commission on what it can order," Loke said, arguing the commission's role is a technical compliance review and that acceptance of a statement of need and action plan is not the substantive approval of a procurement. Loke described the independent monitor as a monitor rather than an evaluator, explaining the monitor is selected from a qualified pool, contracted with the utilities, and that the commission "cannot rely solely on the independent monitor's reports" in later proceedings.

Loke cited more recent statutes she said support commission authority, including provisions allowing competitive solicitations for energy-efficiency and load-management resources, and broader statutory grants that the commission argued give it power to supervise public utilities "in every aspect" necessary to ensure fair, just and reasonable rates. She characterized the rule as a transparency and feedback mechanism intended to prevent surprises in later procurement or rate proceedings rather than a transfer of decision-making authority over bid selection.

Both sides referenced precedent: the appellants relied on separation-of-powers and due-process authorities including Sandell and the court's treatment of RFP requirements in New Energy Economy, while the commission emphasized statutory changes the commission views as expanding its implied authority. Counsel for the utilities warned the rule's mechanics — particularly changes to section 9's acceptance process and the insertion of an independent monitor into RFP operations — create a "decisional cul-de-sac" that could block utilities from issuing RFPs until their IRP is "accepted" under the new process.

The justices asked questions about the line between procedural review and substantive control, the contract and selection process for the independent monitor, and whether subsequent procurement or rate proceedings provide adequate opportunity for utilities to rebut monitor findings. Both sides told the court that later proceedings (procurement approvals or general rate cases) allow parties to present evidence and expert testimony to rebut monitor reports and to contest the reasonableness of costs.

The court heard extended argument and questioning on separation-of-powers, whether the rule's acceptance standard denies adjudicatory process, and whether the statutory scheme provides explicit or necessarily implied authority for the commission's amendments. No decision was announced during oral argument.