2023 New Mexico Statutes › Chapter 62 - Electric, Gas and Water Utilities › Article 9 - The Utility Franchise › Section 62-9-1 - New construction; ratemaking principles.

A. No public utility shall begin the construction or operation of any public utility plant or system or of any extension of any plant or system without first obtaining from the commission a certificate that public convenience and necessity require or will require such construction or operation. This section does not require a public utility to secure a certificate for an extension within any municipality or district within which it lawfully commenced operations before June 13, 1941 or for an extension within or to territory already served by it, necessary in the ordinary course of its business, or for an extension into territory contiguous to that already occupied by it and that is not receiving similar service from another utility. If any public utility or mutual domestic water consumer association in constructing or extending its line, plant or system unreasonably interferes or is about to unreasonably interfere with the service or system of any other public utility or mutual domestic water consumer association rendering the same type of service, the commission, on complaint of the public utility or mutual domestic water consumer association claiming to be injuriously affected, may, upon and pursuant to the applicable procedure provided in Chapter 62, Article 10 NMSA 1978, and after giving due regard to public convenience and necessity, including reasonable service agreements between the utilities, make an order and prescribe just and reasonable terms and conditions in harmony with the Public Utility Act to provide for the construction, development and extension, without unnecessary duplication and economic waste.
B. If a certificate of public convenience and necessity is required pursuant to this section for the construction or extension of a generating plant or transmission lines and associated facilities, a public utility may include in the application for the certificate a request that the commission determine the ratemaking principles and treatment that will be applicable for the facilities that are the subject of the application for the certificate. If such a request is made, the commission shall, in the order granting the certificate, set forth the ratemaking principles and treatment that will be applicable to the public utility's stake in the certified facilities in all ratemaking proceedings on and after such time as the facilities are placed in service. The commission shall use the ratemaking principles and treatment specified in the order in all proceedings in which the cost of the public utility's stake in the certified facilities is considered. If the commission later decertifies the facilities, the commission shall apply the ratemaking principles and treatment specified in the original certification order to the costs associated with the facilities that were incurred by the public utility prior to decertification.
C. The commission may approve the application for the certificate without a formal hearing if no protest is filed within sixty days of the date that notice is given, pursuant to commission order, that the application has been filed. The commission shall issue its order granting or denying the application within nine months from the date the application is filed with the commission. Failure to issue its order within nine months is deemed to be approval and final disposition of the application; provided, however, that the commission may extend the time for granting approval for an additional six months for good cause shown.
D. In an application for a certificate of public convenience and necessity for an energy storage system, the commission shall approve energy storage systems that:
(1) reduce costs to ratepayers by avoiding or deferring the need for investment in new generation and for upgrades to systems for the transmission and distribution of energy;
(2) reduce the use of fossil fuels for meeting demand during peak load periods and for providing ancillary services;
(3) assist with ensuring grid reliability, including transmission and distribution system stability, while integrating sources of renewable energy into the grid;
(4) support diversification of energy resources and enhance grid security;
(5) reduce greenhouse gases and other air pollutants resulting from power generation;
(6) provide the public utility with the discretion, subject to applicable laws and rules, to operate, maintain and control energy storage systems so as to ensure reliable and efficient service to customers; and
(7) are the most cost effective among feasible alternatives.
E. As used in this section:
(1) "energy storage system" means methods and technologies used to store electricity; and
(2) "mutual domestic water consumer association" means an association created and organized pursuant to the provisions of:
(a) Laws 1947, Chapter 206; Laws 1949, Chapter 79; or Laws 1951, Chapter 52; or
(b) the Sanitary Projects Act [Chapter 3, Article 29 NMSA 1978].
History:
Laws 1941, ch. 84, § 46; 1941 Comp., § 72-701; 1953 Comp., § 68-7-1; Laws 1965, ch. 289, § 10; 1967, ch. 96, § 1; 1990, ch. 95, § 1; 2000, ch. 51, § 1; 2005, ch. 340, § 1; 2019, ch. 65, § 25.
ANNOTATIONS
Compiler's notes.
— Sections 62-9-1 to 62-9-7 of the Public Utility Act are still effective as the repeal of Chapter 62, Article 6 by Laws 1998, Chapter 108, Section 82, effective July 1, 2003 Chapter 108, Section 82 was repealed prior to taking effect by Chapter 23, Section 1, Laws 2003. Although Laws 2003, Chapter 336, Section 8, amended Laws 1998, Chapter 82, as amended, an amendment of a repealed section is ineffective.
See
Quintana v. N.M. Dep't of Corrs., 100 N.M. 224, 668 P.2d 1101 (1983). Laws 2003, Chapter 416, Section 5 also repealed Laws 1998, Chapter 108, Section 82, as amended, a second time, however, that repeal is of no effect as the section had previously been repealed by Chapter 23, Section 1, Laws 2003.
The 2019 amendment,
effective June 14, 2019, provided guidelines for the public regulation commission when reviewing for approval an application for a certificate of public convenience and necessity for an energy storage system, and defined "energy storage system; added a new Subsection D and redesignated former Subsection D as Subsection E; and in Subsection E, added a new Paragraph E(1) and redesignated former Paragraphs E(1) and E(2) as Subparagraphs E(2)(a) and E(2)(b), respectively.
The 2005 amendment,
effective July 1, 2005, added Subsection B to provide for the determination of the rate making principles and treatment that will be applicable for a facility that is subject to a certificate of public convenience and necessity; and added Subsection C to provide for the approval of the certificate of public convenience and necessity without a hearing.
The 2000 amendment,
effective May 17, 2000, designated the existing provisions of the section as Subsection A, and in Subsection A deleted "after the effective date of this 1941 act" following "No public utility shall" in the first sentence, substituted "June 13, 1941" for "the effective date of this 1941 act" in the second sentence, deleted "Notwithstanding any other provision of the Public Utility Act, as amended, or any privilege granted under that act" from the beginning of the third sentence, and added Subsection B.
The 1990 amendment,
effective May 16, 1990, inserted "or mutual domestic water consumer association" following "public utility" in three places, substituted "Chapter 62, Article 10 NMSA 1978" for "Sections 68-8-1 through 68-8-16 New Mexico Statutes Annotated, 1953 Compilation" in the third sentence and made numerous stylistic changes throughout the section.
Constitutionality.
— The preference in this section indicated by its protection of mutual domestic water consumer associations from invasion by a regulated utility but not from an unregulated utility does not lack a rational basis, and an argument that it unconstitutionally discriminates against the invaded utility solely on the basis of the status of the invader was without merit.
Morningstar Water Users Ass'n v. N.M. Pub. Util. Comm'n
, 1995-NMSC-062, 120 N.M. 579, 904 P.2d 28 (decided prior to 2000 amendment).
Deference to commission interpretation.
— The court will defer to the public regulation commission's interpretation of the ambiguous phrase "unreasonably interfere with the service or system" because the public regulation commission has policy-making authority to plan and coordinate the activities of New Mexico public utilities and because the public regulation commission has developed the expertise to understand the operation of public utilities.
Do a Ana Mut. Domestic Water Consumers Ass'n v. N.M. Pub. Regulation Comm'n
, 2006-NMSC-032, 140 N.M. 6, 139 P.3d 166.
Interpretation of "unreasonably interfere with the service or system".
— The public regulation commission interpretation of the phrase "unreasonably interfere with the service or system", which presumes that all contiguous territory lies within a utility's "service or system", and its definition of "contiguous" to include territory within one-half mile of a public utility's pipes or facilities are not arbitrary or capricious.
Do a Ana Mut. Domestic Water Consumers Ass'n v. N.M. Pub. Regulation Comm'n
, 2006-NMSC-032, 140 N.M. 6, 139 P.3d 166.
Substantial evidence of interference.
— Evidence that encroachment by a competing public utility on the service area of an objecting public utility would interfere with the objecting public utility's physical system, planning to provide future service and ability to realize economies of scale for its customers is substantial evidence of interference with the service or system of the objecting public utility.
Do a Ana Mut. Domestic Water Consumers Ass'n v. N.M. Pub. Regulation Comm'n
, 2006-NMSC-032, 140 N.M. 6, 139 P.3d 166.
State engineer approval of water rights
obtained by an encroaching public utility to be used in disputed service area occupied by another public utility does not preclude the public regulation commission from entering an order denying the encroaching public utility the right to provide service in the disputed area.
Do a Ana Mut. Domestic Water Consumers Ass'n v. N.M. Pub. Regulation Comm'n
, 2006-NMSC-032, 140 N.M. 6, 139 P.3d 166.
Water users association not within commission's jurisdiction.
— A water users association formed under Chapter 73, Article 5 NMSA 1978 was not a mutual domestic water consumer within the meaning of this section; further, absent any evidence showing the association was subject to the Public Utility Act, it did not come within the jurisdiction of the public utility commission (now public regulation commission).
Morningstar Water Users Ass'n v. N.M. Pub. Util. Comm'n
, 1995-NMSC-062, 120 N.M. 579, 904 P.2d 28 (decided prior to 2000 amendment).
City not within commission's jurisdiction.
— A city operating a water facility which had not elected to come under the Public Utility Act and which had a population of less than 200,000 was not a public utility within the jurisdiction of the public utility commission (now public regulation commission).
Morningstar Water Users Ass'n v. N.M. Pub. Util. Comm'n
, 1995-NMSC-062, 120 N.M. 579, 904 P.2d 28 (decided prior to 2000 amendment).
Certificate is needed for construction, but not for extensions where lawfully operating.
— This section prohibits construction of any facilities for public utility service without first obtaining a certificate of convenience and necessity, and provides that the holder of a certificate need not get a permit for extensions within a district where it has lawfully commenced operations, or to territory being served by it and necessary in the ordinary course of its business.
N.M. Elec. Serv. Co. v. Lea Cnty. Elec. Coop.
, 1966-NMSC-046, 76 N.M. 434, 415 P.2d 556, cert. denied, 385 U.S. 969, 87 S. Ct. 506, 17 L. Ed. 2d 433.
New certificate not required for service to few transferred customers.
— It is not required that utility obtain a new certificate for the purpose of providing service to a few customers who are to be transferred to it from another utility.
Gonzales v. Pub. Serv. Comm'n
, 1985-NMSC-038, 102 N.M. 529, 697 P.2d 948.
1967 amendment to this section did not annul appellant's certificate
of public convenience and necessity which was valid at the date of amendment.
Pub. Serv. Co. v. N.M. Pub. Serv. Comm'n
, 1974-NMSC-045, 86 N.M. 255, 522 P.2d 802.
Other provisions govern revocation of certificate.
— If the commission is assumed to have power to revoke a certificate, the authority as well as the procedure therefor is found in Sections 62-10-1 to 62-10-16 NMSA 1978 rather than in Sections 62-9-1 and 62-9-4 NMSA 1978, as contended by the commission.
Pub. Serv. Co. v. N.M. Pub. Serv. Comm'n
, 1974-NMSC-045, 86 N.M. 255, 522 P.2d 802;
N.M. Elec. Serv. Co. v. Lea Cnty. Elec. Coop.
, 1966-NMSC-046, 76 N.M. 434, 415 P.2d 556, cert. denied, 385 U.S. 969, 87 S. Ct. 506, 17 L. Ed. 2d 433 (1966).
Commission cannot deny right to continue under valid certificate.
— The commission cannot deny to service company its right to continue in the area covered by its certificate if its certificate has been exercised as required by Section 62-9-4 NMSA 1978, or, in other words, if its certificate is valid in the area sought to be served by it, even though other public utilities have overlapping or conflicting certificates; furthermore, the commission cannot hold existing franchise rights null and void, nor can it make an order which would conflict with Section 62-9-2 B NMSA 1978, which states that when certificates granted utilities under that section overlap, certificates theretofore issued and exercised within the time required are valid under Section 62-9-4 NMSA 1978 and both utilities shall be permitted to continue service.
Pub. Serv. Co. v. N.M. Pub. Serv. Comm'n
, 1974-NMSC-045, 86 N.M. 255, 522 P.2d 802;
N.M. Elec. Serv. Co. v. Lea Cnty. Elec. Coop.
, 1966-NMSC-046, 76 N.M. 434, 415 P.2d 556, cert. denied, 385 U.S. 969, 87 S. Ct. 506, 17 L. Ed. 2d 433.
Even though commission could find certificate void under this section.
— A conclusion that the certificate of a public service company was null and void, if based upon proper findings, could probably be made in determining the issues in a hearing under this section as a necessary incident of the larger questions presented thereunder.
Pub. Serv. Co. v. N.M. Pub. Serv. Comm'n
, 1974-NMSC-045, 86 N.M. 255, 522 P.2d 802;
N.M. Elec. Serv. Co. v. Lea Cnty. Elec. Coop.
, 1966-NMSC-046, 76 N.M. 434, 415 P.2d 556, cert. denied, 385 U.S. 969, 87 S. Ct. 506, 17 L. Ed. 2d 433.
If holder does not exercise certificate in time.
— A certificate of public convenience and necessity cannot be declared null and void in the absence of findings by the commission, based upon substantial evidence, that the certificate holder failed to exercise its right with diligence.
Pub. Serv. Co. v. N.M. Pub. Serv. Comm'n
, 1974-NMSC-045, 86 N.M. 255, 522 P.2d 802;
N.M. Elec. Serv. Co. v. Lea Cnty. Elec. Coop.
, 1966-NMSC-046, 76 N.M. 434, 415 P.2d 556, cert. denied, 385 U.S. 969, 87 S. Ct. 506, 17 L. Ed. 2d 433.
Formerly, section did not apply to rural electric cooperatives.
Socorro Elec. Coop. v. Pub. Serv. Co.
, 1959-NMSC-105, 66 N.M. 343, 348 P.2d 88; 1957 Op. Att'y Gen. No. 57-31.
Section does not apply to water and sanitation districts.
— Water and sanitation districts are not required by statute to obtain a certificate of convenience and necessity as are public utilities under the jurisdiction of the commission. 1971 Op. Att'y Gen. No. 71-56 (decided prior to 2000 amendment).
Law reviews.
— For article, "Cost of Service Indexing: An Analysis of New Mexico's Experiment in Public Utility Regulation," see 9 N.M.L. Rev. 287 (1979).
Am. Jur. 2d, A.L.R. and C.J.S. references.
— 36 Am. Jur. 2d Franchises §§ 6, 7; 64 Am. Jur. 2d Public Utilities §§ 237, 277.
Validity of contract between public utilities other than carriers, dividing territory and customers, 70 A.L.R.2d 1326.
Public utility's right to recover cost of nuclear power plants abandoned before completion, 83 A.L.R.4th 183.
73B C.J.S. Public Utilities §§ 3, 66, 69, 99.