Opinion ID: 2551972
Heading Depth: 2
Heading Rank: 9

Heading: End Result of the Commission's Order

Text: {103} Although we have determined that individual issues decided by the Commission are not supported by substantial evidence, the Commission nonetheless contends that this Court is bound to apply an end result test and that PNMGS fails to demonstrate that the end result of decreasing rates by approximately $6.9 million is unreasonable. See Hope Natural Gas Co., 320 U.S. at 602, 64 S.Ct. 281 (If the total effect of the rate order cannot be said to be unjust and unreasonable, judicial inquiry ... is at an end. The fact that the method employed to reach that result may contain infirmities is not then important.), quoted in part in Attorney Gen. v. New Mexico Pub. Serv. Comm'n, 111 N.M. 636, 642, 808 P.2d 606, 612 (1991). While it is true that the Commission has considerable discretion in fixing rates charged by utilities, this `considerable discretion' does not mean ... that the [Commission's] authority is boundless. Sandel, 1999-NMSC-019, ¶ 16, 127 N.M. 272, 980 P.2d 55. Nor does the flexibility necessarily accorded the Commission in setting rates render this Court's review of its orders superficial in nature. While the result reached in a rate proceeding is ultimately controlling, we must review the method employed by the Commission and the Commission's application of its chosen methodology to the evidence in the record in order to determine in a meaningful way whether the result is unreasonable or unlawful. {104} In this case, the Commission determined on the basis of substantial evidence that PNMGS is entitled to a rate of return on its investment of 9.17%. Given this determination, we believe that the Commission's decision to deny recovery for the costs involved in the reacquisition of debt, as well as the Commission's complete denial of the Mewbourne settlement costs and PNMGS's rate case expenses for this proceeding, unreasonably hinders PNMGS's ability to obtain the reasonable rate of return established by the Commission. See, e.g., General Tel. Co., 98 N.M. at 757, 652 P.2d at 1208 (The deduction of 41% from the rate of return determined to be just and reasonable is in conflict with the SCC's own finding as to the necessary rate of return, and exceeded the SCC's authority.); Hobbs Gas Co., 94 N.M. at 734-35, 616 P.2d at 1119-20 (stating that the Commission's denial of a requested acquisition adjustment was not supported by substantial evidence and resulted in a return on actual equity capital of only 7.5 percent rather than the 15 percent which the Commission admits to be a `just and reasonable' return on equity). We conclude that the end result of the final order is unreasonable and unlawful.