Opinion ID: 6216636
Heading Depth: 3
Heading Rank: 2

Heading: Separation of powers: legislative powers

Text: {44} New Energy next argues that the ETA invades the Commission’s “responsibility for regulating public utilities” under Article XI, Section 2 of the New Mexico Constitution by purportedly eliminating the Commission’s authority to review and disallow a public utility’s energy transition costs for imprudence or unreasonableness. As we discussed in paragraph 27, supra, we do not reach the unripe question regarding the extent of the Commission’s authority in the ratemaking proceedings contemplated by the ETA. See § 62-18-4(B)(10); § 62-18- 5(F)(8). Yet, even if we were to accept New Energy’s construction of the Act, we would still reject New Energy’s separation of powers challenges. {45} We once again emphasize that the Commission is constitutionally tasked with the “responsibility for regulating public utilities as provided by law.” N.M. Const. art. XI, § 2 (emphasis added); Egolf, 2020-NMSC-018, ¶ 33 (quoting the 2012 amendment of Article XI, Section 2 of the New Mexico Constitution and noting that “[t]he Commission has a constitutional duty to regulate public utilities ‘in such manner as the legislature shall provide’”). Thus, while the New Mexico Constitution delegates to the Commission the exclusive responsibility for carrying out public utility regulatory policy, the parameters of that policy are, in the first instance, for the Legislature to decide. See, e.g., Egolf, 2020-NMSC-018, ¶ 33 (explaining that 29 the discretion to make or modify applicable law “is not within the discretion of the Commission and is instead a function of our Legislature”); Sandel, 1999-NMSC019, ¶ 13 (“The nature and extent of the [Commission’s] authority was defined by the Legislature when it enacted and amended the [New Mexico Public Utility Act].”); City of Albuquerque v. N.M. Pub. Regul. Comm’n, 2003-NMSC-028, ¶¶ 1622, 134 N.M. 472, 79 P.3d 297 (discussing the Commission’s rulemaking authority as deriving from the Legislature); accord Duquesne Light Co. v. Barasch, 488 U.S. 299, 313 (1989) (“We have never doubted that state legislatures are competent bodies to set utility rates.”). {46} We do not mean to suggest that the Legislature’s power to set rates or enact utility legislation is unbounded, as the legislation must still accord with the mandates of the Constitution. “But if the system fails to pass muster, it will not be because the legislature has performed part of the work.” Duquesne Light Co., 488 U.S. at 314. We must reject New Energy’s separation of powers arguments under Article III, Section 1 and Article XI, Section 2 in light of this fundamental principle of constitutional law. {47} New Energy also insists that the Legislature is constitutionally required to confer upon the Commission the authority to disallow, as imprudent, some or all of a utility’s energy transition costs. We disagree. “The prudent investment theory 30 provides that ratepayers are not to be charged for negligent, wasteful or improvident expenditures, or for the cost of management decisions which are not made in good faith.” In re Pub. Serv. Co. of N.M., 101 P.U.R. 4th 126 (1989). However, the prudent investment theory is but one of many accepted ratemaking methodologies, and we have repeatedly recognized that “[t]he Commission is not bound to the use of any single formula or combination of formulae in determining rates.” PNM v. PRC, 2019-NMSC-012, ¶ 10 (brackets, internal quotation marks, and citation omitted); accord Fed. Power Comm’n v. Hope Nat. Gas Co., 320 U.S. 591, 601-02 (1944) (recognizing that legislatures may regulate rates under their police powers and that legislatively enabled commissions are “not bound to the use of any single formula or combination of formulae in determining rates”). To the contrary, “[n]o one of the many formulas from time to time used to determine a rate base such as prudent investment . . . is imposed by the Constitution upon the [C]ommission for use in determining rates.” State Corp. Comm’n v. Mountain States Tel. & Tel. Co., 1954NMSC-044, ¶ 19, 58 N.M. 260, 270 P.2d 685; Duquesne Light Co., 488 U.S. at 316 (“The Constitution within broad limits leaves the States free to decide what ratesetting methodology best meets their needs in balancing the interests of the utility and the public.”). 31 {48} We thus reject New Energy’s assertion that the Legislature violated separation of powers by failing to explicitly provide for a prudence review under the ETA. As we discussed in paragraph 27, supra, we do not reach the unripe question whether such a review is statutorily authorized, but it is apparent that this review is not constitutionally required.