The New Mexico Supreme Court ruled Monday that nonprofit rural electric cooperatives do not have complete autonomy over their rates. The decision means state utility regulators can set the rates as they see fit. The co-op at the center of the lawsuit is calling the decision “dangerous,” and wants the state Legislature to step in.
There are 15 rural electric cooperatives that dot the state – providing electricity to areas that otherwise would not have access – like the Socorro Electric Cooperative (SEC).
“We were disappointed in the ruling because rural cooperatives are different from a PNM or an Xcel or El Paso Electric, where they have shareholders and have to get a certain rate of return,” said SEC General Manager Joseph Herrera. “Here we're looking just to, as a nonprofit, maintain reasonable rates.”
In their ruling, the Justices noted that the Legislature has not distinguished rural electric co-ops from other, often much larger, public utilities when it comes to the power of the Public Regulation Commission to set rates.
Herrera said he wants lawmakers to provide that clarity in state law.
“It's a very dangerous thing that we're entering now,” he said. “Because the commission, per this ruling, has some new authority that we still believe they don't have to redo the rates that are proposed by a cooperative.”
The case stems back to 2018 when the SEC proposed a $1.25 million rate hike to balance its budget and meet its debt obligations. The City of Socorro and the New Mexico Institute of Mining and Technology objected to the increase, filing a protest petition with the PRC.
In its review, the commission found the SEC proposal “not just or reasonable,” and rejected it, adopting a different rate structure instead.
In the end, the SEC’s revenue stayed flat.
Now, the SEC is again looking to increase its rates in the next year once it completes a cost of service study. Only this time, the co-op estimates its proposal could be three or four times the original ask.
