Nm Prc Recusal Motion Re Montoya and Lyons 242 Pgs

8/10/2019 Nm Prc Recusal Motion Re Montoya and Lyons 242 Pgs

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BEFORE THE NEW MEXICO PUBLIC

IN THE MATTER OF THE APPLICATION)OF PUBLIC SERVICE COMPANY OF NEW)MEXICO FOR APPROVAL TO ABANDON)

SAN JUAN GENERATING STATION UNITS)2 AND 3, ISSUANCE OF CERT IFICATES )OF PUBLIC CONVENIENCE AND )NECESSITY FOR REPLACEMENT POW ER)RESOURCES, ISSUANCE OF ACCOUNTINGORDERS AND DETERM INATION OF )RELATED RATEMAKING PRINCIPLES AND)TREATMENT )

)PUBLIC SERVICE COMPANY OF NEW )MEXICO, )

Applicant. ))

REGULATION COMM[S_SJON

Case No. 13-00390-UT

MOTION AND SUPPORTING BRIEF OF NEW ENERGY ECO NOMY FORRECUSAL OF PUBLIC REGULATION

COMM ISSIONERS MONTOY A AND LYONS

New E nergy Econom y (NEE) requests tlhat Public Regulation Com missioners Karen Mont

and Patrick Lyons sitting on the P ublic Regulation Comm ission (PRC) recuse themselves f

participating in or deciding the abov e-captioned m atter. The groun ds for this Motion are a

follows:

Applicable Standard

1. New Energy Economy now takes the extraordinary step of moving for the recusal

of two members of the PRC, Patrick Lyons and Karen Montoya, because of the evidence of ex-

parte contacts during the course of this proceeding and immediately preceding PNMs filing that

in some cases directly concern issues in this case and in other cases are likely to have concerned

issues in this case. In addition, with very limited discovery of information, NEE has been able to

show that there are ongoing and regular contacts, both social and professional, between senior


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management and lobbyists of PNM and these two commissioners that create the appearance of a

conflict of interest sufficient to disqualify them. In order to further support this motion and to

understand the extent of the ex parte contacts between PNM and PRC Commissioners, NEE

served interrogatories and document requests on PNM to obtain any communications between it

and PRC commissioners but PNM refused to respond, claiming that the requests were not

calculated to lead to the discovery of admissible evidence. See NEEs Seventh Set of

Interrogatories and Requests for Production to PNM and PNMs response of December 22, 2015.

NEE has initiated first steps necessary figr a Motion to Compel, but believes that, out of caution,

it should file this motion promptly and before the hearing begins so that its position is known by

the affected commissioners and PNM.

2. PRC adjudications are governed by the same due process protections and

formalities as other administrative or court adjudications. The federal Administrative Procedures

Act (APA), 5 U.S.C. 556 & 557, prescribes the same hearing requirements for adjudications

and formal rulemakings and that both shall be "conducted in an impartial manner." See also N.M

State Racing Commn v. Yoakurn,113 N.M. 561,564, 829 P.2d 7, 10 (Ct. App. 1991) (citing 2

Am. Jur.2d Administrative Law 350, 162 (1962) for the proposition that "Rules and regulations

of an administrative agency governing proceedings before it, duly adopted and within the

authority of the agency, are as binding as if they were statutes enacted by the legislature.")

3. Under New Mexico law, PRC Commissioners must meet an objective standard of

impartiality:

A. A commissioner or hearing examiner shall recuse himself in anyadjudicatory proceeding in which he is unable to make a fair and impartialdecision or in w hich there is reasonable doubt about whe ther he can ma ke fair and impartial decision, including:


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(1) when he has a personal bias or prejudice concerning a party or itsrepresentative or has prejudged a disputed evidentiary fact involved in aproceeding prior to hearing. For the purposes of this paragraph, "personal biasor prejudice" means a predisposition toward a person based on a previous orongoing relationship, including a professional, personal, familial or other

intimate relationship, that renders the commissioner or hearing examinerunable to exercise his functions impartially

2006 New Mexico Statutes - 8-8-18; Gila Res. Info. Project v. N.M. Water Quality Control

Commn,2005 NMCA 139, 37 ("concepts of fairness and transparency" apply to "administrative

proceedings"). The standard established by Section 8-8-18 is consistent with the Governmental

Conduct Act, NMSA 1978, Sections 10-16-1 through 10-16-18, the Financial Disclosures Act,

NMSA 1978, Sections 10-16A-1 through 10-16A-8, and 20.1.1.111NMA C~

and "is in essence a

paraphrase of a federal statute governing the disqualification of judicial branch judges, see 28

U.S.C. 455(a) (1994) (A judge shall disqualify himself [or herself] in any proceeding in which

his [or her] impartiality might reasonably be questioned.), as well as New Mexicos Code of

Judicial Conduct dealing with disqualification of state judges, see NMRA 1997, 21-400(A) (A

judge is disqualified and shall recuse himself or herself in a proceeding in which the judges

impartiality might reasonably be questioned ....) City of Albuquerque v. Chavez, 1 9 97 N M C A

54, 16. Under this objective standard:

The inquiry is not whether the Board m emb ers are actually biased orprejudiced, but whether, in the natural course of ev ents, there is anindication of a possible temptation to an average m an [or wom an] sittingas a judge to try the case w ith bias for or against any issue presented tohim [or her].

Id., quoting Reid v. New Mexico Bd. of Exam rs in Optometry, 92 N.M. 414, 416, 589 P.2d 198,

1 20.1.1.111NMAC add ressing impartiality: "No bo ard m emb er shall participate in any ac t

wh ich his or her impartiality of fairness may reaso nably be que stioned..."


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200 (1979). Presiding board members ":must act like a judicial body bound by ethical standards

comparable to those that govern a courtin performing the same function." Id. (emphasis added)

(quoting High Ridge Hinkle Joint Venture, 119 N.M. at 40, 888 P.2d at 486), Los Chavez

CommunityAssn v. Valencia Cty., 277 P.3d 475,482-83 (N.M. Ct. App. 2012). Our Supreme

Court has determined it to be "imperative" that when governmental agencies adjudicate the legal

rights of individuals they "use the procedures which have traditionally been associated with the

judicial process." Reidv. N.M. Bd. of Examrs in Optometry, 92 N.M. 414, 416, 589 P.2d 198,

200 (1979). And, while such procedural matters as the rules of evidence or hearsay need not be

adhered to by administrative agencies to the same degree as in a court of law, the right to an

impartial tribunal is held to the higher standard.

The rigidity of the requirement that a tribunal be impartial and disinterested in the result

applies more strictly to an administrative adjudication where many of the customary safeguards

affiliated with court proceedings have, in the interest of expedition and a supposed administrative

efficiency, been relaxed. Id.; see also Ohio Bell Tel. Co. v. Pub. Utils. Commn, 301 U.S. 292,

304, 57 S.Ct. 724, 81 L.Ed. 1093 (1937) (suggesting that in the adjudicative role of

administrative agencies: "All the more insistent is the need, when power has been bestowed so

freely, that the inexorable safeguard of a fair and open hearing be *483 maintained in its

integrity." (internal quotation marks and citations omitted)). Los Chavez Comm unity Assn v.

Valencia County277 P.3d 475,482 -483 (N.M.App., 2012) Based on the available evidence and

the objective standard of impartiality, Commissioners Montoya and Lyons should recuse

themselves.

4. Pursuant to NMAC 1.2.2.38 B (3) "A commissioner may be disqualified for


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violation of the code of conduct adopted by the comm ission." Com missioners, like Board

mem bers, must follow the codes of con duct and rules of procedure of their own adm inistra

bodies. A tlixco C oalition v. C ounty o f Bernalillo,1999 NMCA 88, 16. According to the PRC

Code of Con duct, a Comm issioner is required to:

a) Obey both the letter and the spirit of all laws and regulations; [...]c) W hile recognizing that some law s may b e subject to varying interpretastrive nonetheless to implem ent the spirit and purpose of each law; [...]f) Treat the office of Com missioner as a public trust by using the pow ers ooffice solely for the benefit of the pub lic rather than for any personal benefit;

Both Commissioners Montoya and Lyons took an Oath of Ethical Conduct, which in part states:

"I shall scrupulously avoid any act of impropriety or any act which gives the appearance of

impropriety." See Exhibit A.

Violations of Code of Conduct

5. Exhibit 1 provides ample evidenc e of both acts of impropriety and acts that gthe appearance of impropriety. Exhibit 1 reveals frequent phone com mun ications between

Comm issioner Patrick Lyons and representatives of Public Service Com pany of New Mexi

(PNM). Note that these records only include phone co nversations between Comm issioner L

and PNM representatives2 between Decem ber 2013 and July 2014, and only between

Com missioner Lyons PR C-issued cell phone and the num bers of a few identified PNM

representatives. They do not include any phone communications between Commissioner L

2 W hen asked at his deposition, Ron D arnell (Senior V.P. for Public Policy for PNM) was a

"Do you have a personal cell phone num ber for Karen Mo ntoya?" Mr. Darnell answered:an office number and I have a cell number." .. . "How man y times have you called KarenMontoya on her cell phone?" After an objection, Mr. Darnell answered: "Its rare." "Whatrare mean to you?" Mr. D arnell answere, d: "Less than ten times a year."


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and PNM representatives that may hav e occurred on one of the Com missioners landlines

personal cell phone. Nor do they include comm unications with any other staff, consultants,

lobbyists or other representatives of PNM.

Calls to or from Commissioner Lyons PRC-issued cell phone and the numbers of a few

identified PNM representatives:

July 30, 2014 - Call between PRC Commissioner Lyons and Senior VicePresident for Public Policy Ron Darnells cell (505.362.5075)

June 24, 2014 - I_,yons and Ron Darnells cell (2 separate calls); 10:50am(PNM RCT hearing scheduled from 9am to 1:30pm) and at 5pm same day 3

June 11, 2014 - Director Strategic Affairs Mary Collins cell(505.242.2010)

June 10, 2014 - Ron Darnells cell

May 21, 2014 - Lobbyist Ernest CdeBacas cell (505.379.3946); 2separate calls

May 20, 2014 - Mary Collins cell

May 16, 2014 - Ernest CdeBacas cell

May 8, 2014 - Ron Darnells cell (2 calls)

April 23, 2014 - Ron Darnells cell

April 17, 2014 - Vice President of Regulatory Affairs Gerard Ortizsoffice number (505.241.2561)

April 17, 2014 - Gerard Ortizs cell number (505.450.5008)

April 17, 2014 - Mary Collins cell

3 Note that two calls on June 24, 2014 occurred on exactly the same day as a formal hearinPNM s petition to amend the rule on Rea sonable Cost Threshold (RCT) of the renewableportfolio standards. In fact, one call happened in the m iddle of the hearing itself.


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March 10, 2014 --Ron Darnells cell

February 15,201,4 - Ron Darnells cell (2 calls)

February 11,201.4 - Ron Darnells cell

January 30, 2014 - Ron Darnells cell (2 calls)

January 29, 2014 - Ron Darnells cell

January 29, 2014 - Ernest CdeBacas cell

January 28, 2014 - Ernest CdeBacas cell

January 27, 2014 - Ron Darnells cell (2 calls)

December 21, 2014 - Ron Darnell s cell

December 18, 2014 - Ron Darnells cell

December 11, 2014 - Ron Darnells cell (2 calls)

There is simply no reasonable justification for cell phone communications between a

Commissioner and a petitioner/regulated entity that average at least one per week - especially

when such calls occur within the scheduled hours of a hearing involving the regulated entity.

When asked at his deposition "how manly phone calls have you received on your cell phone from

Patrick Lyons in the last year?" Ron Darnell answered: "Again, I dont know. Its rare." Darnell

Deposition of October 7, 2014, pp. 74-75.

6. The following Exhibits consist of email communications and attachments

between representatives of PNM and Commissioner Patrick Lyons or Commissioner Karen

Montoya or their executive assistants, Dallas Rippy and Robert Lara, respectively. In each case,

the content of the emails goes far beyond necessary communications regarding customer service,


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complaints or outages. Together, they clearly demonstrate a close relationship between thes

two Com missioners and PNM that clearly violates both the letter and the spirit of the law.

a. Exhibit 2 is an email from Ron Darnell, Senior Vice-President of Public

Policy for PNM, sent July 21, 2014 to Commissioner Karen Montoya, referencing

a phone conversation about Rule 111 (d) [itself a significant issue in this

proceeding], with an attached "white paper on 111 (d)." Exhibit 2 will be

discussed in further detail below.

b. Exhibits 3, 4 and 5 all involve a standing weekly meeting that

Commissioner Montoya .appears to have requested with Mary Collins, the

Director of Strategic Initiatives for PNM (According to Mr. Darnell, Ms. Collins

has since left that position; Darnell deposition at p. 80). The email exchanges are

between Mr. Lara and Ms. Collins, including a request (Exhibit 3) from Mr. Lara

that the meetings take place at an Albuquerque Starbucks location rather than the

PNM offices. Exhibits 4 and 5 include personal health information that Ms.

Collins freely offers to Mr. Lara and Commissioner Montoya.

c. In Exhibits 6, 7 and 9, Mr. Lara seeks input and advice from PNMs

Collins to assist Commissioner Montoya in giving panel presentations to an

upcoming conference on regional transmission organizations and distributed

generation. Commissioner Montoya is identified as a member of a panel of

regulators and legislators providing "Regulatory and Legislative Perspectives"

(Exh. 6). Another panel, consisting of industry representatives, was to provide

"Industry Perspectives." Yet Commissioner Montoya turned to PNM to provide

here with the materials for her presentation. Commissioner Montoyas assistant,


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Mr. Lara, provides draft :notes and a PowerPoint presentation to Ms. Collins

(Exhibits 8, 10 and 11), and specifically indicates (p. 5 of Exhibit 8): "Your

thoughts on this debate and its impact on this new method of power generation

and transmission I think would dovetail well into this panel." In other words,

Commissioner Montoya, who was to provide a regulatory perspective, turned to

PNM - a member of"the industry" - to assist her on settling on what her

regulatory perspective should be.

d. Exhibits 12 through 19 involve another presentation Commissioner

Montoya needs PNM, tbxough Ms. Collins, to help prepare, this time for the Law

Seminar International "Energy in the Southwest" Conference.

e. Exhibit 12 is an email exchange between Commissioner Montoyas

assistant, Mr. Lara, and PNMs Collins where Mr. Lara indicates "the

Commissioner asked that I get with [Ms. Collins] to assemble some background

research on a few topics so she can lead the discussion." These topics include

distributed generation and the diversity portfolio. The initial request further asks

whether it would "be best to get together to go over some of these topics or do

you [Ms. Collins] want to send me [Mr. Lara] stuff." Ms. Collins responds that

she will "pull together so:me information" and then they can "get together to

review." The remainder of the exchange is about scheduling the "study session"

with Commissioner Montoya. PNMs views on the topics discussed are in most

cases adverse to the views of environmental groups and to the views of many

thousands of members of the public. What is of such concern regarding this and

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Commissioner Montoya that contained information hostile to distributed

generation and net metering (Exhibits 29 through 33).

n. A number of emails from Ms. Collins to Commissioner Montoya (Exhibits

34 through 39) consist of connections to conferences, listserves, and webinars, all

of which appear to align with PNMs regulatory interests. Apparently,

Commissioner Montoya accepted Ms. Collins invitation to the NARUC

Conference. Conference attendance by Commissioner Montoya with PNM,

including dinner together, was admitted to in Ron Darnells sworn deposition

testimony: "Q. Has she gone with Karen Montoya on any type of retreat or

conference or vacation? A. Karen Montoya, Mary Collins, myself, we certainly

have attended NARUC conferences." Darnell Deposition at p. 75 "Q. When you

say that you and Mary Collins and Karen Montoya attended this conference,

where was it and when was it? A. The last conference that I recall Mary and

Commissioner Montoya being at with myself- I believe it was last February in

Washington D.C." Supra,, at p. 76 "Q. And when you were at that conference did

you and Mary Collins and Commissioner Montoya have any meal together? A.

We had dinner once." Supra, at p. 77

o. Commissioner Lyons has also attended conferences and socialized with

PNM. According to Ron Darnells testimony:

"A. Patrick Lyons has gone to - hes gone to the Dallas NARUC conference in

Denver the summer of- I think the summer of 13. Those are the only NARUC

conferences that I know of that PNM people and Patrick Lyons were at. And then

I was not at - I believe its the - probably not exactly right but like the Western

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Commissioners Conference held in Seattle in early June .... was not there. Pat

Vincent was on a panel as well as some other CEOs, and I believe Mark Fenton

was at that meeting."

"Q. When youve been at the same conference, a NARUC conference at the same

time with Patrick Lyons,. did you also share any meals together? A. Yes, certainly

we have shared some meals together. Q. And do you know if any PNM people

when they went to the Seattle conference that Patrick Lyons was at, if he shared

meals with PNM employees at that time? A. I believe he did." Darnell deposition,

pp. 78, 79

p. In Comm issioner Montoyas calendar, attached as Exhibit 40,

Comm issioner Montoya is scheduled to meet w ith Mr. Ortiz on June 20, 2013

with Mr. D arnell at his office in Albuquerque for two hours on July 25, 2013

again on Augu st 30, 20134.

q. Com missioner Montoya has repeatedly attended sporting events with M

Collins: "You know , I think Mary [Collins] might have gone to a baseball ga

with Karen to help her out w hen she w as on crutches." "I believe Mary Colli

has golfed in a foursome with Karen M ontoya."

80.

ro

Darnell Deposition, at pp. 79,

Commissioner Lyons also attended sporting events with PNMs senior

management: "Patrick and I went to a baseball game in Arlington stadium at the

4 Before PNM filed its Application, on October 29, 2013, Mariel Nanasi and D avid Van Wi

of New E nergy Econom y m et with Cormnissioner Montoya, and discussed general oppositifurther reliance on coal and nuclear and a preference for solar and wind. Unknow n to NanaVan W inkle were the contents of PNMs filing, other than what was disclosed at public IRmee tings, and New E nergy Econom y had not yet determined to intervene in the case herei

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summer conference this last summer .... . Can you tell us about the baseball

game that you and Patrick Lyons went to in Arlington, Texas? A. Sure. It was - a

friend of mine is a former Colorado commissioner. Ray Gifford knows Tony

Clark very well. Tony Clark is a FERC commissioner, and Ray thought it would

be a good idea for Tony to meet Pat so we went to the game. It was hot and

miserable and Patrick and Commissioner Clark hit it off." Damell Deposition, at

pp. 81, 82.

Prohibited Acts

6. As quasi-judicial officials, Commissioners are held to a higher standard than most

other elected officials. Section 8-8-19 NMSA 1978 addresses acts prohibited of Commission

and Commission candidates.

C. A candidate for election to the public regulation commission shall notsolicit or accept:

(1) anything of value, either directly or indirectly, from a personwhose charges for services to the public are regulated by the commission. For thepurposes of this paragraph, "anything of value" includes money, in-kindcontributions and volunteer services to the candidate ...

D. A commissioner or employee of the commission shall not:(1) accept anything of value from a regulated entity, affiliated

interest or intervenor. For the purposes of this paragraph, a commissioner mayaccept allowable campaign contributions when campaigning for reelection. Forthe purposes of this paragraph, "anything of value" does not include:

(a) the c, ost of refreshments totaling no more than five dollars($5.00) a day or refreshments at a public reception or other public social functionthat are available to all guests equally;

7. Without discovery from PN M, it is not possible to know the extent to which th

provisions have been violated. How ever, all of the materials, resources and guidan ce Ms.

Collins provided to Commissioner Montoya constitute "value," especially since "anything

value" in the previous paragraph is defined as in-kind and voluntee r services. Given the sp

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definition in subsection 8-8 -19(D)( 1 ) , Comm issioner Montoya solicited, and PNM

provided,research, editing, and other presentation assistance through Ms. Collins Ms. Collins, all

w hich h as value. The precise value is unknown bu t one could determ ine the figure quite easily

by sim ply m ultiplying Ms. Collins average h ourly com pensation by the num ber of hours she

spent assisting Com m issioner Montoya. Sim ilarly, the cost could be calculated on the ba sis of

wh at an outside consultant would have ch arged Com m issioner Montoya for the same assistanc

8. Exh ibit 41 is a Septem ber 25, 2014 em ail from Cindy Edwards, Assistant to Mr.

Darnell, to Mr. Rippy, Assistant to Com m issioner Lyons. The em ail references a dinner Mr.

Darnell had the previous m onth w ith the Comm issioner and the Com m issioners sister and

brother-in-law and requests the nam es of the Com m issioners relatives.

Ex Parte Com m unications

9. The Fourteenth Am endm ent of the Un ited States Constitution protects citizens

from state action that leads to "deprivations of liberty and property w ithout due process of law."

Mills v. State Bd. of Psychologist Exam rs, 1997-NMSC-028, 14, 123 N.M. 421,941 P.2d 502

The New Mexico Constitutions Due Process Clause echoes th e federal one: "No person shall b

deprived of life, liberty or property w ithout due process of law[.]" N.M. Const. art. II, 18 .

"Procedural due process requires a fair and impartial hearing before a trier of fact who is

disinterested and free from any form of bias or predisposition regarding the ou tcome of the

case." New M exico Brd. of Veterinary Med. v. Riegger,2007-NMSC-044, 27, 142 N.M. 248,

164 P.3d 947 (internal quotation mark s and citation om itted). These principles of fairness arebasic to our justice system.Los C havez Comm unity Ass n v. Valencia County277 P.3d 475,482 -

483 (N.M.App., 2012)

10. According to 1.2.3.7 NMAC F and 1.2.3.8 A. NMAC ex parte comm unications

between Com m issioners and a party during a pending adjudication is prohibited:

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F. pending adjudication means any matter docketed, or, in the case of a partyrepresented by counsel, any matter that an attorney representing such party reasonably believeswill be docketed, before the commission, including, but not limited to, formal complaintproceedings, show cause proceedings, investigations, notices of inquiry other than non-adjudicatory notices of inquiry, application proceedings, petitions, and any matter other than arulemaking or a non-adjudicatory notice of inquiry requiring decision or action by the

commission.[ 1.2.3.7 NMAC - N, 7-15-04; A, 9-1-08]

EX P ARTE COMMUNICATIONS PROHIBITED:

A. A com missioner shall not initiate, permit, or consider a com mu nication direcor indirectly with a party o r his or her representative, outside the presence of other parties,concerning a pending rulemaking after the record has been closed or a pending adjudication.

11. Exhibit 2 is an email from Mr. Damell, sent July 21, 2014 to Commissioner Montoya, that

references a phone conversation about Rule 111 (d) and attaches a white paper on 111 (d), the

federal greenhouse gas rule that is a critical issue of debate in PNMs case at the PRC on its

proposed replacement power plan. In the email and attachment, Mr. Darnell is clearly trying to

improperly influence Commissioner Montoya about PNMs point of view about the rule, which

is included here as Exhibit 42. There is no doubt that the Clean Power Plan, aka Rule 111 (d), is

an issue in the case herein. Numerous witnesses have referred to this issue, with PNMs

witnesses arguing that the company is "well-positioned" to address it because the company is

shutting down two of the four coal units at San Juan, while New Energy Economy has

vociferously argued that it is risky for PNM to acquire any more coal, a source of energy subject

to progressively tighter regulatory standards and provided at unacceptably high costs to

ratepayers in terms electricity costs and cost to health and the environment. 5

s A few examples to references in PNMs testimony: "Edward Cichanowicz, an independent

consultant providing engineering and analytical services to the electric and energy industries,addresses the Clean Power Plan Rule and the Coal Combustion Residuals Rule currently underconsideration by the U.S. Environmental Protection Agency ("EPA) and the implications ofthese proposed rules for San Juan." Rebttttal Testimony in Support of Stipulation and ResponseTestimony on Reserved Issue, Ortiz, p. 5; "As discussed in more detail by Mr. Cichanowicz inhis rebuttal testimony, based on the proposed Clean Power Plan, which I note is focused on state

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12. Exhibit 43 contains an email from Ms. Collins to Commissioner Lyons assistant,

Mr. Rippy in June 2013 requesting to set up a meeting between Commissioner Lyons and Mr.

Darnell "to discuss San Juan." Exhibit 44 is an email about two meetings between PNM and

Commissioner Montoya taking place during exactly the same time frame; it is reasonable to infer

that those meetings were also about San Juan.

13. The P ublic Regulation Comm ission has broad pow ers that affect the daily liv

all New M exicans. It is absolutely crucial that the Com mission be h eld to the highest stan

of integrity, and that New M exicans have faith that their interests are being faithfully repr

by their elected officials.

14. In California, coziness between regulators and regulated entities has led to bo

federal and state civil investigations. 6 It seems clear from the above-referenced communications

compliance rather than individual utility compliance-a fact that is confused in Mr. Dirmeiersanalysis when he discusses PNMs compliance with the proposed rule-New Mexico is in goodshape to meet the targets established for it, given compliance with the Revised SIP." RebuttalTestimony in Support of Stipulation and Response Testimony on Reserved Issue, Ortiz, p. 30,31. "It is simply not reasonable to assume that there will not be additional costs associated withgreenhouse gas emissions during the twenty-year planning period." (Direct Testimony of PatrickOConnell, December 20, 2013, p. 18) And, New Energy Economys David Van Winkle testifiesin his Direct Testimony in Opposition to the Stipulation:

PNM claims that it will be "well-positioned to meet anticipated environmental regulations,"but fails to definitively state that they will meet the requirements of EPAs Clean PowerPlan. (Olson, supra, at p. 60) In fact, PNMs Executive Director of Environmental Services,Maureen Gannon testifies in her deposition that "in the context of what EPA has proposedfor its state standards under the Clean Power Plan, [PNMs emissions] gets the State veryclose to the proposed standard." ... "New Mexico will get within 10% of the Clean PowerPlan." Gannon Deposition of August 22, 2014, pp. 75-76). In other words, they dont makeit with the current proposed replacement plan. Van Winkle, at p. 16

6 http://www.utilit~/dive.c~m/news/federal-pr~secut~rs-t~-investigate-pges-re~ati~nship-wicpuc/317855/

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that mem bers of New M exicos PRC are similarly cozy with PNM - to the potential detrim

the states consumers, whom the Public Regulation Comm ission is charged with protecting

15. The substance of Article VI, Section 18 has been part of the New Mexico

Constitution since statehood. "[T]he disqualification of judges for certain causes, raising a

presumption of partiality, has been ever present in our Constitution ....State ex rel. Hannah v.

Armijo, 38 N.M. 73, 83, 28 P.2d 511,516 (1933). The purpose of this provision is based on due

process considerations--"to secure to litigants a fair and impartial trial by an impartial and

unbiased tribunal." State ex rel. Bardacke v. Welsh, 102 N.M. 592, 603,698 P.2d 462, 473

(Ct.App. 1985) (internal quotation marks and citation omitted). The recusal grounds listed in

Article VI, Section 18 of the New Mexico Constitution are "recognized dangerous sources of

partiality" and were included in the Constitution so as to prevent "the possibility of legislative

detraction in any legislative scheme of disqualification of judges on account of partiality."

Hannah, 38 N.M. at 82, 28 P.2d at 515-16. New Mexico law binds quasi-judicial

decisionmakers to "ethical standards comparable to those that govern a court in performing the

same function." ACP, 2008-NMSC-025, 33, 144 N.M. 99, 184 P.3d 411 (internal quotation

marks and citation omitted). As recently explained by the appeals court, ".... [B]asic safeguards

established by standards set out in the federal and state constitutions, as well as in New Mexico

statutes and rules, all have one goal--to ensure that the decision-maker is not biased. There is no

principled reason to apply the prohibitions in Article VI, Section 18 of the New Mexico

Constitution to judges but not to board members who are acting in an adjudicatory capacity." Los

Chavez Community Assn v. Valencia County277 P.3d 475, 482 -483 (N.M.App., 2012)

16. The PRC and Commissioners Montoya and Lyons have the responsibility,

delegated by the People of New Mexico, to decide what is undoubtedly one of the most

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important energy decisions to face New Mexico, a decision that will have far-reaching

consequences for energy generation over the next 20 to 30 years. NEE has produced evidence

that rises, at the very least, to "an appearance of impropriety" if not evidencing improper conduct

and bias by Commissioners Lyons and Montoya toward PNM, a party in a pending matter before

the PRC Commission. Because of ongoing relationships between these Commissioners and

certain PNM officials and start; evidenced by email and telephonic communications, the sharing

of meals, familiarity with family members and personal health matters, invitations to attend and

joint attendance at entertainment and sporting events, and PNMs assistance in preparing reports

and presentations for Commissioner Montoya, to say nothing of ex parte contacts relating to

matters at issue in this case, both in anticipation of this case and during this case, there is

reasonable doubt that Commissioners Montoya and Lyons will be able to make a fair and

impartial decision regarding approval of PNMs Stipulation. Having deliberately crossed a time-

honored, bright-line boundary that exists between the PRC and a regulated entity with business

before the PRC, there is reason to suspect that these Commissioners at least give the appearance

of bias. This is sufficient ground to require their recusal. The law requires no less.

17. PNMs refusal to provide documents evidencing ex parte communications with

commissioners makes this motion more compelling and, at a minimum, requires that complete

discovery be conducted to establish the nature and extent of ex parte communications between

PNM and Commissioners Lyons and Montoya:

An ex parte com munication occurs when a board m ember com municates, directly oindirectly, in connection with a m atter before the board, with any person or party, exupon notice and o pportun ity for all parties to participate.See Iowa Code 17A. 17(1).Thus, ex parte com mun ications, by their very nature, happen outside the record. Therecord before the B oard is insufficient to address the issue of whether the Boardsdecision was illegally tainted by ex parte comm unications.

19


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*4 We determine the district court abused its discretion by ruling that further discovewas n ot necessary in this case. It is clear that in order for LD MG to have an o pportuto establish its claim of ex parte comm unications, LDM G needed to present evidencbeyond that brought before the Board. We co nclude the case should be reversed andremanded to the district court to allow LD MG the opportunity to gather evidence tosupport its claim o f ex parte com munications.

LDMG Corp. v. Webster County Bd. Of Adjustment L 22697730, 2 -4 (Iowa

App.,2003). See, e.g., Portland Audobon Soc. V. Endangered Species Committee,984 F.2d

1534, 1549 (9th Cir. 1993) ("In the absence of declarations [of the involved parties] denying t

alleged violations of the APAs ex parte communications prohibition occurred, the declaration of

the environm ental groups coun sel...and the new spaper reports.., are sufficient to warrant remand [to conduct discovery.. [therefore we] remand for a vigorous and thorough adversarial,

evidentiary hearing" on the ex parte contacts]7

Here, NEE believes there is more than enough evidence under the foregoing standards to

disqualify Commissioners Lyons and Montoya. At a minimum, NEE is entitled to obtain all

relevant documents in the hands of PNM that related to ex parte communications with these two

(or any other) PRC commissioners. PNM has tellingly failed to indicate that there are no such

documents but, instead, has refused to provide any such documents and has merely lodged a

boiler-plate objection that the request is not calculated to lead to admissible evidence. That

standard, for merits discovery, is inapplicable here, where the issue is not whether PNMs plans

are in the best interests of the ratepayers but, rather, whether NEE and the other objectors are

entitled to the due process protection implicit in having that issue decided by Commissioners

who are free from any appearance of impropriety in their relationships with PNM.

7 Here, it would be Commissioners Lyons and Montoya, and Collins, Darnell, CdeBaca, Gerard

Ortiz, Sayuri Yamada, and perhaps others from PNM who should submit affidavits, includingPNMs lawyers who would likely know of them.

2O


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1 8 . The parties positions in the case are as follows:

Southwest Generation Operating Co., LLC takes no position.

No other parties provided their position before this Motion was filed.

WHEREFORE, pursuant to basic principles of justice and fairness, New Energy

Economy respectfully requests that the PRC require Commissioners Montoya and Lyons to

recuse themselves from deciding the case herein.

Respectfully Submitted,

New Em ~omy

Esq.

t43 East Alameda St.Santa Fe, NM 87501-2229(505) [email protected]

/S/John W. BovdFREEDMAN BOYD HOLLANDERGOLDBERG URIAS & WARD, P.A.20 First Plaza, Suite 700Albuquerque, NM 87102(505) 842-9960

21


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BEFORE THE NEW MEXICO PUBLIC REGULATION COMMISSION

IN THE MATTER OF THE APPLICATION OFPUBLIC SERVICE COMPANY O F NEW M EXICO

FOR APPROVAL TO ABANDO N SAN JUANGENERATING STATION UNITS 2 ,AND 3,ISSUANCE OF CERTIFICATES OF PUB LICCONVENIENCE AND NECESSITY FORREPLACEMENT POWER RESOURCES,ISSUANCE OF ACCOUNTING ORDERS ANDDETERMINATION O F RELATED RATE-MAKINGPRINCIPLES AND TREATMENT.

PUBLIC SERVICE COMPANY OF NEW M EXICO,Applicant.

))))))))))))))

Case No. 13-00390-UT

AFFIDAVIT OF MARIEL NANASI

STATE OF NEW MEXICO )) ss

COUNTY OF BERNALILLO )

1. My name is Mariel Nanasi.

2. New Energy Economy received the documents attached to the Motion and

Supporting Brief of New Energy Economy for Recusal of Public Regulation Commissioners

Montoya and Lyonsfrom the Rio Grande Sun pursuant to an Inspection of Public Records

request to the Public Regulation Commi:ssion (PRC).

3. Upon being duly sworn according to law, under oath, deposes and states: That I

have read Motion and Supporting Brief of New Energy Economy for Recusal of Public

Regulation Commissioners Montoya and Lyons and believe the contents therein to be true and

correct and to the best of my knowledge and belief.


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NEW MEXICO PUBLIC REGULATION COMMISSION

R~ solution No. 01-03-13

2013 Comm ission Code of Conduct

W H E R E A Sthis duly elected body, on this 3 rd day of January, 2013, doeshereby recognize the fundamental principle that a public office is a public trust.This Commission Code of Conduct sets out standards of ethical conduct intendedto foster public trust and proraote confidence in the integrity of government byavoiding even the appearance c,f self-interest, personal gain or benefit; and

W H E R E A Sethical leaciership sets a good example whereby all citizens aretreated with respect;

THEREFORE, BE IT RESOL VED,That the Commission shall adopt this Commission Code of Conduct, and

that each Commissioner shall:

a) Obey both the letter and the spirit of all laws and regulations;b) Abide by the law in their personal lives, as well as in their

professional duties, and thus set a good example for all New Mexico citizens;c) While recognizing that some laws may be subject to varying

interpretations, strive nonetheless to implement the spirit and purpose of each law;

d) Facilitate open discussion within the Commission to the maximumextent permitted by law;

c) Comply with the rules governing the conduct of Commissionmeetings;

f) Treat the office of Commissioner as a public trust by using the powersof the office solely for the benefit of the public rather than for any personal benefit;and

BE T FUR THER RESOLVED,That Commission employees should be encouraged to develop detailed

ethical standards, including procedures for training and compliance; and


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BE IT FURTHE R RESOLVED,That Comm issioners and em ployees should collaborate and work together to

foster teamwork, m utual support and collective ethical awareness; and

BE IT FUR THER RESOLVED,

That this Commission Code of Conduct shall be applicable to eachCommissioner and to all Commission employees; and

BE IT FUR THER RESOLVED,

That this Commission Code of Conduct shall be reviewed periodically bythe Commission.


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STATE OF NEW MEXICOPUBLIC REGULATION COMMISSION

January 3, 2013

OATIt OF ETHICAL CONDUCT

I, Karen L. Montoya, duly elected member of the New Mexico Public RegulationCommission from District 1, do lhereby recognize the irrefutable principle that a publicoffice is a public trust and do solemnly swear that:

. 1 shall faithfully support lhc United States Constitution and the Constitution ofthe State of New Mexico.

2. I shall ethically and with integrity discharge the high responsibilities placedupon me by the Conslit~Jtion of the State of New Mexico and the voters of mydistrict.

3. shall abide by the spirit as well as the letter of this Oath taken on January 3,2013.

4. shall not use my office for personal gain, and I shall scrupulously avoid any actof impropriety or any a.~t which give s the appearance of impropriety.

KAREN L. ~YACOMMISSIONER DISTRICT 1


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ST.ATE OF NEW MEXICOPUBLIC REGULATION COMMISSION

January 3, 2013

OATlt OF ETHICAL CONDUCT

, Patrick H. Lyons, duly elected member of the New Mexico Public RegulationCommission from District 2, do I~ereby recognize the irrefutable principle that a publicoffice is a public trust and do solemn ly swear that:

5. I shall faithfully support the United States Constitution and the Constitution ofthe State of New Mexico.

6. shall ethically and witl~ integrity discharge the high responsibilities placedupon me by the Constit~ation of the State of New Mexico and the voters of my

district.

7. 1 shall abide by the spirit as well as the letter of this Oath taken on .January 3,2013.

8o 1 shall not use my office for personal gain, and shall scrupulously avoid any actof impropriety or any a.~t which gives the appearance o f impropriety.

~PATRICK il. LYONS~"

COMMISSIONER DISTRICT 2


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Exhibit 2 12/23/14 3:

From: D arnell, RonSubject: 111 (d) white paperDate: July 21,2014 10:25:30 AM M DTTo: [email protected]


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Exhibit 3 12/23/14 3

From: Lara, Robert, PRCSubject: RE: Standing Thursday meeting with Com missionerDate: October 16, 2013 1:42:02 PM MDTTo: Collins, Mary


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Exhibit 3 12/23/14 3

Rob ert Lara, Esq.Executive Assistant to Comissioner Karen L. MontoyaDistrict 1

New Mexico Public Regulation Comission1120 Paseo de PeraltaSanta Fe, NM [email protected]

Page


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Exhibit 4 12/23/14 3

From: C ollins, MarySub ject: Re: Tomorrows me etingDate: October 23, 2013 2:16:13 P M M DTTo: Lara, Robert, PRC


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Exhibit 4 12/23/14 3:

..... Original Message .....

From: Collins, Mary [mailto:[email protected]]

Sent: Wednesday, October 23, 2013 11:27 AM

To: Lara, Robert, PR C

Sub ject: Tomo rrows meeting

N eed to cancel/home sick with cold

Sent from my iPhone

Page


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xhibit 5 12/23/14 3:58 PM

From: Collins, MarySubject: ThursdayDate: October 30, 2013 11:51:01 AM M DTTo: Lara, Robert, PRC ,Montoya, Karen L, PRC


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Exhibit 6 12/23/14 3

From: Lara, Robert, PRCSubject: Re: Panels for Comm issioner MontoyaDate: October 10, 2013 1:16:06 PM MDTTo: Collins, Mary


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Exhibit 6 12/23/14 3

affordable, cost-effective, and environmentally sound energy supply. Using theCCIF report as a foundation, this panel will further explore the implications of thegrowth of distributed generation on the electric industry, consumers and publicpolicy.Moderator:Thom as Linquist, Executive D irector, Russell Reynolds AssociatesDiscussion Leader:Katrina McM urrian, Executive D irector, Critical Consumer Issues Forum (CCIF)Industry Perspective:Kimb erly G reene, President &CE, O, Southern Company ServicesKen dal Bowm an, Vice President Regulatory Affairs and Policy-NC, Duk e EnergyKim berly H. Despeaux, Senior Vice President, Federal Policy, Regulatory &Governm ental Affairs, EntergyGloria Godson , Vice President, Federal Regulatory Policy, Pepco Holdings, Inc.Regu latory & Leg islative Perspectives:Chairwoman Elizabeth Jacobs, IowaVice-Chairwoman Nikki M. Hall, South CarolinaCom m issioner Karen L. Montoya, New M exicoCom missioner Ellen Nowak , W isconsinNBCSL President-Elect Senator CatherinePugh, Maryland

Panel 2Discussion Session VIII: An In-Depth Lo ok at Reg ional Transm issionOrganizations and Independent System OperatorsPlaza III & IVThis panel w ill explore the current status as well as the future of RT Os and ISOs.The panel w ill explore issues such as: How are RTO /ISO markets operating? Is thecurrent RTO/ISO planning process working? How are the RTOs and ISOs workingtogether in the context of Order 1000? Is there room for partnerships w ith regionsthat arent in RTOs/ISOs? The panel will also explore incentives that the state andfederal regulatory bo dies can offer to create additional efficiencies.Moderator:Charles Davidson, Director, Advanced Communications Law & Policy Institute(ACLP), New Y ork Law SchoolIndustry Perspective:Anne M . Vogel, Director Transmission Strategy and Federal Policy, American

Electric Pow er Service Corp. Richard Doying, Executive Vice President ofOperations & Corporate Services, Midcontinent ISOLinda H . Blair, Executive V ice President, Chief Bu siness Officer, ITC Ho ldingsCorp.Roundtable Discussion:NAR UC U tility Marketplace Access Sub Com mittee Vice Chair Nikki Hall, SouthCarolina

P a g e2


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Exhibit 6 12/23/14

Chairman Phil Montgomery, WisconsinCommissioner Bob Anthony, OklahomaChairwoman Donna Nelson, TexasCommissioner Karen L. Montoya, New MexicoCommissioner William Kenney, Missouri

Robert Lara, Esq.Executive Assistant to Comissioner Karen L. MontoyaDistrict 1New Mexico Public Regulation Comission1120 Paseo de PeraltaSanta Fe, NM [email protected]

Page


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Exhibit 7 12/23/14 3

From: Lara, Robert, PRCSub ject: RE: Distributed Energy Resources notes-Date: October 11,2013 1:13:05 PM M DTTo: Collins, Mary


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Exhibit 7 12/23/14 3

Robert

Sent from my Verizon Wireless 4G LTE DROID

Original Message.........Subject: Distributed Energy R esources notes-From: "Lara, Robert, PRC" To: "Montoya, Karen L, PRC" CC:

Page


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Distributed energy Notes

Background

In the U.S. energy infrastructure power is produced from resources inland, but most of the

consum ption is in the major population centers along the east and we st coasts. Thus, thereweb of transmission and distribution (T&D) system s to get pow er from w here its generatewhere its consume d. As those load centers increasingly deman d mo re energy, significantinvestments in transm ission infrastructure are needed - but building out addition transmiscreates congestion at the load centers, according to experts.

Creating enough T &D to satisfy peak demand and avoid congestion would be like buildilane highway to com bat rush-hour traffic: for two hours a day it would be w ell used but th22 hours it would be overkill and utilitie, s dislike underutilized investments.

Utilities are not equipped to meet the sudden increase in powe r demand a ssociated with celectric vehicles, nor do utilities have a way to address the effects of distributed resources,as unpredictable increases in electric demand if the output of these resources suddenly dro

Distributed energy (DE ) technologies are playing an increasingly important role in the naenergy portfolio. They can be used to m eet base load pow er, peaking power, backup powremote pow er, power quality, as well as cooling and heating needs.

Distributed energy refers to a variety of small, modular power-generating technologies that canbe combined with load management and energy storage systems to improve the quality and/orreliability of the electricity supply. They are "distributed" because they are placed at or near the

point of energy consumption, unlike traditional "centralized" systems, where electricity isgenerated at a remotely located, large-sc, ale power plant and then transmitted down power linesto the consumer.

Types of distributed energy resources

Distributed energy resource systems are small-scale power generation technologies (typically inthe range of 3 kW to 10,000 kW) used to provide an alternative to or an enhancement of thetraditional electric power system. The usual problem with distributed generators are their highcosts.

One popular source is solar panels on the roofs of buildings. The production cost is $0.99 to2.00/W (2007) plus installation and supporting equipment unless the installation is Do it yourself(DIY) bringing the cost to $0.525 to 0.750/W (2010). This is comparable to coal power plantcosts of $0.582 to 0.906/W (1979), adjusting for inflation.

Nuclear power is higher at $2.20 to $6.00/W (2007). Some "thin-film" solar cells have wastdisposal issues when they are m ade with heavy m etals such as Cadmium telluride (CdTeCopper indium g allium selenide (CuInGaSe), and m ust be recycled, as opposed to silicon


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cells, which are mostly non-metallic. Unlike coal and nuclear, there are no fuel costs, operpollution, mining-safety or operating-safety issues. Solar power has a low capacity factor,producing peak pow er at local noon each d ay. Average capacity factor is typically 20%.

Another source is small wind turbines. These have low maintenance, and low pollution.

Construction costs are higher ($0.80/W, 2007) per watt than large power plants, except in verywindy areas. Wind towers and generators have substantial insurable liabilities caused by highwinds, but good operating safety. In some areas of the US there may also be Property Tax costsinvolved with wind turbines that are not offset by incentives or accelerated depreciation. Windalso tends to complement solar. Days without sun there tend to be windy, and vice versa. Manydistributed generation sites combine wind power and solar power.

Distributed cogeneration sources use natural gas-fired microturbines or reciprocating enginturn generators. The hot exhaust is then used for space or w ater heating, or to drive an abschiller for air-conditioning. The clean fuel has only low pollution. Designs cu rrently havereliability, with some m akes having excellent ma intenance costs, and others being unacce

Integration with the grid

Grid-connected distributed energy resources also support the central-station model of electrgeneration, transmission, and distribution. While the central generating plant continues toprovide most of the pow er to the grid, the distributed resources can be used to m eet the peademands of local distribution feeder lines or major custom ers. Computerized control systemusing phone lines or wireless technologies--make it possible to operate the distributedgenerators as dispatchable resources, generating electricity as needed. In addition, emerginsmart grid technologies are making it easier for utilities to operate distributed generators asdispatchable resources.

The growing popularity of distributed energy is analogous to the historical evolution of computersystems. Whereas we once relied solely on mainframe computers with outlying workstations thathad no processing power of their own, we now rely primarily on a small number of powerfulservers networked with a larger number of desktop personal computers, all of which help to meetthe information processing demands of the end users.

Distributed generation plants are mass-produced, small, and less site-specific. Their developmentarose out of:

1. concerns over perceived externalized costs of central plant generation, particularly

environmental concems,2. the increasing age, deterioration, and capacity constraints upon T&D for bulk power,3. the increasing relative economy of mass production of smaller appliances over heavy

manufacturing of larger units and on-site construction, and4. Along with higher relative prices for energy, higher overall complexity and total costs for

regulatory oversight, tariff administration, and metering and billing.


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Cost and Reliability

While the generation cost of distributed generation (DG) is more expensive than conventional

sources on a kWh basis, this does not consider negative aspects of conventional fuels. Theadditional premium for DG is rapidly declining as demand increases and technology progresses,and sufficient and reliable demand may bring economies of scale, innovation, competition, andmore flexible financing, that could make DG clean energy part of a more diversified future.

Distributed generation reduces the amount of energy lost in transmitting electricity becauselectricity is generated very near w here it is used, perhaps even in the same b uilding. Thisreduces the size and number of pow er lines that must be constructed.

For reasons of reliability, distributed generation resources would be interconnected to the sametransmission grid as central stations. Various technical and economic issues occur in the

integration of these resources into a grid. Technical problems arise in the areas of power quality,voltage stability, harmonics, reliability, protection, and control. Behavior of protective deviceson the grid must be examined for all combinations of distributed and central station generation.A large scale deployment of distributed generation may affect grid-wide functions such asfrequency control and allocation of reserves.

To date, 37 states representing over 80% of the US population have enacted renewable porstandards or goals that require 10% to 313% of energy delivered to customers by 2020. Themo stly variable resources present an operating challenge since the am ount of power over mo nth, hour or even the next m inute is generally harder to predict than powe r available frhydro, gas, coal or nuclear plants. While many of these renewable plants w ere originally

interconnected to transmission systems, m ore recently large amounts of rooftop solar haveto create operating and economic issues for distribution systems.

According to the Federal Energy Regulatory Comm ission, 37 states plus theDistrict of Columbia have im plemented renewable portfolio standards (RPS) orgoals (RPG ) calling for an average of about 20% energy de livered to be sourcedfrom renewable resources by 2020. (4) These states represent about 80% of the US populat

Benefits of Distributed Pow er

This new c onfiguration of micropow ers and microgrids has m any benefits over the oldconfiguration (a big powe r plant feeding superhighway transmission lines). It reduces toxgreenhouse gas emissions. It saves land, protects property rights, and reduces controversierights of way and eminent domain. It is more efficient, eliminating line-loss inefficiencies the water required for cooling large power plants. It can resolve peaking pow er problems apostpone the need for new power plants and transm ission lines. It avoids financing problelarge pow er plants and high-voltage lines -- the capital, taxes or bonds o therwise requiredfrugal. Distributed micropower is delivered power.


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Effects on Mark etplace and sugg estions to improv e the system

Pow er companies w ill have to adapt and innovate to offer consume rs the products and ser

they desire, lest they face the same type of creative destruction that has revolutionized couindustries in the U.S.

Energy consumers will need need a simple, certain and transparent method for pricing the powerthat they supply to the grid. Net metering has served this purpose well and should be continuedso that the customers and suppliers of distributed generation systems know that this foundationalpolicy will be available in the long run. Decision-makers can address cost-shifting concerns overnet metering through the same type of cost-effectiveness analyses that have been used for manyyears to assess other demand-side resources such as energy efficiency and demand response.

Many energy customers do not have a rooftop suitable for the installation of solar panels or

yard large enough to site a w ind turbine.. Shared renewa bles programs can a ddress this prthrough the development of larger, but still distributed renewable generation projects conneto the distribution system at the wholesale level, with the power output distributed to subscor comm unity mem bers. Shared renewables programs should be developed so that all eneconsumers are able to participate in clean energy markets.

Distributed generation does not have to be on the customers side of the meter, nor does theoutput need to serve specific customers. It can also be deployed as small power plants, providingwholesale power to utilities. Wholesale DG can help utilities to meet their states renewableportfolio standard goals, to hedge against the risks of developing large-scale generation andtransmission projects, and to respond quickly to load growth. A variety of administrative or

market-based pricing mechanisms can be used to support wholesale DG, with long-termcontracts essential in order to allow these capital-intensive projects to be financed.

Too much regulation can present a major barrier to distributed generation, raising "soft costs"like permitting and customer acquisition.. Regulators and local agencies should adopt best-practice interconnection standards and improvements in the permitting process for DG as waysto remove these barriers to DG deployment while still ensuring safe and reliable installations.

DG can reduce transmission and distribution costs, but only if utilities integrate DG into theirplanning for delivery networks. IDP is a coordinated, forward-looking approach under whichutilities plan in advance to upgrade or reconfigure certain circuits that are expected to have DGadded in the near future, and make the associated costs known to the market with far moretransparency than is common today

New Mexico Specific Projects

Kit Carson July 2013


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Kit Carson Electric Cooperative (KCEC) of Taos, NM an d the Clean Energy Collective (Cof Carbondale, CO, have entered into a 1.2 mega watt agreem ent to launch New M exicos comm unity solar gardens. The com munity solar projects will allow utility customers to pusolar panels located in comm unity arrays, with the first phase being constructed at the TaoCharter School.

Clean Energy Collective pioneered the community solar model for clean energy production,which allows community members to purchase solar panels located in solar gardens to offsettheir electricity use. CEC constructs and maintains the solar gardens, and the local utilitycompany agrees to acquire the power from the community arrays. Consumers receive the sametax credits and electricity discounts as they would if the panels were installed on their roofs. CECwarranties the panels for 50 years, so consumers dont have to worry about construction,maintenance or repair.

The community solar concept allows all consumers to utilize clean renewable energy, includingrenters, those with poorly sighted properties and individuals of all income levels, without having

to build a costly system of their own. Owners of community solar panels reap the benefitsdirectly on their monthly electric bills through KCEC.

The com munity solar arrays will be constructed on solar carports, mounting 420 solar panetop of a sturdy cano py structure. Solar carports are easy to m aintain and also serve to protautomobiles from the weather as well as. provide a convenient place to charge electric vehThe first comm unity solar arrays will produce approximately 160,000 kW h of clean energyear.

NMPRC and Reasonable Cost Threshold

Your thoughts on this debate and its impact on this new m ethod of power generation andtransmission I think wou ld dovetail well into this panel.


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Exhibit 9 12/23/14 3:59 PM

From: C ollins, MarySub ject: RE: Regional transmission organizations reviewDate: October 11,2013 1:33:31 PM MDTTo: Lara, Robert, PRC


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Exhibit 9 12/23/14

F r o m :Lara, Robert, PRC [mailto:[email protected]]Sent: Friday, October 11, 2013 11:00 AMTo: Collins, MarySubject: Fwd: Regional transmission organizations review

Second set of notesSent from m y Verizon Wirehzss 4G L TE D ROID

Original Message .........Subject: Regional transm ission organizations reviewFrom: "Lara, Robert, PRC" To: "Montoya, Karen L, PR C" CC:

Please review the ms word doc first, its a general background for youThen the P owerPoint highlights the deve lopments in N M, but I need toadd your personal comments to them to finish itr

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Regional transmission organization (RTO) and Individual System Operators (ISP) Notes:

Wh at is it?

A Regional Transmission Organization (RTO) and a Individual System Operators (ISO) is

independent system operator. Both types of entities are functionally the sam e: they operateman age the interstate electricity grid over a large region, dispatch the system by mea ns ofauction-based energy m arkets, and provide market m onitoring oversight. A key c haracteriboth ISOs and R TOs is that, in contrast with grid operators in utility operated systems, thenot affiliated w ith any m arket participant and thus provide the fair access to grid services for a level playing field. Both RT Os and ISOs dispatch the system by m eans of com petitivauction-based energy markets, in contrast to the purely bilateral markets in single utility opsystems. The grid operators in New York and Ca lifornia are ISOs, not RTOs, because of thsingle-state geographic scope. The im portant point of both ISOs and R TOs is that they araffiliated with any ma rket participants and thus provide the fair access to grid services nee

a level playing field. RTO s and ISOs serve about two -thirds of electricity consum ers in the

RT O m em bership is voluntary under FER C rules and regulations, but once a utility is in, pretty difficult to get out. RT Os dont physically ow n or operate any physical transm issiogeneration facilities, but they do arrange for and coordinate the traffic over the transmissiosystem (eg, m anage the tariffs, plan for congestion elimination, etc) and in som e cases, arrafor the generation - wholesale m arkets -- and delivery of the power over the system ( eg, mimbalances, load following, e tc). Individual utilities still have the responsibility to operatesystem and control areas within the constraints as dictated by the RTOs. RTOs charge a ftheir services; they dont actually get a transmission fee themselves or buy and sell powerRT Os basically bring a buyer and seller together. The relationship between the utility anRTO is contractual, so its enforceable under FER C. Entities not jurisdictional to FER C likTriState, generally do not like RTO s, because participation brings them on e step closer to oversight.

Where are they?

There are currently six operational Regional Transmission Organizations/Independent SystemOperators (RTOs/ISOs) under the jurisdiction of the Federal Energy Regulatory Commission(FERC): ISO New England (ISO NE); the New York ISO (NY ISO); the PJM Interconnection(PJM); the Midwest ISO (MISO); the California ISO (CAISO); and the Southwest Power Pool(SPP). The ERCOT ISO in Texas is entirely encompassed within the state which has its ownintrastate transmission grid and is therefi~re subject only to state authority.


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How do they work?

In regions with operating R TOs, m arket participants buy and sell a variety of electricity pand services in RT O-run markets. Typically, these products and services are not actually

furnished by the RT O itself; instead they are sold by m arket participants through marketstructures that the RT O adm inisters. For exam ple, in RTO regions w ith centralized m arkeelectric energy (PJM, NYISO, ISO-NE, MISO and CAISO), the RTO operates the day-aheand real-time ma rkets through w hich ma rket participants buy and sell wholesale electric pThe R TO does no t own the pow er plants that generate the power bought and sold in the mHow ever, the RTO develops the rules it uses to adm inister the markets, decides which genwill run and at what levels, grants (ordenies) the transmission services needed for transactoccur, and runs the billing systems for payments for power.

RTO s also operate day-ahead and real-time spot pow er markets. The prices for power in thma rkets are set every hour based on the bids that sellers submit to the RTO . The RTO take

bids in ascending order, and stops with the last incremental bid neede d to supply power toin that time interval. The priceall sellers in that time interval receive, howeve r, is based o n tlast bid the R TO accepted -- this is know n as a "single clearing price" market. RTO m arkwith these features are called "Day 2" markets. These offers need not reflect the sellers acosts of generating power, as FE RC w ould have required under a traditional cost-of-servicratemaking regime prior to formation of RT O m arkets. Rather, the sellers set their own pricoffers, regardless of their actual co sts.

As is mentioned above, the single price auction and absence of price regulation in the wholesaleelectric power markets have led to these "restructured" markets producing both higher prices andhigher profits than one would expect in a competitive market and than are seen in the non-RTO

regions that have not restructured. The mechanism that most RTOs use to manage congestion ontheir transmission systems (where demand for transmission service in a specific directionexceeds the capacity of the needed lines) is to charge a premium, known as a "congestioncharge" to transmission customers using those lines. When congestion prevents generation frombeing delivered to customers in a "constrained zone," more expensive generation located withinthe zone may be provided to meet those customers demand. The customers price reflects theoffer submitted by this higher cost generator, even if there are generators offering lower prices inthe RTO, but that cannot deliver their power because of the constraints.The difference between the lowest price in the RTO and that charged in the constrained zone isreferred to as the "congestion charge." This congestion pricing system is known as "locationalmarginal pricing" (LMP). The conceptual basis for LMP is that if market participants must pay

higher congestion costs to support their power supply transactions, they will have an incentive tosupport construction of new generation or additional transmission facilities, or to reduce theirusage through conservation or shifting of the times when energy is consumed. Yet, there is noevidence that this theory has worked in practice - generation and transmission development hasin fact lagged in RTO regions versus non-RTO regions.


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Controversy

Much of the controversy over RTOs centers on the use of markets to manage transmission linecongestion and balance generation output against customer load (demand). When these marketswere established, proponents argued that competition would increase in each region, and

therefore prices would drop. In fact, the opposite has occurred because the markets are notcompetitive. Instead, complicated mech,misms have been put in place to encourage certainmarket behaviors, but these mechanisms have not achieved the desired results.

RTO individual characteristics:

CAISO: Operates only in California, but it is fully FERC-jurisdictional as the statestransmission grid is interconnected with the rest of the West. Some public power systems in thestate have chosen not to turn over operational control of their transmission facilities to theCAISO, but all public power systems are impacted by the CAISOs spot market prices andprovision of transmission service, due to the web of business relationships among market

participants in the state.

ISO NE: Operates in Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, andConnecticut. ISO NE proposed to add a new locational generation capacity market (calledLocational Installed Capacity or LICAP), which engendered great controversy in the region.However, most parties have now agreed to a settlement which replaces the LICAP proposal witha Forward Capacity Market (FCM). The Commission has approved the FCM settlement, butsome parties, including the state of Maine, continue to oppose it.

MISO: Operates in all or parts of Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan,Minnesota, Missouri, Montana, Nebraska, North Dakota, Pennsylvania, South Dakota, Virginia,

Wisconsin and Manitoba, Canada. There have been complaints about MISOs high rates, and theinvestor-owned utilities in Kentucky have requested and obtained FERC permission to withdrawtheir transmission facilities from MISOs control.

NY IS0: Operates only in New York, but is fully FERC-jurisdictional as the states transmissiongrid is interconnected with the rest of the region. New York City is a very transmission-constrained area within the NY ISO, which requires substantial mitigation of the NY ISO powermarkets.

PJM: Operates in all or parts of Delaware, Illinois, Kentucky, Maryland, Michigan, New Jersey,North Carolina, Ohio, Pennsylvania, Telmessee, Virginia, West Virginia and the District of

Columbia. PJM has a very large footprint, but faces substantial transmission constraints betweenits eastern and western regions. American Electric Power and Allegheny Power have bothproposed to build substantial high voltage transmission projects from Western to Eastern PJMthat they assert will help to ease transmission congestion in the region.

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SPP: Operates in all or parts of Arkansas, Kansas, Louisiana, Mississippi, Missouri, NewMexico, Oklahoma and Texas. SPP has approached RTO formation and market development ona slower and more conservative track than many other RTOs.

For the most part, these interconnections operate separately. New Mexico happens to "straddle"

both the Eastern and Western interconnects affording it the opportunity to export power botheastward and westward. The state is also adjacent to ERCOT. Thus far, the majority of the focuson exporting New Mexicos renewable energy out-of-state has been on western markets likePhoenix, San Diego and Los Angeles. However, there are significant opportunities to exportpower to eastern markets particularly as more and more states adopt renewable portfoliostandards, see the Tres Amigas project discussed below.

In NM we have a voluntary R TO the W estern E lectricity Coordinating Counsel. Mem berWE CC is open to any entity engaged or interested in electric system reliability or access,including large end-users, regulatory agencies, public interest groups, generators, transmissproviders, transmission users, power marketers, consultants and sitting agencies.

For the W estern U.S., it is important to note that unlike the Northeastern US, w here load vcapacity is a major issue requiring that RTO s and ISOs are used to ensure organizedtransmission and pow er generation is had to m aintain load capacity. In the W est, we do nthe load vs ca pacity issues yet, therefore RT Os are not as prevalent.

Wh y do RTOs and ISO m atter?

RTOs and ISOs have becom e m ore prevalent in the industry due to the issuance of the FERC1000 order.

Order 1000 at its heart it deals with the issue of whether states can be forced to coordinate transmission planning and meeting c ost obligations for new electricity transmission capaciThe order says that states can be co mpelled.

Order 1000 aims to increase competition in the electric transmission industry. The three keyareas of focus include cost allocation, transmission planning and the removal of the federal rightof first refusal (ROFR).

Cost allocation -- Who pays?Part of Order 1000 mandates coordination and collaboration on allocation of costsbetween regions on large-scale, interregional transmission projects.

Planning processOrder 1000 requires all transmis,~;ion providers to participate in a regional transmissionplanning process. In addition, it requires all regional planning processes to accommodatean interregional planning process when addressing large, multiregional transmissionprojects.

Removal of ROFROrder 1000 removes the federal Right of First Refusal for transmission projects that are

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identified in a regional plan for the purposes of cost allocation. As a result, manytransmission projects that have traditionally been assigned based upon geographiclocation and service territory may now be open to competition. Incumbent utilities will nolonger maintain the federal right of first refusal to build, own and operate large-scaletransmission projects that are located within their service territory. The ROFR removal

has the potential to significantly change the way large transmission projects are identifiedand awarded.

Key da tes in FERC 1000 include

FERC Issues Order No. 1000: July 21,2011Posted in Federal Register: August 1 l, 2011Rehearing Date: August 22, 2011Intraregional Compliance Filings Due: October 11, 2012Interregional Compliance Filings Due: April 11, 2013Order No. 1000 requirements apply to "new transmission facilities," which are those subject to

evaluation or reevaluation within local or regional transmission planning processes after theeffective date of compliance filings (assumed 60 days after filing so Dec. 10, 2012 at theearliest).

FER C 1000 is important because it has a keystone in the creation in developing newtransmission lines. This impacts renewable energy resources because the areas optimal fordeveloping renewable resources som etimes do not m atch with population centers, and thamuch wider dispersal of renewables is needed to ensure reliability. So transmission lines arnecessary to m eet the energy w here its at, carry it to where it is needed, and link it into thlarger grid.

Tres Am igas Project

Tres Amigas is a proposed project located near Clovis, New Mexico, that would physicallyconnect all three interconnections to enhance interstate conveyance of electricity into and out ofNew Mexico.

On April 9 2013 FE RC signed offon an agreement among Tres Amigas LL C, the SouthwPublic Service Co. and the Southwest Pow er Pool Inc. that will enable the Tres Amigas"superstation" to interconnect w ith Southwesterns transmission system.

The FERCs acceptance of the interconnection agreement is the latest milestone reached by TresAmigas in its effort to develop a new facility that will connect the Western Interconnection, theEastern Interconnection and the transmission system controlled by the Electric ReliabilityCouncil of Texas Inc.


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The companys website maintains that the focus of the project is "to help the country achieve itsrenewable energy goals and facilitate the smooth, reliable and efficient transfer of green powerfrom region to region."

Noting that the nations three interconnections largely "operate as islands" and that renew

energy developers "are facing increasing difficulties in getting sufficient access to thetransmission assets required to take their power to market," Tres Am igas said its goal is tothese bottlenecks" by offering "gigawatts of pow er transmission capability."

David Stidham, senior vice president and CO0 for Tres Amigas, told SNL Energy that thecompany is in the process of completing its contract preparations with construction firms for theerection of the buildings, voltage source converters and transmission lines associated with theproject. Once those contracts are in place, he said, Tres Amigas will "finalize design and orderthe equipment," and expects to begin construction "sometime this summer."

"Our big rem aining obstacle is obtaining the rights of way for the transmission line," Stidh

said, noting that Tres Amigas has secured approximately 40% of the rights it needs.Stidham explained that because the com pany w ill not be publicly traded and w ill not havratepayers, the project will not be regulated by the Public U tility Com mission of Texa s antherefore does not need that agencys approval. He also said the com pany is negotiating wseveral customers interested in taking on an "anchor tenan t" role, but stressed that enterinsuch an arrangem ent "is not necessary fi~r financing" and that the com pany intends to wathe facilitys go-live date is closer before completing any such agreements. Operation of thfacility is expected to begin sometime in the sum mer of 2016, Stidham added.

Four Corners Project

In addition to the Clovis project, Tres Amigas is working on the New Mexico E xpresstransmission line. This is a transm ission line underground that cou ld connect pow er generstations in the Four Corners to the separate Texas power grid and to southern New M exicoallow New Mexico to sell power across the grid.

Tres Am igas is planning to unite, in New Mexico, the W estern Grid, Eastern Grid and TeGrid, the three power grids in the nation, with a buried High Voltage Direct Current (HVDtransmission line.

The project would make the w holesale market mo re efficient by allowing low-priced pow

delivered to high-priced areas, Phillip Harris, Tres Am igas CEO, told the New Mexico F inAuthority at Aug. 2013 me eting. It would also provide opportunities for new and existingrenewable an d natural gas-fired generation reach key m arkets, he said.

The co mpan y, Smith said, is nearing the start of its $500 m illion fundraising for the projeccompany has already received approval for industrial revenue bondsfrom B ernalillo Countyandfrom Clovis, where the m ain station will be.


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The project would be built in phases by a public-private partnership, Harris said. The first phasewould run about 400 miles between the Four Comers hub in northwestern New Mexico and theplanned Tres Amigas superstation in the eastern part of the state. Once built, the superstation willlink the Western and Eastern interconnects and the Texas grid system. A second phase wouldloop through southern New Mexico, which has significant solar and wind potential.

Sun Zia

The SunZia Project consists of two bi-directional extra-high voltage electric transmission linesand substations that will transport energy from Arizona and New Mexico to customers andmarkets across the Desert Southwest. SunZias total transmission capacity has an approvedrating from the Western Electricity Coordinating C

Documents

Nm Prc Recusal Motion Re Montoya and Lyons 242 Pgs