El Paso Electric will credit people with non-commercial accounts this summer to make up for undercharging some of its large customers. (Photo by Anton Petrus / Getty Images)
State officials want to make sure New Mexicans are not missing out on what could be more than $1 million because a Texas utility company was found charging incorrect rates on electric bills.
Last week, the New Mexico Public Regulation Commission ruled that El Paso Electric had been undercharging some of its largest customers a few years ago, consequently making other people pay higher rates.
Commissioners said the undercharge created inequities in the rates that other regular El Paso Electric customers paid. Officials in Las Cruces argue the utility owes more than $1.19 million for overcharging people.
The PRC ordered El Paso Electric to fix its billing mistakes by creating new discounted rates for people with non-commercial accounts and gave the Texas-based company just under a month to determine how much it will return in credits.
The utility has until June 6 to file a notice with credited rates.
El Paso Electric will not appeal the decision in court and is moving in motion plans to correct the charge to its customers, according to utility spokesperson Karmen Mayorga.
She said the utility will credit its non-commercial customers to make up for undercharging its large customers starting July 1.
“Pursuant to the New Mexico Public Regulation Commission’s order, El Paso Electric is to correct the underbilling of five large commercial customers and will credit the underbilled sum directly to all other customers over the course of the next year,” Mayorga said via email.
How this happened
Utilities can charge their customers certain fees in order to meet state-required renewable energy standards.
Large, nongovernmental utility customers used to have caps on how much of these fees they had to pay for utilities’ renewable energy requirements — no more than 2% of their annual revenue. New Mexico lawmakers reversed that rule in 2019 when they amended the Renewable Energy Act.
However, El Paso Electric continued to cap fees for some of its biggest customers.
This matter dates back to 2018, when the PRC approved fines that El Paso Electric wanted to charge its customers in order to pay for energy from a facility in southern New Mexico. The city of Las Cruces disagreed with the fees and appealed the PRC decision with the New Mexico Supreme Court.
Meanwhile, El Paso Electric charged its customers the extra fines from 2019 to 2021.
In December 2021, the New Mexico Supreme Court decided that the fees were illegal.
The PRC shouldn’t have approved the fines because the energy costs that the utility was charging for should’ve been free under federal law, according to the court.
So the public regulation commission ordered El Paso Electric to pay back its customers. In 2022, the utility returned over $600,000 to its customers in southern New Mexico.
Las Cruces officials had more issues with the Texas utility company, arguing in a hearing that took place in January and February 2023 that the El Paso Electric capping fees on its largest customers since 2019 trickled into higher bills for people with smaller accounts.
El Paso Electric could owe more than $1.19 million to people with accounts in southern New Mexico, said Las Cruces Utilities administrator José F. Provencio.
El Paso Electric argued against paying it all back, saying discounted rates or credits would qualify as “retroactive ratemaking,” or changing rates after they’ve already been set in place and charged. And, the utility argued, El Paso Electric billed people following approval in 2018 directly from the PRC.
Last week, the Public Regulation Commission agreed with Las Cruces officials and ordered El Paso Electric to give its general customers credits to make up for the difference in the rates the utility charged them compared to its large customers.
The PRC said since the rates were wrong in the first place, the utility needs to fix them.
Commissioners also said all parties — including the PRC and El Paso Electric — have to follow New Mexico law, regardless of what the commission ordered in 2018. PRC attorney Russell Fisk explained this during the public meeting last week.
“Correcting billing to comply with the amendments to the (Renewable Energy Act) is not retroactive ratemaking,” Fisk said. “It is ensuring compliance with the law to which the Commission as well as EPE were and are subject.”
Now that El Paso Electric has to fix the incorrect charges, the city of Las Cruces also wanted the utility to skip over figuring out how much needs to be credited, since Provencio’s testimony with the city added up to $1,198,067 in error.
The PRC disagreed.
Commissioners said the utility should be able to calculate the needed billing adjustments, which El Paso Electric has about a month to do.
“I don’t think I’ve ever seen a case where the commission ordered an adjustment that would be executed by utility without letting the utility calculate the adjustment,” Fisk said.
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