EL PASO, Texas (KTSM) — In a unanimous decision, the New Mexico Supreme Court ruled that El Paso Electric cannot recover losses incurred under rates that were later invalidated on appeal, according to a news release from the Administrative Office of the Courts on Friday, April 24.

EPE serves customers in southern New Mexico, including Las Cruces.

The Court reaffirmed a long-standing legal precedent against retroactive ratemaking, stating that the utility company did not provide sufficiently compelling reasons to overturn the Court’s established precedent.

Additionally, the Court upheld the New Mexico Public Regulation Commission’s (PRC) rejection of a proposal by EPE to recover losses incurred over two years before the rates were invalidated by a Supreme Court decision in 2023.

“We agree with the Commission that the rule against retroactive ratemaking prohibits EPE’s request to book a regulatory asset in its January 2024 rates for the losses incurred between June 2021 and June 2023,” the Court concluded in an opinion written by Chief Justice Julie J. Vargas.

The Court explained that a “party that seeks to avoid incurring potentially unrecoverable losses during the pendency of an appeal should request a stay of the Commission’s ratemaking order” as permitted by state law or request the regulatory agency to establish interim rates that are subject to refund or a surcharge while awaiting the appeal’s outcome.

The 2021 order was reversed by the Court in a 2023 opinion, in which the justices concluded that the Public Regulation Commission violated EPE’s due process rights by excluding certain costs and assets from the utility’s rate base, according to the Court.

When the PRC took up the rate case again after the Court’s ruling, EPE proposed “a way for it to recover losses from the rates in effect during its initial appeal,” the Court said.

EPE then filed a second appeal after the PRC established new rates, which did not allow for recovery between the time the rates were first orded in 2021 and when the rates were vacated by the Court in 2023.

In today’s opinion, the Court wrote that if state regulators “were to allow EPE to recover these amounts in rates with a January 2024 effective date, then the Commission would retroactively change the price of transactions occurring between June 2021 and June 2023. This is precisely what the rule against retroactive ratemaking was designed to prevent.”

As well, the Court stated that the prohibition on retroactive ratemaking “promotes principles of fairness and protects parties’ due process rights by ensuring that rates paid for past transactions cannot be changed without prior notice to the parties.”

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