Regulate This!

One troubled agency—many, many conflicts

If you’ve ever turned on your heater, called your mother, used the internet or gone to a doctor, the New Mexico Public Regulation Commission has influenced the transaction. The PRC, which consists of five handsomely compensated ($90,000 a year) elected officials, is charged with ensuring New Mexicans pay “fair and reasonable” rates for public utilities—and, in return, receive “reasonable and adequate services.”

In other words, turning on a light shouldn’t break the bank—and electricity should always be there. Like freedom.

Because the PRC plays such an integral role in New Mexicans’ daily lives, ethical lapses within its leadership are particularly disturbing. Last year, two commissioners—Jerome Block Jr. and Carol Sloan—were accused of serious crimes. Block’s indictment, for election code violations and embezzlement, now languishes in the New Mexico Court of Appeals. This past April, Sloan was convicted of two felonies related to an incident that occurred last fall, in which she attacked with a rock a woman she believed to be her husband’s lover.

But 2010 ushered in a whole new set of scandals, this time related more to the commission’s actual work than its members’ extracurricular activities.

In February, Blue Cross Blue Shield of New Mexico announced plans to increase rates for its customers by as much as 24.6 percent in order to cover rising health care costs. In April, minutes before a hearing on the proposed rates, the PRC Insurance Division’s then-superintendent, Morris “Mo” Chavez, announced that the case had been settled—and that Blue Cross could levy rate hikes averaging approximately 21 percent.

A public outcry ensued, resulting in Chavez’ resignation amid allegations of a backroom deal, as well as the revelation that Blue Cross’ parent company enjoyed a surplus of approximately $6.7 billion. But even customers’ outrage didn’t sway PRC commissioners—because, according to Commissioner Sandy Jones, that’s just the way the agency works.

“We make decisions not based on public comment at a hearing, [but] on actuarially sound testimony that is subject to cross examination,” Jones says. “That’s what made that whole Blue Cross deal so absolutely frustrating: Somehow, the public was led to believe that they could come out there and make a difference in how that rate case was made.”

But Commissioner Jason Marks says that system alone is reason for change.

Marks says he still disagrees with the PRC’s decision to allow the rate increase, but acknowledges that the rate case at least brought attention to the lack of public influence in how utility rates are set.

Marks foresees legislation to provide for more public hearings—but he also says change is needed in the way commissioners are chosen. Among lawmakers’ proposals to streamline state government is the idea of appointing commissioners. It’s unpopular among most current commissioners—Jones calls the idea “ridiculous”—but Marks says he’s willing to consider the idea.

“I thought, [since] there are a lot more voters out there who are consumers than who own regulated companies,” elected commissioners “wouldn’t necessarily favor consumers,” but would “at least be fair,” Marks says. “Yet I see commissioners who tend to be deferential to large, regulated companies, so my theory doesn’t work.”

But he describes another idea on the table—abolishing the PRC entirely, via constitutional amendment—as “very, very dangerous. It’s basically an opportunity for the powerful regulated companies to rewrite things in a way that favors their interest.”

But not unprecedented. The PRC itself was created in 1996 after voters abolished by constitutional amendment its predecessor agencies.

Blue Cross isn’t the only company making headlines for its rate hikes. Public Service Company of New Mexico, the state’s largest utility, also seeks rate hikes of 20 to 22 percent.

“If we could have avoided asking for a rate increase at this time, we would have,” PNM spokeswoman Susan Sponar writes in an email to SFR. Electricity costs will already rise for PNM customers by approximately 35 cents each in January; if the PNM case is approved, Sponar writes that the average monthly bill of $60.61 would increase by an additional $10.19 in April and by another $4.25 in January 2012.

Marks has requested two additional public hearings in Albuquerque so the public knows what’s at stake—but with ever-intensifying renewable energy requirements to satisfy, PNM has said more rate hikes are in the offing [News, July 14: “Energy Dependence”].

CONSIPIRACY THEORY: Public Regulation commissioners taking kickbacks from big utility companies? Let’s just say it’s not impossible.