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NM Supreme Court rules PNM can recover future Palo Verde decommissioning costs

The New Mexico Supreme Court ruled May 16 that a previous regulatory decision disallowing Public Service Co. of New Mexico from recovering future decommissioning costs related to leased capacity from the Palo Verde Nuclear Generating Station "deprived PNM of its right to due process of law."

However, the court upheld the New Mexico Public Regulation Commission's September 2016 decision allowing PNM partial recovery of its $163.3 million purchase of 64.1 MW of capacity in Palo Verde unit 2, as well as recovery of lease expenses and operating costs associated with 114.6 MW of capacity under extended Palo Verde leases. It also allowed partial recovery of fuel costs under the coal supply agreement that serves the Four Corners coal-fired plant as well as the inclusion of PNM's "prepaid pension asset" in rate base.

The court rejected rejected PNM's appeals on several matters. It upheld state regulators' decision disallowing recovery of a portion of the purchase price of 64.1 MW of capacity from Palo Verde unit 2; the undepreciated costs of capitalized improvements made while PNM leased the 64.1 MW from Palo Verde unit 2; and the costs to install balanced draft technology at the San Juan plant's units 1 and 4.

The court's decision will result in a noncash, post-tax write-off of $104 million, according to a May 17 filing.

PNM is a subsidiary of PNM Resources Inc.