New Mexico has some of the highest solar and wind capacity of any state in the nation and will need to make important decisions during its transition to renewable energy sources. Climate change is accelerating at a fast pace, with extraordinarily high temperatures fueling unheard-of tornadoes and rapid melting of our ice cap. As we phase away from oil and gas fueling utilities, the state is facing a massive restructuring—and not just of its finances. Utility generation sources, the power grid, energy markets and who owns and controls our utilities must be addressed. Public utilities need to please voters. Private utilities need to please investors. In the real world, both have their ups and downs.

As our state moves toward a zero carbon footprint, merging with large multinational energy companies offers one possible path forward. Public power ownership represents another vision of the future. With this in mind, several senators and representatives who want to explore this last option have petitioned the Public Regulation Commission to initiate a formal study of the benefits and feasibility of a public power path for the Land of Enchantment.

Petitioners include Senator Liz Stefanics and Representative Andrea Romero and jointly Senators Jeff Steinborn, Carrie Hamblen, Leo Jaramillo, Linda M. Lopez, Harold Pope, Antoinette Sedillo Lopez, William Tallman. Representatives Brittney Barreras, Joanne Ferrary, Derrick Lente, Roger E. Montoya, Kristina Ortez, Angelica Rubio and Debra Sariñana also signed on.

The legislators are seeking answers to the following questions: What would the quantifiable benefits be if New Mexico pursued a public power structure for its electric system? What are the high-level cost reductions of replacing private investor-owned utilities with public power? What is the revenue potential of exporting excess renewable energy and job creation opportunities? How might public power accelerate the transition to renewables? 

“Solar, wind and batteries are disrupting coal, nuclear, oil and gas. Will we be able to deploy these technologies rapidly enough to avoid dangerous climate change? This study will evaluate the central role energy has on natural systems and human systems and our economy; that’s why I support this analysis,” said Representative Derrick Lente.

While public monopolies are focused less on profit than the private companies, any changes must align with the interests of its political controllers. To pay for an update to old infrastructure or build a new treatment plant, public utility companies need a lot of ducks in a row to get funding. Local commissioners or city council members have to vote to approve any rate increases. Their constituency needs to be happy with that vote if they want back in office. 

“As a former city manager of two cities who owned and operated electric and gas utilities, I am a strong supporter of public utilities. The citizens of both communities took great pride in the fact that they had local public control over their electric and gas utilities—our rates were significantly less than the rates of the surrounding investor-owned utilities, and we contributed 10 percent to the cities’ general funds,” said Senator William Tallman. 

Private utility companies are subject to substantial government oversight and regulation because they provide a public service. Private utilities are, by law, able to set their rates based directly on the cost of their investments. A private monopoly will do what you want, but it will cost more to get it done. How these rates impact low-income people can be mitigated during contract negotiations but not without a lot of discussion and possible compromise on other points. 

“We no longer need to trade off the environment and the economy against each other, as we have abundant natural resources in New Mexico. We must look at alternative ways to structure the provision of energy, so that we can meet our goals as quickly and equitably as possible,” said Senator Liz Stefanics.

In a poor state that has notoriously pandered to private oil and gas companies until recently, the inequities that pandering has caused to the health and bank accounts of state residents is currently on-stage, front and center. 

“The exploration of choices is being considered all over the U.S. from Hawaii to New Hampshire and everywhere in between, including our neighbors in Colorado. We must be well informed,” Representative Andrea Romero said about the study. 

When complying with important health regulations, private companies far outperform the public sector, according to a forthcoming paper in the American Journal of Political Science by Manuel Teodoro, an associate professor of political science at Texas A&M, and co-author David M. Konisky, an associate professor of public affairs at Indiana University,

“People are sensitive to water rate increases in the way they are to tax increases,” Teodoro states. Resource-challenged public utilities can be more likely to fail to meet federal environmental and health regulations than resource-rich private utilities. “Since harsh punishment only further hurts the public, regulators are often more lenient with them than with private utilities,” Teodoro said. 

“Private utilities prioritize their investors rather than their customers. Low-income pricing schemes and rebate schemes and retrofitting—those are not going to be something the investor engages in, unless they have that in their contract with the standards,” Teodoro explained. 

Supporters say the proposed study will help the Legislature make well-informed decisions at a critical juncture in the transition to renewable energy. Legislators must decide whether allowing public ownership of retail electric service at just and reasonable rates is feasible. 

“Technology disruptions are already underway in the energy and transportation sectors, and these have extraordinary implications for addressing climate change. This petition is about exploring our alternatives. The monopoly electric systems of the past which have served us well may not be the best fit to serve a competitive renewable energy market going forward,” Romero concluded.