- Associated Press - Monday, January 12, 2015

ALBUQUERQUE, N.M. (AP) - Public Service Co. of New Mexico disputes a fired plant manager’s testimony that the utility cut operating and maintenance spending and padded other costs to earn more profits.

Gregory Smith was fired by PNM in May 2013 as manager of the San Juan Generating Station. He testified during a November deposition for an environmental group in preparation for a state Public Regulation Commission hearing now underway, the Albuquerque Journal (https://goo.gl/Tba0BZ ) reported.

PNM spokeswoman Susan Sponar said Smith signed off on the San Juan Generating Station’s budget for 2013 long before he was fired in May 2013.

“The budget was not reduced after that,” Sponar said.

The current hearing is on PNM’s proposal to close two of four units and install environmental controls on the remaining units at the coal-fired plant near Farmington.

PNM succeeded in keeping much of Smith’s testimony out of the current proceeding. But a hearing examiner has said it could be suitable for a separate rate case for PNM.

“This is not to find that the allegations of Mr. Smith are not serious. They are,” examiner Ashley Schannauer wrote in an order.

In the deposition, Smith said PNM executives ordered him in late 2012 to cut the San Juan maintenance budget roughly in half because the company expected a cool summer in 2013 that would lower electric consumption and reduce PNM revenue. Smith said the company wanted the budget cuts to cover lost revenue and help meet earnings forecasts for shareholders.

He said he warned PNM executives that plant reliability would decline, leading to outages and forcing purchases of more expensive electricity from elsewhere. But utility executives said it didn’t matter because the extra costs would simply be passed on to ratepayers, according to Smith.

Smith said unscheduled outages did significantly increase as a result.

PNM said the 2013 maintenance budget was not cut and that San Juan’s performance that year wasn’t unusual.

Smith also said PNM ordered him to not cut budget spending for capital improvements because those costs could be included in the plant’s rate base, which allows a return on investment. He said it was difficult to maintain that spending pace because of the lack of scheduled maintenance outages.

PNM said spending at San Juan is carefully vetted by the utility and the plant’s eight co-owners.

Smith has filed a lawsuit challenging his termination.


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