MINUTES OF THE REGULAR OPEN MEETING

NEW MEXICO PUBLIC REGULATION COMMISSION August 18, 2011

TIME: 9:30 a. m. PLACE:

A quorum was present as follows:

Members Present: Commission Chairman Patrick H. Lyons Commissioner Vice Chair Theresa Becenti-Aguilar Commissioner Jason A Marks Commissioner Ben L. Hall Commissioner Jerome D. Block

Members Absent:

Staff Present Johnny Montoya, Chief of Staff Bob Parker, Acting General Counsel Margaret Caffey-Moquin, Associate General Counsel Larry Lujan, Transportation Division Director

Others Present Carl Boaz, Stenographer

CALL TO ORDER

Cree Meadows Country Club 301 Country Club Drive Ruidoso New Mexico

The Regular Open Meeting was scheduled at 9:30 a.m., pursuant to proper notice under NMSA 1978, 10-15-1(C), and the Commission's Open Meeting Policy. Commission Chairman Patrick Lyons called the Regular Open meeting to ordur at 9:30 a.m., in the Cree Meadows Country Club 301 Country Club Drive, Ruidoso, New Mexico. He ask:ed Commissioner Hall to chair the meeting.

A copy of the sign-in sheeit for the Regular Open Meeting is incorporated herewith to these minutes as Exhibit 1.

A copy of the Agenda for the Regular Open meeting is incorporated herewith to these minutes as Exhibit 2.

1. PLEDGE OF ALLEGIANCE

2. INTRODUCTIONS

The Commissioners introduced themselves to the public present at the meeting.

Ms. Caffey-Moquin joined the bridge during the introductions.

Commissioner Hall thanke~d Becky Brooks with the Ruidoso Chamber of Commerce who set this up the facilities for the meeting.

Those who came introduced themselves to the Commission.

Commissioner Hall said they met in Clayton in June and wanted to meet in other towns of New Mexico as well.

3. MISCELLANEOUS ANNOUNCEMENTS

There were no miscellaneous announcements.

4. CONSIDERATION AND APPROVAL OF THE AGENDA

Commissioner Block moved to approve the agenda as presented. Commissioner Marks seconded the motion and it passed by unanimous voice vote.

5. CONSIDERATION AND APPROVAL OF MINUTES

• Minutes of the Regular Open Meeting of July 21, 2011

Commissioner Block moved to approve the minutes of July 21, 2011 as presented. Commissioner Becenti-Aguiilar seconded the motion and it passed by unanimous voice vote.

6. PUBLIC COMMENT

Mr. Rick Albers said regarding the PNM base rate increase in the newspapers said it was 0%. He asked if the Commission could expand on what additional costs were involved in the rate riders. The HE suggested it could be as high as 20 percent.

Commissioner Marks said there were three riders potentially. The energy efficiency rider at various

Minutes of the Regular Formal Open Meeting August 18, 2011 Page2

amounts since 2005 required lby legislature - things like light bulb replacement rebate and efficient refrigerators rebates. Utilities could recover the costs. That is in the 2-3% range. Recently the PRC cut back PNM's program to try to keep that amount manageable.

Commissioner Lyons said the request was an increase of 3.2% and the Commission cut it back to less than 2.5%. The Commission wanted to keep it at about 2-2.5%.

Commissioner Marks not€!d that it was not an increase. It had been 2.5% for awhile.

Next was the renewable energy rider and it was not in effect at this time. It was part of a settlement on the Renewable Energy Act for the next 2 years. They agreed that PNM would recover added costs through a rider. It was filed in July and they would get it finalized in December and rate payers would not see it until next January. It could be no hiigher than 2% and it could be less.

The other rider was the fuel adjustment clause and was the big one. There were some uncollected amounts because they undercharged for fuel last year and now had to catch up. He couldn't give what amount would be in the rider but it was not as much as 10% on the bills. They needed to figure that out and would provide the information when it was determined. So two of the riders were not much. The fuel clause tracked with natural gas costs.

The cheapest source of energy was coal and nuclear power at Palo Verde. The coal plants were supposed to run at 85-90% and when they were not the natural gas plants run more and increase costs. When they make surplus energy they sell it on the market.

Last year the coal power was at 75% capacity.

Commissioner Hall said there was one more rider for PNM-South people. PNM South had to pay to make up the difference from PNM North of about $7.5 million.

Commissioner Marks said! that was necessary so the rates would end up being the same for both but PNM South rates had been lower.

Commissioner Lyons explained that the North customers had been paying for Palo Verde and a coal plant. PNM bought the TNMP Company and the South didn't have those two cheap sources. The North paid $11 million more and the South customers paid $7 million. This was now one company

The first two riders were mandated by the legislature - renewables and energy efficiency. The fuel adjustment clause was to make up the difference of natural gas over coal.

Mr. Albers said it was confusing because in the stipulation appeared to have eleven different riders.

Commissioner Lyons said some new construction needed to happen. They had to pay for the upgrades. The Commission approves the first two riders every year.

Mr. Albers said his concern was that there were so many different riders and all of them added to the

Minutes of the Regular Fonnal Open Meeting August 18, 2011 Page3

bill.

Commissioner Hall said there were actually 13 riders and many of them had already been there. The only ones that increased your bill were the 3 that Commissioner Marks mentioned. The rest had been there before and would remain.

Commissioner Marks was trying to reach Jim Brack. He didn't think there were 13 different riders for residential.

Mr. Albers said the stipulation showed all the different riders.

Commissioner Marks said with energy efficiency there was a rider for residential and one for small commercial and one for large commercial.

Commissioner Hall explained that the consolidation of south and north would mean higher rates for south vs. north. South customers didn't pay for the San Juan generating plant but he didn't think it was fair for the south to have to pay for it now. Those new rates for north and south would go into effect later this month.

Mr. Albers felt that when another increase was requested this would be good background.

Allan Moore, local attorney and General Counsel for Lincoln County, said he had previously had some interaction with the Commission but more with PRC staff. He thanked the Commission for meeting in Ruidoso and appreciated the lhard work Commissioners did.

Commissioner Hall said probably 99% of the general public didn't have any idea what the PRC did. The PRC did a lot of different thin9s and regulated something that affected almost everybody. The Commission wanted to keep the meetings open.

There were no other public comments.

7. REGULAR ACTION

A. Transportation Divi!iion

11-0018-TR-M IN Tl-IE MATTER OF THE APPLICATION OF NEW MEXICO WINE TOURS, LLC, FOR A CERTIFICATE TO PROVIDE TOUR AND SIGHTSEEING SERVICE AND FOR TEMPORARY AUTHORITY. (Bob Parker) Order

Mr. Parker presented information regarding this matter to the Commission. This was to approve a certificate for New Mexico Wine Tours out of Los Alamos. They now operated under temporary certificate and this application was for a permanent certificate. The Transportation Division said they met the requirement.

Minutes of the Regular Fonnal Open Meeting August 18, 2011 Page4

Commissioner Block moved to approve the order. Commissioner Becenti-Aguilar seconded motion.

Commissioner Lyons asked Mr. Lujan to explain what the PRC was regulating here.

Mr. Lujan said the Transportation Division was covered by state statute. Providers of any transportation for hire on public roads were required to come to the PRC and submit an application. They needed to provide evidence of a need. The PRC regulated passenger service including ambulances, taxi c,on,,.,.0

shuttle, tenninal shuttle service and limousines. They also regulated under warrants towing companies rates for all nonconsensual tows. The tow companies could not charge any more than those rates.

In 1996, the federal government gave the PRC authority for non-consensual tows but not for consensual tows. They could charge whatever they wanted for those.

The Transportation Division also regulated pipeline safety including all natural gas lines for safety.

Commissioner Becenti-Aguilar asked him to explain what his staff members did.

Mr. Lujan said they had 5 staff members in applications to make sure insurance was in force with us. They regulated 3,657 carriers presently. They had 5 people in the investigation unit. When received a complaint, they investigated and inspected and made recommendations for sanctions, fines, whatever the circumstances revealed.

Two men dealt with safety of railroads. They regulated the safety issues like the gates. They didn't have anything to do with the installation. The Highway Department dealt with installation and maintenance.

For Pipeline Safety, any time anyone excavated, utilities had to mark the lines. Two staff handled that and others dealt with inspections of gas lines.

The motion passed by unanimous (5-0) voice vote. So Ordered.

11-00303-TR-M IN THE MATTER OF THE APPLICATION OF GOODWIN FARMS, LLC, D/8/A PREMIUM LIMOUSINE, FOR AN ENDORSEMENT TO ITS LIMOUSINE SERVICE CERTIFICATE TO PROVIDE NON-SCHEDULED TERMINAL SHUTTLE SERVICE AND FOR TEMPORARY AUTHORITY. (Bob Parker) Order

Mr. Parker presented infonnation regarding this matter to the Commission. They had a limo service out of Hobbs and wanted an endorsement to allow them to go to and from the Hobbs airport.

Mr. Parker explained to the public that when someone applied for a certificate to provide a service, they usually also applied for temporary authority first and then they were required to publish notice and if someone objected the Commission had to consider their objection.

Minutes of the Regular Fonnal Open Meeting August 18, 2011 Page5

Mr. Lujan's division had reviewed the application and found it in order and he recommended approval.

Mr. Lujan said the applicant found their business was good so they wanted to expand to terminal shuttle service. The rule for terminal shuttle service required that every call and service must begin or end at an airport or terminal. This was to add an endorsement to his current limo service. Staff reviewed the application and recommended through General Counsel for approval. The notice had to be to the public and to the existing other carriers. Then they took 21 days for anyone to come in and object for whatever reason. So from date of application received, it took about 60-90 days to process it.

Commissioner Becenti-Aguilar moved to approve the order. Commissioner Lyons seconded the motion and it passed by unanimous (5-0) voice vote. So Ordered.

B. Utility Division

09-00094-UT IN THE MATTER OF THE DEVELOPMENT OF AN ALTERNATIVE FORM OF REGULATION PLAN FOR QWEST CORPORATION. (Margaret Caffey-Moquin) Order

Ms. Caffey-Moquin presented information regarding this matter to the Commission.

In June, the New Mexico Supreme Court made a ruling on the case which TW Telecomm had filed an appeal. That ruling established a multiple year regulation for Qwest. In the first week of July, they returned this case to the Commission and directed the Commission to conduct additional hearings because of the appeal of TW Telecomm because they had not been afforded an opportunity to present their objections on this issue.

So two days ago, staff presented it as a discussion item. This order would establish further hearings on that issue, clarify that the cou11 returned jurisdiction to the Commission on July 811 and that all matters that were appealed remained valid. The issues that were appealed would be litigated going forward.

Commissioner Marks said this order, if adopted, would ratify and reimplement everything in the AFOR except for what was sent to Supreme Court. It would be the price ceiling for service, Quality of Service standards and investment requirements that would stay in place. Ms. Caffey-Moquin agreed.

Commissioner Marks said the matters were appealed and the PRC decision was overturned on the issues dealing with promotional pricing, wholesale services and how they dealt with their competitors.

Ms. Caffey-Moquin agreed. The language from the Supreme Court clarified those issues.

Commissioner Marks thought the parties to this case might be on the bridge. Yesterday they communicated with General Counsel about wanting the Commission to delay and he likely said they would have to file a motion. To deal with that concern, as a procedural matter, he had suggested they be on this bridge so they could ask for a delay in order to file a motion. But he didn't think it was okay for them to

Minutes of the Regular Formal Open Meeting August 18, 2011 Page6

discuss the substance of the motion.

Ms. Carol Clifford representing TW Telecom, Mr. Bruce Throne representing Cyber Mesa and Ms. Loretta Armenta representing Century Link were on the bridge.

Ms. Clifford said the partiEis met informally yesterday and she was deputized to make the request which she did by email to Ms. Caffey-Moquin. She wanted to renew the request today orally. They did not have time to file a motion and now were seeking on behalf of the Attorney General, Century Link, TW Telecomm and Cyber Mesa and the Department of Defense, time to file a motion before the Commission voted on the order before them today. We could get it filed shortly.

Commissioner Lyons ask,~ what she meant by shortly.

Ms. Clifford said it was whatever the Commission asked for.

Commissioner Marks askBd if it was postponed until Tuesday that would give them enough time to file.

Ms. Clifford agreed.

Commissioner Lyons moved to temporarily table this matter until Tuesday. Commissioner Becenti-Aguilar seconded the motion and it passed by unanimous (5-0) voice vote.

Commissioner Marks thought it would be most helpful if the parties could agree on what the initial order might be. They could propose something for the Commission to consider or a process. He was concerned that if they proposed a process that there would be no AFOR in place and nothing governing pricing, QOS or investment in the interim. He asked that they put something in front of the Commission on the undisputed matters as quickly as possible.

Ms. Clifford said she would file a motion for leave for the parties to file comments on it but expected they would be able to speak to the process too. The amount of time for comments would be around 10 days.

Commissioner Marks ask13d that they might agree on some substance. He asked that they come to a point where the Commission was scoping this.

Mr. Throne said he was trying to understand the draft order. It said everything was reinstated except what was in paragraph 4.

Commissioner Marks agroed. If the parties could come to some consensus on that between now and Monday or, if not, go with the other plan.

8. COMMUNICATIONS WIT'H ACTING GENERAL COUNSEL, BOB PARKER

There were no communications with General Counsel.

Minutes of the Regular Fonnal Open Meeting August 18, 2011 Page7

9. COMMUNICATIONS WITH CHIEF OF STAFF, JOHNNY MONTOYA

There were no communications with Chief of Staff.

10. COMMUNICATIONS WITH COMMISSIONERS

Commissioner Lyons invited a public comment from a gentleman who came in late.

Mr. Michael Nebison introduced himself as the new receiver for Timberon Water. He said the Commission granted Timberon an emergency water rate increase that was good until September 30 at which time they were to post a notice and have a new rate approved by a vote of the people.

He came into this district and had not received the court order from the judge. There was some contradiction in the documentation he found - that according to HB 337, June 17 2009 that a sanitation and water district was not required to be under the PRC and documentation from your staff to that effect.

The problem right now was a l~nancial problem - how to deal with the cost benefit study. It would take about $8,000 to $10,000 to do that. They had already published a rate increase under the PRC authority and a protest was decided in court. ,Judge Reynolds said that it was not valid.

He said he had been before the Commission on the Cloudcroft ambulance rates but he needed to know the process to get an extension from the Commission until he could get this worked out with the judge. He felt the judge's order was in contradiction to HB 337. He had pleaded with judge to see him on the issue but he could not overcome that until after September 30th.

Commissioner Lyons asked how much extension he needed.

Mr. Nebison said he needed at least 30 days but 60 days would be better.

Commissioner Lyons ask1:KI him it was saying that the Timberon board voted not to be under the PRC.

Commissioner Marks expliained that the former receiver chose to go under PRC jurisdiction two years ago. He thought the Commission could give him 60 days. He was a new receiver. He and Commissioner Hall were there when he was appointed and now were very pleased to have Mr. Nebison on board. They needed someone who was more focused on business. The Commission should at least give him 2 months and to explore the possibilities of getting out from under the PRC's jurisdiction.

Mr. Nebison was not comlfortable going for that escape now but after looking at the budget, he had to find a way to generate $5000 per month to meet budget.

Mr. Parker gave him his business card and offered to help with filing a pleading.

Minutes of the Regular Fonnal Open Meeting August 18, 2011 Pages

Commissioner Marks showed him how to file it in.

Mr. Nebison said he would be pleased to work with Mr. Parker and would contact him on Monday.

11. ADJOURNMENT

Commissioner Block moved to adjourn the meeting. Commissioner Lyons seconded the motion and it passed by unanimous voice vote.

The meeting was adjourned at 10:32 a.m.

ATTEST:

Carl Boaz, Stenographer ()

APPROVED: tJf&f /4,tJI/

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<wl ✓l/ai( BEN L. HALL, COMMISSIONER

K, COMMISSIONER

Minutes of the Regular Formal Open Meeting August 18, 2011 Page9

BEFORE THE NEW MEXICO PUBLIC REGULATION COMMISSION

REGULAR OPEN MEETING Thursday, August 18, 2011

9:30A.M. Cree Meadows Country Club

301 Country Club Drive Ruidoso, NM 88345

AGENDA

1. PLEDGE OF ALLEGIANCE

2. INTRODUCTIONS

3. MISCELLANEOUS ANNOUNCEMENTS

4. CONSIDERATION AND APPROVAL OF THE AGENDA

5. CONSIDERATION AND APPROVAL OF MINUTES

• Minutes of the Regular Open Meeting of July 21, 2011

6. PUBLIC COMMENT

7. REGULAR ACTION

A. Trans rtation Division 11-0019-TR-M Bob Parker

11-00303-TR-M Bob Parker

Regular Open I\Aeeting Agenda Thursday,August18,2011 Page 1 of2

IN THE MATTER OF THE APPLICATION OF NEW MEXICO TOURS, L.L.C., FOR A CERTIFICATE TO PROVIDE TOUR SIGHTSEEING SERVICE, AND FOR TEMPORARY AUTHORITY.

IN THE MA TIER OF THE APPLICATION OF GOODWIN FARMS, L.L.C., D/8/A PREMIUM LIMOUSINE, FOR AN ENDORSEMENT ITS LIMOUSINE SERVICE CERTIFICATE TO PROVIDE SCHEDULED TERMINAL SHUTTLE SERVICE, AND FOR TEMPORARY AUTHORITY.

EXHIBIT2 PRC 08/18/11

B. Utility Division 09-00094-UT IN THE MA TIER OF THE DEVELOPMENT OF AN ALTERNATIVE Margaret Caffey-Moquin FORM OF REGULATION PLAN FOR QWEST CORPORATION.

8. COMMUNICATIONS WITH ACTING GENERAL COUNSEL, BOB PARKER

9. COMMUNICATIONS WITH CHIEF OF STAFF, JOHNNY MONTOYA

10. COMMUNICATIONS WITH COMMISSIONERS

11. ADJOURNMENT

The Commission will make reasonable efforts to post the agenda on the Commission's website 24 hours before the open meeting but the inability to do so within the 24 hours prior will not require the Commission to delay the meeting or to refrain from taking action on any agenda item on which it otherwise

At any time during the Open Meeting the Commission may close the meeting to the public matters not subject to the New Mexico Open Meetings Act. The Commission may revise agenda items considered at this Open Meeting.

PERSONS WITH DISABILITIES

ANY PERSON WITH A DISABILITY REQUIRING SPECIAL ASSISTANCE IN ORDER TO PARTICIPATE PROCEEDING SHOULD CONTACT THE OFFICE OF DIRECTOR OF ADMINISTRATIVE SERVICES COMMISSION (827-4084) AS SOON AS POSSIBLE PRIOR TO THE COMMENCEMENT MEETING.

Regular Open Meeting Agenda Thursday, August 18, 2011 Page2of2

THIS THE

OPEN