PNM deal could lead to 7 percent rate increase by 2019
Average residential electricity bills would go up by a little more than 7 percent over the next two years if state regulators approve an agreement that Public Service Company of New Mexico reached Friday with the New Mexico attorney general and other parties to a pending rate case.
Seven business and environmental stakeholders were part of the deal, which requires approval from the state Public Regulation Commission.
Including industrial and commercial customers, the utility company would increase rates by 9 percent overall between 2018 and 2019. The company originally had asked for a 14 percent rate increase over that time period.
The rate case represents the second time in two years the company has sought to boost electricity bills for its more than 500,000 customers in New Mexico.
Under the agreement, PNM will seek $62.3 million in new revenue from customers over two years, with an average residential increase of 3.9 percent starting in January 2018 and an additional 3.4 percent tacked on beginning in 2019.
Pahl Shipley, a PNM spokesman, said this would work out to a $2.77 increase in average monthly residential bills in 2018 and an additional $2.44 per month in 2018.
A number of business and environmental groups, including Wal-Mart Stores East, Sam’s East Inc., The Kroger Co., the Sierra Club, Western Resource Advocates, the Renewable Energy Industries Association, and the Coalition for Clean Affordable Energy, all signed on in support of the more modest rate increase.
The city of Albuquerque, Bernalillo County and the Albuquerque Bernalillo County Water Utility Authority participated in the process but have not said if they will join the agreement or not.
PNM CEO Pat Vincent-Collawn, said in a statement that “the broad support of this agreement demonstrates the parties’ shared vision for PNM customers to have affordable, reliable and environmentally responsible power.”
The only outlier to the agreement is New Energy Economy, a steadfast critic of PNM.
Mariel Nanasi, the group’s director, called the proposed rate increase a “heavy and unjustified burden on New Mexican families,” saying in a statement: “It’s egregious that PNM would seek cost recovery from ratepayers without any showing that there is benefit to them.”
Nanasi also criticized New Mexico Attorney General Hector Balderas, who she said failed to protect ratepayers from the utility’s overreach by agreeing to the settlement.
James Hallinan, a spokesman for the Attorney General’s Office, said in an email that the “parties were able to get PNM to concede on several aspects of its case resulting in a significantly lower rate increase to its customers and a firm movement away from its dependence on coal.”
Earlier this spring, PNM reversed a long-held position on coal’s affordability and said it was considering closing down its San Juan Generating Station outside Farmington after 2022 and divesting all coal interests by 2031. It said this might be the most prudent financial path forward for customers and the company. PNM is currently 60 percent reliant on coal to generate power.
Hallinan said the company agreed not to file another rate case for two years.
In September, the Public Regulation Commission approved a $65.7 million revenue increase for PNM, following a 13-month case before the commission. PNM had asked for $123.5 million.
When PNM first filed this second rate case in December, the company said it needed to recover an additional $99.2 million from customers to compensate for capital expenditures; the cost of shutting down part of the San Juan Generating Station, as part of a plan to reduce carbon emissions and comply with federal environmental laws; and to compensate for a decline in energy usage that resulted from customers using energy efficiency technology and solar power.
If that proposed increase had been approved, PNM would have raised monthly customer bills by an average of 7 percent in 2018 and another 7 percent in 2019.
The average customer bill is currently just under $70, according to PNM. If the $62.3 million request is approved, average monthly bills will rise to almost $73 in 2018 and $75 per month the following year. These figures vary based on the amount of energy used by a customer and fluctuations in fuel cost and energy efficiency.
The commission also will have to determine how to manage “the disincentives PNM experiences as a result of its successful energy efficiency programs” — namely a decrease in profit.
Contact Rebecca Moss at 505-986-3011 or firstname.lastname@example.org.