PNM gets (some of) what it wants

By Mona  Blaber, 
Rio Grande Chapter communications director

On September 28, the New Mexico Public Regulation Commission voted on the contentious PNM rate case, with good news and bad news for ratepayers and the climate.

PNM, the electric utility serving most of New Mexico, had asked for a 15 percent residential rate increase. A PRC hearing examiner in August recommended a 6.6 percent increase instead.

The hearing officer had excoriated PNM for failing to justify several multimillion-dollar transactions it wanted consumers to pay for.

The commission criticized the transactions but allowed PNM more payback than the hearing officer recommended.

While PNM gets to make consumers pay for its unjustified coal and nuclear decisions, the commission did prevent PNM from imposing significantly higher service fees, and customers won’t have to foot the bill for the company’s unnecessary San Juan Generating Station expenses.

Key elements of the case

  • Commissioners didn’t allow PNM to saddle customers with a $53 million bill for unnecessary equipment the company installed at San Juan Generating Station. The “balanced draft” equipment was not required by either the Environment Department or the EPA and is of dubious environmental value. If PNM got its way, its shareholders would have earned a rate of return at consumers’ expense, and millions would have been added to the cost of retiring the San Juan coal plant and transitioning to renewable energy.
  • The commission refused PNM’s request to raise monthly service fees from $5 to $13. High service charges hurt low-income customers the most, because no matter how little electricity they use, they must pay the fees. These fees also punish energy-efficient residents, who see little reward for saving electricity. And they discourage residential solar by making the return on investment lower (solar users pay the same fees other customers do). The commission did raise the fee to $7, but that’s better than PNM’s requested $13.
  •   The PRC unfortunately allowed PNM to charge consumers for its ill-advised reinvestment in Four Corners Power Plant. PNM extended its ownership in the plant and signed a contract to pay for coal from the plant’s mine for decades — even if the coal isn’t used. PNM didn’t get approval before it committed us to this dirty energy source, and customers shouldn’t be forced to pay for executives’ poor decision-making. The hearing examiner didn’t find that the coal transactions were justified but said the concerns should have been raised in a previous case. However, this was the first rate case since the contracts were signed.
  • The biggest sticking points were PNM’s purchase of another 64 megawatts of Palo Verde Nuclear Plant and renewal of other leases there, deals it made without commission approval or considering other resource.

The hearing officer and commission found the transactions to be imprudent and not in ratepayers’ best interest. But despite the hearing officer’s recommendation to allow the nuclear into rates but deny PNM cost recovery for these transactions, the commission did allow the transaction costs into rates, though at a much lower price than PNM was seeking.

More than 700 of you wrote to commissioners about these issues, and many of your concerns were addressed. Commissioners Valerie Espinoza and Sandy Jones voted against the final order on the basis of the nuclear cost recovery.

The rate hike goes into effect in October.

PNM gets (some of) what it wants