By Mona Blaber,
Chapter communications coordinator
We all know utility rate cases can make a big impact on our pocketbooks. But from the lifespan of San Juan coal plant to rooftop solar, the PNM rate case being decided now will have a big impact on our climate.
PNM wants to raise the base service fee on every residential bill from $5 to $13, a 160% increase. This hurts low-income and energy-efficient ratepayers, who would have to pay a larger bill no matter how much energy they use. And rooftop solar owners will see the return on their investment go down steeply.
The utility also wants ratepayers to pay for a pollution control it installed at coal-fired San Juan Generating Station that was not required by the EPA or the state and is of dubious benefit. PNM gets a 10% rate of return from ratepayers from capital investments like this. Allowing this expense into rates would increase the unrecovered-investment cost of San Juan, making the coal plant harder to retire in the near term.
Some of the changes PNM proposes are positive, including a decoupling rate structure that would encourage energy efficiency and boost solar energy.
It has also proposed different possible fixes to large users’ “fuel windfall.” That’s a loophole that allows the largest electricity consumers, like Intel, to pay a lower percentage of their bills for renewable energy than residents and small business do but still get the same level of fuel savings. This means some large users actually make a profit from PNM’s compliance with the Renewable Energy Act, while residents and small businesses foot the bill.
Since this cap also reduces the amount of renewable energy that PNM is required to provide, fixing this loophole would return some of that “windfall” to regular ratepayers and free more funds to develop renewables.
PNM has also applied to add more electricity from its Palo Verde nuclear plant in Arizona to New Mexico’s rate base.
As part of the modified stipulation in the recent case where PNM proposed closing two units at San Juan Generating Station and replacing some of that power with Palo Verde nuclear, the price to ratepayers was lowered considerably from $2,500 per kilowatt to $1,100 per kilowatt. In the current rate case, PNM has included a new purchase of 64MW of Palo Verde that it had leased in 1985 and purchased back in 2015.
This proposal would add more nuclear power at a price of $2,500 per kilowatt, more than double the $1,100 per kilowatt PNM eventually agreed to charge ratepayers in the San Juan case. PNM has not established that the capacity is needed or that the purchase price was justified.
PNM also wants to continue its participation in the Four Corners Power Plant and add a new coal contract to its New Mexico customers’ rates. PNM entered into this take-or-pay coal contract (meaning PNM and others must pay for the coal for the decades-long duration of the contract whether it needs it or not) in 2013, but several intervenors contend that PNM must prove that extending its ownership interest and entering into this contract was prudent before ratepayers are forced to foot the bill.