State regulators will give Santa Fe residents a chance to discuss a proposed electric-rate hike by the state's largest utility at a public hearing Friday.

The state Public Regulation Commission hearing is the third held around the state to get feedback on Public Service Company of New Mexico's hopes of raising rates by nearly 10 percent over the coming year.

PNM wants to boost residential rates by 4.6 percent effective July 1 and 5.1 percent effective April 1, 2010. The overall hike, including businesses and industry, would be 5.6 percent. The proposal comes on the heels of the company's 6.3 percent hike for all customers a year ago.

Company spokeswoman Susan Sponar said growing demand is a big reason behind the proposal. "For many years we had excess power, but now we've grown into it," she said.

Sponar said the new proposal would raise average monthly rates $2.33 starting in July, then another $2.66 starting next April. The rates are based on households that use 600 kilowatt-hours a month, she said.

Public Regulation Commissioner Jerome Block Jr., who is holding the public hearing, said he hasn't decided on whether to back the increases. "People think that it's a done deal, but it's far from done," he said. "I still have a lot of questions."

For example, Block said, he wonders why residential customers face sharper increases than businesses and industry.

In response, Sponar said, "When we look at how costs are allocated, it does appear commercial customers are subsidizing residential customers — paying a much larger proportion of cost of service."

She said the company has agreed to study how costs are allocated across different customer classes.

PNM says its proposal would bring in an additional $77 million a year, a figure that includes rate increases for homes, small businesses and industry. It previously proposed a rate increase that would have brought in $123 million and hiked residential rates 23 percent. But a number of public and private interests intervened, and those groups and PNM last month agreed to the current figures, said PRC spokesman Paul Carbajal.

Sponar said the utility agreed to the smaller figure partly because of lower fuel prices.

The concerned groups, some of which haven't joined the agreement, include Community Action New Mexico, a low-income consumer advocacy group; retirees, the city and county of Santa Fe, Albuquerque-Bernalillo County Water Authority, The University of New Mexico and Wal-Mart, according to Carbajal.

"We're trying to maintain low-income protections, as in decreased deposits, zero late fees and stuff like that," said Kira Jones, Community Action's energy leader.

A 72-year-old Albuquerque woman who intervened opposed any rate hike. "I'm concerned if it goes up because I already have problems paying my bills," said the woman, who didn't want to be identified. She said she receives $600 in Social Security retirement payments and that her electric bill last month cost $89 — although federal and state energy-assistance programs help with her bill.

A PRC hearing examiner is expected to make a rate recommendation in late May, and the PRC could make a decision in mid- to late summer, Carbajal said.

The entire PRC is expected to hold a hearing on the PNM rate proposal Wednesday in the PERA Building. PNM has 859,000 electrical customers in New Mexico and Texas.

Contact Doug Mattson at 986-3087 or dmattson@sfnewmexican.com.

IF YOU GO
What: Public hearing on PNM's proposed rate hike
When: 10 a.m. Friday
Where: Boys & Girls Club, 730 Alto St.