ALBUQUERQUE — Public Service Company of New Mexico wants its customers to bear more of the burden of soaring costs of fuel used to generate electricity.

And the utility wants them to pay more for increased costs that PNM must bear when purchasing electricity that it does not generate.

PNM has asked the state Public Regulation Commission to approve implementation of an emergency fuel and purchased power cost adjustment clause.

If approved, residential PNM customers using an average of 600 kilowatts a month would pay an additional $4.99 monthly for electricity, Don Brown, a PNM spokesman, said Friday.

State Attorney General Gary King is supporting PNM's request which, if approved by June 1, would add $44 million to PNM coffers during the remaining seven months of this year.

PNM also has requested a 13.8 percent, or $77 million, overall rate increase that includes residential, commercial and industrial customers, Brown said.

But a PNM hearing officer has recommended that PNM be granted an overall rate increase of 4.4 percent, or $24 million.

The average PNM residential customer would pay another $6.47 a month under the PNM rate request or $1.59 under the hearing officer's recommendation, Brown said.

Chuck Eldred, vice president and chief financial officer for PNM Resources, PNM's parent company, said the utility needs higher rates and the emergency clause to prevent its bond rating from tumbling to junk status.

PNM likely would be downgraded to junk bond status by Standard & Poor's, Moody's Investors Service and Fitch Ratings — the three largest bond-rating agencies — if the commission approves the hearing examiner's recommendation, he said.

"The proposed base rate increase and fuel clause implementation are essential for PNM to fully recover the cost to serve retail customers, remain investment grade and reduce exposure to fluctuating fuel costs," Eldred said Thursday.

Standard & Poor's changed PNM's outlook from stable to negative and Fitch downgraded PNM's long-term debt to the lowest investment grade credit rating, he said.

Moody's indicated it would continue to review PNM for a possible downgrade, Eldred said.

Brown said junk bond status is "looming large."

"If that happens, not only does our access to capital dry up, but it's more expensive to borrow when we can borrow," he said.

Junk bond status also would end up costing PNM consumers more money, Brown said.




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