State regulators will begin deliberations Monday to determine whether New Mexico’s largest electric utility can raise its rates by 9.2 percent over the next two years, leading to a couple of hikes in customers’ monthly bills through at least 2019.
The Public Service Company of New Mexico is seeking $62.3 million from customers to compensate for capital investment costs, including maintenance to coal and nuclear power plants, and revenue losses from more energy-efficient appliances and consumer behaviors.
On Monday, following a public comment period, hearing examiners for the state Public Regulation Commission will begin to hear testimony from expert witnesses and attorneys both supporting and opposing the proposal. The weekslong process is expected to conclude in mid-September.
The state Attorney General’s Office, Wal-Mart Stores East, the Sierra Club, Western Resource Advocates and other groups have signed on to PNM’s rate proposal. But New Energy Economy, a climate advocate and staunch PNM opponent, is expected to speak against the rate increase.
PNM’s request to raise rates comes less than a year after the Public Regulation Commission approved a $65.7 million rate increase for the utility — lower than the $123.5 million, or 15.8 percent, increase the company originally sought.
When the utility filed a second rate case in December 2016, it asked for $99.2 million, nearly 5 percent more than the figure now on the table. But the proposal went through several revisions earlier this year, in part because an original agreement reached by the majority of the parties involved in the case, which lowered the total compensation to $62.3 million, was rejected by two PRC hearing examiners.
The hearing officers said the rate increase might disproportionately impact some PNM customers, especially residential consumers, and that the agreement was so complex it would overburden regulators.
Ray Sandoval, a spokesman for PNM, said the revised proposal the company is presenting to regulators next week “is supported by a broad and diverse group of parties that signed the agreement and we believe this is a good thing for customers.”
A large portion of the rate increase, he said, is tied to PNM’s agreement in 2015 to shut down two of four units at the coal-fired San Juan Generating Station and add pollution controls to the remaining units, in part to comply with the U.S. Environmental Protection Agency’s Clean Power Plan.
But Mariel Nanasi, director of New Energy Economy, said PNM shouldn’t continue to operate any of its coal assets.
When PNM chose to make investments in the San Juan Generating Station and the Four Corners Generating Station near Farmington, she said, “they didn’t follow their own laws” by showing proof that the investments were prudent.
As a result, she said, “all costs associated with Four Corners should be disallowed, and the commission should order them not to have Four Corners provide us energy anymore.”
PNM announced in the spring that it intends to begin divesting its stake in coal power in 2022 and will retire all coal assets by 2031.
Still, Nanasi said, the continued costs of operating the coal plants until that time will needlessly cost ratepayers millions of dollars.
Steve Michel, an attorney with the environmental advocacy group Western Resources Alliance, said the case raised some questions about PNM’s investment in coal. But, ultimately, he said, the San Juan Generating Station is “a plant that is in their rate base and they are required to operate.”
The current proposal “appeared to be a good compromise to resolve an issue of pollution controls that were mandated by law,” he said. “There is no question that these investments needed to be made.”
During the process of developing a settlement agreement, Michel said, stakeholders reduced the rate request by 4 percent and outlined how the company could divest its stake in coal by 2031, instead of 2046, as PNM had proposed. He said many customers might only see a 6 percent rate increase.
“We thought this was a good result,” he said.
Contact Rebecca Moss at 505-986-3011 or firstname.lastname@example.org.