PNM seeks to lower subsidies businesses pay

The Public Service Company of New Mexico wants its larger customers to pay lower subsidy bills.

As part of the utility’s new 2025-2026 rate request, the company is asking the New Mexico Public Regulation Commission for permission to enact cost-based rates.

That would reduce subsidies large and commercial customers pay to help offset residential bill prices.

PNM’s estimation that residential bills would increase by about $23 over the next two years for the average customer.

PNM spokesperson Ray Sandoval said PNM figures out rate cases through cost of service. The utility implements what’s called banding, he said, which is how the company distributes its revenue requirements among its customers.

He said a fairly large subsidy has built up over the years for large customer and commercial classes, which helps offset rates for residential customers. The exact subsidy amount depends on the rate class.

“We’re not trying to claw back that entire subsidy and throw residential rates into a higher territory. But we do think that right now is a good time to start on a path where we start limiting subsidies,” Sandoval said.

Sandoval said it’s difficult to calculate average price changes with the cost-based rate request since there are so many different commercial classes that vary dramatically in size. He said renewable energy use also makes it more complicated to calculate electricity costs since it doesn’t require physically paying for fuel.

The reasoning behind reducing the subsidies is to attract more business to the state.

Sandoval said one of the first things businesses will look at when considering moving to New Mexico is electricity rates.

“By starting to claw back parts of this subsidy, we think that it makes New Mexico even more attractive,” he said.

He said the change will also benefit residential customers because more business in New Mexico will bring more people paying into the state’s tax base and create more high-paying jobs.

“We all know that we live in a very economically challenged state,” he said.