Public Regulation Commission largely rules against PNM’s rate change requests

More than a year and thousands of pages of documents later, state regulators have decided to reject many requests by the Public Service Company of New Mexico in its first rate change application in six years.

As a result, New Mexicans’ monthly residential bills will be lower compared to what they would have been under the rate increase PNM wanted. In addition, regulators’ final order deems customers will get credits or riders on their bills for two years and won’t have to pay for imprudent investments PNM is deemed to have made in generating stations.

PRC Commissioners Gabriel Aguilera and James Ellison made the decision Wednesday afternoon, largely following suggestions from PRC hearing examiners that strayed heavily from what PNM had requested.

Only Ellison and Aguilera voted on the matter. Commissioner Pat O’Connell recused himself because of his previous employment with PNM and his involvement in the utility’s last rate case.

PNM can file for a rehearing, which must be done by Feb. 2.

The details

The commissioners ruled PNM imprudently, or in poor business judgment, invested in the Four Corners Generating Station near Farmington. That means a loss of $84.8 million in revenue for PNM, because it can’t recoup its investment costs through customers’ rates or bills.

That was a decision the Sierra Club Rio Grande Chapter advocated for during the PRC process of the rate change application. Senior Attorney Matthew Gerhart said in a statement the coal-fired Four Corners Power Plant should be retired and replaced with clean energy.

“Today, the commission recognized that PNM failed to do its due diligence before reinvesting in Four Corners after 2016, when there were clear signs that coal is a costly and deadly fuel,” Gerhart said.

New Mexicans also can expect bill credits as a result of Wednesday’s decision. The regulators ordered PNM to return about $38.4 million to New Mexicans, which will come in bill credits or riders over a two-year period. This is a consequence for the utility continuing to charge its customers for a Palo Verde Generating Station unit lease after it already expired.

The commissioners are also only allowing the utility to get a return on $51.3 million of underappreciated investments — large financial investments for which the utility charges customers over a period of time — made in the Palo Verde station. PNM had requested a $96.3 million return.

The regulators followed suit with suggestions on equity and debt recommendations by the hearing examiners that PNM disagreed with.

Ellison and Aguilera did stray from a few recommendations, including an approval for PNM’s time-of-day rate pilot program, which would allow customers to have varying electricity rates according to the time of day, season and type of day, like a weekend or holiday.

Other final changes and decisions made by the regulators can be viewed on the PRC’s online e-docket system.

Rates to come

The exact rates that will be charged remain unclear. PNM has to calculate what the new rates are and file the numbers by Jan. 10. PRC hearing examiners’ recommendation to commissioners would decrease the average monthly residential bill by about 3%.

As of December , the annualized monthly bill — averaged over the entire year — for the average residential customer using 600 kilowatt hours per month was $79.25, according to PNM.

Under the roughly 3% monthly billing decrease in the recommended decision, the average residential customer would have an average annualized bill of $76.59, according to PNM.

Under PNM’s original application with its 9.7% residential base rate increase, which the utility said would be a 0.9% billing increase taking into account savings, the average residential customer would be paying 75 cents more a month.

New rates could take effect as soon as the next billing cycle, according to the PRC.