PNM challenges PRC decision on rate hike

Move puts higher bills on hold, could lead to battle in court

Public Service Company of New Mexico will not raise electric rates Jan. 1 after all.

The utility’s plan to increase prices by about 8 percent for the average residential customer over the next two years is effectively on hold after the utility asked state regulators to reconsider a few big changes to the proposal.

The Public Regulation Commission barred the company from using higher rates to recoup tens of millions of dollars in upgrades at a coal-fired generating station, deeming the spending “imprudent” amid arguments by some environmental advocates that PNM should pull out of the facility altogether.

PNM filed a motion Thursday asking the commission to reconsider, delaying the higher rates and potentially leading to a showdown in court.

The motion marks another turn in a process that has come to center on the company’s transition away from coal power and could affect the bills of more than a half-million households and businesses that rely on PNM power.

The company filed last year to raise rates by about 14 percent for the average residential customer over two years, starting in 2018. The request came after regulators trimmed PNM’s last rate increase, ruling the company could not use the higher prices to recover costs of purchasing nuclear power or installing pollution control equipment at the coal-fired San Juan Generating Station.

PNM reached an agreement on a lower rate earlier this year with a broad coalition of groups such as the Sierra Club and major customers, including the grocery store chain Kroger. Under that agreement, the company would raise about $62.3 million in new revenue over two years, with an average residential customer seeing an increase

of 3.9 percent in their bill starting in January 2018 and an additional 3.4 percent beginning in 2019.

But one advocacy group, New Energy Economy, challenged the settlement, arguing in part that PNM should not ask consumers to cover the costs of investments in the San Juan Generating Station or another coal-fired facility, the Four Corners Power Plant.

PNM is considering divesting from the facilities and ultimately ending the company’s reliance on coal around 2031.

New Energy Economy has argued the company should stop putting money into the plants and move more quickly to cleaner sources of energy.

The Public Regulation Commission, which oversees PNM’s rates, adopted some of those arguments last week when it voted on the rate increase, barring the company from using higher rates to recoup capital expenditures at the Four Corners Power Plant and about $37 million in spending at the San Juan Generating Station.

Every group that was part of the original settlement had until Thursday to agree to the commission’s decision.

PNM asked the commission to reconsider and adopt the original agreement, emphasizing it has wide support from very divergent groups.

Pat Vincent-Collawn, PNM chairman, said everyone who signed on to the agreement earlier this year “recognizes the significance and complexities of transitioning to coal-free generation and made concessions in this agreement to continue down this path.”

The company argued in its motion that the commission should not take up the issue of whether certain investments in the coal plants were prudent. And it raised concerns about the commission’s call to change how the rate increase would be applied to different types of consumers, maintaining the current agreement ensures rates are fairly applied — from water systems to residential customers.

PNM’s motion said several groups that were part of the original agreement want it approved without changes, including the city of Albuquerque and Renewable Energy Industries Association. The New Mexico Attorney General’s Office, which also signed on to the original agreement, did not take a position.

Mariel Nanasi, executive director of New Energy Economy, said she will oppose PNM’s motion to revisit the commission’s changes to the rate increase.

Nanasi said PNM “had numerous opportunities to convince … two hearing examiners and then the full commission of the prudence of its investments with respect to Four Corners and San Juan coal plants and it has failed.”

The commission meets next on Jan. 3 but has 20 days to consider PNM’s motion.

If commissioners reject the request, the case could end up in court, like PNM’s hard-fought rate increase in 2015.

Contact Andrew Oxford at 505-986-3093 or aoxford@ sfnewmexican.com. Follow him on Twitter @andrewboxford.