PNM trims rate-hike request

Utility says corporate tax cut allows bump to decrease from 9% to 2%; PRC reverses decision on imprudence of coal plant expenditures

Customers of Public Service Company of New Mexico, the state’s largest electric utility, might see an increase of only 2 percent in their bills instead of the 9 percent hike originally approved by the state Public Regulation Commission.

The commission on Wednesday voted 3-2 to amend an agreement that PNM hammered out last year with several organizations that intervened in the rate case.

PNM lawyer Rick Alvidrez said a smaller bump in electric rates is feasible because of the reduced corporate tax rate in a bill drafted by Republicans in Congress and signed into law last month by President Donald Trump.

But for the new plan to go into effect, PNM and the other interveners that signed the stipulated agreement last year will have to agree with the order approved Wednesday.

Although the commission appeared to do what PNM and other parties involved in the case wanted, Alvidrez wouldn’t say whether his company would agree to the proposed order. “I’ll have to read the order,” he told a reporter after the vote.

In accepting the new rate plan, the commission reversed its decision last month against

allowing PNM to make customers pick up the tab for tens of millions of dollars the company is spending to upgrade a coal-fired power plant in northwestern New Mexico. The commission’s earlier action had followed the advice of two hearing examiners who recommended against allowing PNM to use revenue from higher rates to recoup money spent on the coal plant because ratepayers shouldn’t pay for an investment that was not prudent.

Commissioners Valerie Espinoza, D-Santa Fe, and Cynthia Hall, D-Albuquerque, argued that the commission could institute the lower electric rate increase without rescinding the earlier decision about the imprudence of the coal plant expenditures.

Others, however, argued that approving a new order was the best way to instantly impose the lower rate increase.

Commissioners Patrick Lyons, R-Cuervo, Sandy Jones, D-Williamsburg, and Lynda Lovejoy, D-Crownpoint, voted in favor of the new plan.

Because of the new federal tax rates that will go into effect next year, PNM would be able to pass savings on to customers.

Alvidrez spoke about the impact of new tax law on how much revenue the investorowned utility needs to generate in order to reach its proposed return on investment. “The revenue requirements would only be $13.8 million per year rather than the $62.3 million required by the revised stipulation,” he told the regulators. This, he said, would amount to a rate increase of about 2 percentage points — about 1 percent this year followed by another 1 percent next year.

Mariel Nanasi, executive director of New Energy Economy, a clean-energy advocacy group opposed to PNM’s rate request, argued that the commission shouldn’t consider the new numbers provided by the company because they have not yet been vetted.

However, other lawyers representing interveners, including the state Attorney General’s Office, New Mexico Industrial Energy Consumers, the Bernalillo County Water Utility Authority and the environmental group Western Resources Advocates, spoke in favor of the new proposal.

Joseph Yar, representing New Mexico Attorney General Hector Balderas, said the commission should accept the new proposal, noting that it would eliminate about 85 percent of PNM’s original rate request, which called for an increase of about 14 percent for residential accounts.

Steve Michel of Western Resources Advocates said his group did not support the rationale PNM provided in the rate hearing but, like other parties, “We agreed that this was the right outcome in this case. … While labeling PNM ‘imprudent’ might be attractive for some in this rate case, it would do nothing for customers,” Michel said. He said those who signed onto the agreement last year obtained “significant concessions” from PNM.

But Nanasi argued that the imprudence issue was the most important thing in the rate case and that the commission “abdicated their number one responsibility.”

“If this case doesn’t prove imprudence no case ever will,” she said in a written statement after the commission’s vote. “PNM did no valid financial analysis before investing nearly $1 billion in the 50-year old nonperforming Four Corners coal plant. The PRC over-ruled not one but two hearing examiners and their own prior determination of PNM imprudence. Based on NO new evidence Lyons and Jones reversed course and removed mention of the ‘imprudence’ finding. Despite their absolute duty to only raise rates if the Commission determines prudence they avoided the issue.”