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New Mexico electric utility to seek another rate increase

Posted November 28

— New Mexico's largest electric provider will be asking state regulators to consider another rate increase for customers in December.

Public Service Co. of New Mexico has sent letters to a half-million customers, saying it needs to recoup the millions of dollars that are being spent on improvements to the grid and on pollution controls at a pair of coal-fired power plants in northwestern New Mexico.

The request comes on the heels of a rate hike approved by the state Public Regulation Commission in September that followed more than a year of public hearings and legal battles.

The utility says a major part of the new request will ensure fulfillment of an agreement between PNM, the state and the U.S. Environmental Protection Agency to shut down two units at the San Juan Generating Station to meet federal haze pollution standards.

The partial closure is scheduled for the end of 2017, and the utility says it needs to have the rates decided in time.

"No one likes a price increase. We're all PNM customers too, and we understand that every dollar counts," Ron Darnell, one of the utility's senior vice presidents, wrote in the letter to customers.

PNM plans to release in the coming weeks more details about how the proposed increase would affect customer bills. The utility is expected to file its request with the Public Regulation Commission by Dec. 16.

Federal data shows residential electricity rates nationwide have remained relatively stable over the past year. That follows an average increase of about 3 percent in 2014, which represented the highest annual growth rate in retail electricity prices since 2008.

Utilities have cited everything from increased investment in transmission and distribution systems to pollution standards and requirements to generate more electricity from renewable resources as reasons for the increases.

In southeastern New Mexico, Xcel Energy also is asking for a rate hike. The Minnesota-based company filed its request in early November, citing nearly $2 billion in new investments that include transmission lines and substations.

Half of PNM's latest rate proposal includes the changes at the San Juan plant and the requirement that the utility pay for a portion of pollution equipment for the neighboring Four Corners Power Plant.

If approved, customers would see their bills increase starting in 2018.

PNM officials argue that the plan for shuttering part of the San Juan plant amounts to millions of dollars less than what federal officials had initially proposed. They say emissions would decrease and the amount of coal used at the plant would be cut by half.

The remainder of the proposed increase would cover infrastructure improvements and offset the overall decline in customer demand, which ultimately affects how much the utility can recover toward its fixed costs.

Environmentalists have been critical of PNM, saying the utility needs to do more to wean itself from fossil fuels. Utility officials have argued that they've invested $270 million in solar energy centers and have been buying wind-generated power since 2003.

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