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New Mexico PRC Issues Order in PNM General Rate Case; Utility to Appeal

October 3, 2016 By Cheryl Kaften

The New Mexico Public Regulation Commission (NMPRC) approved a final order on September 28 in the general rate case filing (Docket No.15-00261-UT) of Public Service Co. of New Mexico (PNM).

PNM had filed a response with the commission on August 29, requesting that the NMPRC promptly make a ruling in the case, which had been pending since August 27, 2015.

At the time of the original filing, the utility had asked for ann increase in electric rates of $123.5 million, or 14.4 percent, reflecting a $655 million increase in its rate base since its previous general rate case filing in 2010.

Key capital additions to the rate base, as listed in the filing, included:

  • Four new solar centers online by 2016 (40 MW, $65 million) capable of powering 16,200 average homes;
  • La Luz Natural Gas Plant online by 2016 (40 MW, $50 million) to serve customers when demand is highest, to support renewable energy growth and to ensure reliable power under a variety of grid conditions;
  • Emission control equipment at San Juan Generating Station to comply with federal haze regulations ($58 million);
  • Critical resources for the future: Purchasing Rio Bravo Generating Station (formerly Delta Person) natural gas plant ($32 million) and purchasing leases for Palo Verde Nuclear Generating Station Unit 2 ($144 million); and
  • Investments to keep the electric system reliable, including a $61 million investment at PNM’s Rio Puerco Switching Station, $8 million to improve substation security and modernizing the company’s distribution system operations center.

The new order is bound to be a disappointment to PNM: Instead of the 14.4 percent rate hike the utility requested, PNM would walk away with just 10 percent. By a 3-2 vote, the commission approved an annual revenue increase of $65.7 million – or roughly half of the initial amount for which the utility had asked.

The commission staff said they anticipate that the approved rate hike will increase electricity rates of the average customer by 7.6 percent, with residential customers seeing an increase of about 9% percent

“We appreciate that the commission’s order corrects some aspects of the Hearing Examiner’s recommendation related to the Palo Verde Nuclear Generating Station,” said PNM Resources CEO Pat Vincent-Collawn, adding, “We are, however, disappointed that the commission discounted the value of these critical carbon-free assets and did not approve recovery of the Balanced Draft technology for the San Juan Generating Station required by the New Mexico Environment Department.

“After completing our review of the final written Order,” he said, “we will appeal these items and any other appropriate issues to the New Mexico Supreme Court.”

For the immediate future, PNM plans to implement the rates granted in the ruling in October.

Although the New Mexico Supreme Court is not required to rule on an appeal by a specific date, a decision will likely be made within 18 months. If the court rules in favor of PNM, the matter will return to the commission for action consistent with the court’s ruling.

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