Albuquerque Journal: PNM Bills Could Jump by Another 18 Percent

May 2011

By Michael Hartranft

Public Service Company of New Mexico customers face a 10.8 percent increase in base electric rates under a proposal pending before state regulators, but consumers could actually see their bills increase by 18 to 23 percent over the next few years due to other charges.
Including the proposed increase in base rates, along with items such as capital improvements, fuel and renewable energy surcharges, PNM officials estimate the average residential customer using 600 kilowatt hours could see his monthly bill go from $63.51 now to $75.19 in 2013.
And that doesn’t include expensive new environmental controls proposed by federal regulators.
Under a deal signed by PNM, the Attorney General’s Office and other intervenors, an $85 million, two-phase rate hike would translate into a monthly increase of $6.32 for the typical residential customer.
PNM’s John Olmstead, testifying before a hearing examiner, said this week that taking into account several riders in addition to the basic rate increase, a typical customer bill could increase by $13 to $15 a month.
Opponents quickly jumped on Olmstead’s testimony as evidence PNM has been deceptive about the true costs of the proposed stipulation.
“PNM and the AG have gotten a lot of mileage out of this media campaign that the rate hike is down from $165 million to $85 million,” said Mariel Nanasi, executive director of New Energy Economy, one of seven intervenors opposed to the stipulation, in a news release.
“But that is a complete farce. Residents are going to see their bills increase by $15 a month if this stipulation is approved.”
PNM’s original rate filing in July sought a 21.2 percent, or $165 million, increase. Under the agreement, PNM base rates could not increase again until 2014.
While confirming Olmstead’s testimony, PNM spokeswoman Susan Sponar said the implication that PNM is asking for an “18-point-whatever increase” is incorrect.
She said PNM has been upfront about costs in the stipulation, which has also been signed by the Albuquerque Bernalillo County Water Utility Authority and New Mexico Industrial Energy Consumers.
“The only increases that are part of this request are the base rate increase and the one-time capital investment recovery rider,” Sponar said.
In addition to the base rate increase, several other factors would add to the $6.32 monthly increase. A rider proposed in the stipulation would enable PNM to recover up to $20 million in additional revenue for capital projects between June 30, 2010, and Dec. 31, 2012. It is projected to add another $1.54 a month to a bill — for one year — when it takes effect in 2013.
Sponar said other charges outside the stipulation also figure into the total impact on customers.
She said those include previously approved energy efficiency and fuel cost riders that already appear on customer bills and a renewable energy rider, proposed to take effect in 2012 to recover the cost of programs approved by the PRC to meet state renewable energy requirements.
Olmstead, in his testimony, addressed the cumulative effects of the base rate increase, the capital additions rider and the other riders with the proposed limits, Sponar said.
Sponar said the impact of those charges on top of a basic rate increase was a major concern of intervenors. To help reduce the total impact, the company agreed in the stipulation to cap the amounts it can recover, she said.
• The fuel rider now adds about $1.39 a month to the average customer’s bill. Under the proposed limits in the stipulation, PNM projects the impact of the rider on a customer’s bill would not exceed $2.70 a month.
• It projects the energy efficiency rider, now about $1.57 a month for the average customer, would have an impact of up to $2.15 on the monthly bill.
• The renewable rider, which would be subject to a hearing by the PRC, would have a cap of $1.43 a month for the average customer.
• The capital additions rider, which would be subject to PRC review, would add about $1.54 to the bill in 2013.
• If the stipulation is approved, the overall monthly bill for a residential customer who uses 600 kilowatt hours a month would increase from $63.51 a month to $68.59 this year, which includes the first phase of the rate increase and the energy and fuel cost riders, Sponar said.
• In 2012, the monthly bill would jump to $73.10, with the second phase of the base rate hike taking effect and the addition of the renewable energy rider.
• In 2013, it would rise to $75.19, with the addition of the capital additions rider.
More charges
The estimates do not reflect a provision allowing PNM to file to recover actual costs related to environmental regulations mandated by federal or state governments. One potential trigger is a pending EPA proposal to mandate new pollution controls at the San Juan coal-powered plant in which PNM has a 46 percent interest.

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