Hearing examiner slashes PNM rate hike request

ALBUQUERQUE, N.M. — A state hearing examiner on Thursday recommended cutting a rate increase sought by Public Service Company of New Mexico by about two-thirds – slashing the electric utility’s request from $123.5 million a year to $41.3 million. Should the commission approve hearing examiner Carolyn Glick’s recommendation, the average customer across PNM’s system would see an increase of about 6.4 percent, according to the recommended decision. A typical residential customer in Albuquerque or Santa Fe would likely see an increase of 7.24 percent. PNM’s request would have translated into an increase of 14.4 percent for the average customer across the system.

ALBUQUERQUE, N.M. — A state hearing examiner on Thursday recommended cutting a rate increase sought by Public Service Company of New Mexico by about two-thirds – slashing the electric utility’s request from $123.5 million a year to $41.3 million.

 

Should the commission approve hearing examiner Carolyn Glick’s recommendation, the average customer across PNM’s system would see an increase of about 6.4 percent, according to the recommended decision. A typical residential customer in Albuquerque or Santa Fe would likely see an increase of 7.24 percent.

PNM’s request would have translated into an increase of 14.4 percent for the average customer across the system.

“We are deeply disappointed with the hearing examiner’s recommendation as it does not represent a fair balance between the interests of customers and shareholders,” PNM CEO Pat Vincent-Collawn said in a statement. “The rate case represents a request to recover the $655 million PNM has invested in its system since 2011 to provide safe, reliable, affordable and environmentally responsible electricity to customers. We plan to file strong exceptions with the Commission that emphasize the importance of recovering our investments.”

PNM is seeking the increase to help cover its purchase of power from the Palo Verde Nuclear Generating Station in Arizona as well as $655 million in capital investments the utility has made since 2011 and will continue to make through the end of the year.

Much of the difference between the rate PNM requested and the one Glick recommended can be attributed to Glick’s refusal to incorporate into rates the $152.8 million PNM spent to purchase power from Palo Verde. In her explanation, she cited a PRC decision in an earlier case that said “ratepayers are not expected to pay for management’s lack of honesty or sound business judgement.”

She also disallowed a $52 million capital investment by PNM in the San Juan Generation Station. PNM installed pollution controls at the behest of the Environmental Protection Agency that some felt were unnecessary.

After lowering the amount of investment allowed in what is called rate base, Glick then dropped the allowed rate of return on equity from the 10.5 percent requested by PNM to 9.575 percent.

Steve Michel, attorney for Western Resource Advocates, one of the intervening parties in the case, said he generally approved of the recommended decision.

“I thought it was a very thoughtful and well-reasoned decision,” said Michel. “There may be some issues we may file exceptions to, but overall I thought (Glick) did a really good job. It’s a very complicated case.”

New Energy Economy, another intervening party in the case, said in a statement that it approved of many of Glick’s conclusions but felt some of them did not go far enough.

PNM can file exceptions to Glick’s findings, after which the PRC general counsel will present a draft order to the commission before the commissioners make a decision. According to the current schedule, the PRC must make a final ruling in the case by Aug. 31.

“The Commission, upon reviewing all of the facts in this rate case, may adopt the recommendations ‘as-is,’ may adopt portions of the Recommended Decision or could choose to adopt none of the recommendations,” said PRC spokesman Carlos Padilla.

A final PRC decision can be appealed to the state Supreme Court.

Published: Friday, August 5th, 2016 at 12:05am
Updated: Friday, August 5th, 2016 at 11:09pm
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