New Mexico bill would end ‘fuel clause’ for utilities

Posted: Saturday, February 14, 2015 2:00 pm | Updated: 10:54 pm, Sat Feb 14, 2015.

ALBUQUERQUE — The New Mexico Senate proposed legislation last week that would prevent public electric utilities from passing increased fuel costs to consumers without a public hearing.

The bipartisan bill, which was brought up by senators Monday, would eliminate the “fuel adjustment clause” used by Public Service Company of New Mexico and the state’s two other public utilities. Instead, they would have to discuss rate increases tied to fuel costs in public before the state’s Public Regulation Commission.

Sen. Sander Rue, R-Albuquerque, and Sen. Peter Wirth, D-Santa Fe, are co-sponsoring the bill.

“Electric utilities are regulated monopolies and are guaranteed their costs and a rate of return,” Rue said in an email. “For that reason, consumers absolutely need to know that someone is reviewing the costs that are passed on to them.”

Agencies such as the Albuquerque Bernalillo County Water Utility Authority say they are paying larger electricity bills despite consuming less power, theAlbuquerque Journal reported. According to the water company, it decreased electricity use by 4 percent last year, but its electricity bill climbed by 5 percent or $428,000. Nann Winter, attorney for the Water Authority, said fuel charges were nearly double in 2014 to $1.01 million, making up 9 percent of a $10.9 million electric bill.

“We used less electricity, and yet we paid almost half a million dollars more last year,” said Nann Winter, attorney for the Water Authority. “All of that was passed on to our ratepayers, and it all happened without any hearings on electric rate increases.”

The additional charges stem from PNM raising prices in January for fuel and purchased power. PNM more than doubled what it charged the Water Authority to compensate for its own electricity generation or to buy replacement power when its plants were shut down.

The ability to pass through payments allows the utility to have timely recovery of its fuel costs and keep capital expenses down, PNM officials said.

“It is adjusted up and down on a quarterly basis, and that helps us more closely manage our cost of fuel in real time,” PNM spokeswoman Susan Sponar said. “That smooths out the jumps, or changes, providing more predictability on people’s bills.”

Sponar said the practice helps keep credit and capital costs from rising. Customers are paid back for overcharges for fuel through adjustments in ensuing quarters, she added.

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