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In December 2022 PNM filed an application at the Public Regulation Commission to increase electricity rates by 9.7%. The Hearing Examiner and the Commissioners will finally decide whether to hold PNM accountable for its imprudent investments in expensive and toxic coal and nuclear plants - decisions the company made without required cost and resource alternatives analyses that have already cost New Mexican families hundreds of millions - an economic and environmental injustice 

The Commission's decision about these issues will determine responsibility for costs that could add approximately $13 per month for the average residential customer for seven years. PNM is also requesting an increased Return on Equity - a premium collected from customers on capital expenditures - from 9.5% to 10.25%. The Hearing will begin September 5th.

PNM has repeatedly attempted to deny and delay the efforts of economic justice advocates to protect the public from PNM's bad business decisions by: 

  • successfully delaying a decision on prudence in the Four Corners Power Plant (FCPP) case for nearly seven years, 

  • convincing the legislature and the Governor to pass the Energy Transition Act in order to guarantee 100% recovery for the company's undepreciated investments in the Four Corners and the San Juan Generating Station (SJGS) coal plants,

  • successfully delaying a decision on the SJGS related rate credits promised and then denied to the public when the plant closed, 

  • continuing to charge ratepayers for Palo Verde Nuclear Generating Station shares even after PNM sold those shares to a third party; 

  • foisting Palo Verde Nuclear Generating Station (PVNGS) decommissioning costs onto the public after imprudently repurchasing a 64MW lease, 

  • And finally attempting and ultimately failing to remove these issues from this rate case. 

Now the Hearing Examiner has ordered that the time for delay is over. All of the evidence that we have amassed and submitted in these cases will finally be considered and a decision made. 



PNM Application for Rate Increase

New Energy Economy Expert Testimony


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How much will rate increases impact your wallet? Much more than .75¢!

With much PR fanfare, PNM advertised that the 9% electricity rate increase would result in a total average impact for residential customers "lower than 1 percent, or about 75 cents a month." What PNM failed to advertise was that the rate case filing also includes the assumption that it will receive 100% of its imprudent investments at the Four Corners Power Plant and that it will not be required to deliver the rate credits for San Juan Generating Station and Palo Verde nuclear leases that customers are entitled to.


Proposed rates will continue to include not only Four Corners operating costs, but also costs associated with the now-closed San Juan Generating Station at $98M per year, and costs associated with the now-ended Palo Verde Nuclear Generating Station leases at $93M per year.

In other words, the people should be getting about a $15/month REFUND for the sale or closure of expensive coal and nuclear that are no longer providing service. The mere 75¢ increase PNM is touting is in fact a $15.75 per month increase!

What is New Energy Economy Recommending?

PNM has attempted to ignore or evade some of the fundamental principles of utility regulation: only plants that are currently used and useful can be included in rate base; a utility can only be permitted to receive a return of and a return on prudent investments which meet that test, and only reasonable expenses related to providing utility service can be recovered from ratepayers.Our expert witness, Christopher Sandberg, has evaluated the facts through those lenses, and made the following recommendations based on the evidence: 

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  • Because PNM failed to perform a proper, contemporary financial or alternatives analysis before it invested in expensive pollution control measures to extend the life of the plant, its investments in FCPP after 2016 should be found imprudent. We recommend 50% on undepreciated investments in the plant before that date to be paid by ratepayers over three years, and denial of any recovery on investments made after that date. 

  • That PNM be denied all future costs on those FCPP investments and remove FCPP costs from rate base. To the extent PNM continues to rely on FCPP, the associated fuel and operational costs should only be recovered through the fuel adjustment clause.  

PNM's attempts to retroactively rationalize their investment of nearly one billion dollars in FCPP through the development of a post-hoc justification based on hindsight should be disregarded as irrelevant. Prudence can only be determined based on knowledge management could have or should have known at the time of the decision. Most importantly, the plant should have and could have closed and been replaced with cheaper, 100% renewable energy sources if PNM had not opted to invest in extending the life of the plant. 

New Mexican's should not be forced to continue to pay an expensive premium for dirty energy from coal that is destroying our climate. 


  • Because at least $95M in costs for PVNGS leases are related to leases that are no longer used and useful, and because PNM has continued to collect those costs from customers over the past year, the full amount associated with the leases plus the return that is being collected on those leases should be returned to customers as a rate credit over the same period of time that it billed customers for it. Parity is an important principle here; if PNM takes from ratepayers over a certain length of time then it should be required to return it to ratepayers over the same period, not five, ten or 25 years as they often request - because by spreading the credit over long periods of time it makes the payback amount so minimal as to be meaningless, and compensates the wrong customers for the harm done. 

  • Because it was already found that PNM imprudently repurchased a 64MW lease in PVNGS in 2016, a determination should be made that customers were subjected to increased risk for decommissioning costs and therefore, PNM shareholders should bear the burden of funding the nuclear decommissioning trusts, not PNM customers. 


  • Ensure that ratepayers be reimbursed for the full amount of $115M already overdue to ratepayers as a result of the delay of the rate credits that were due “upon abandonment” of San Juan Generating Station. As the Joint Motion to the NM Supreme Court states: “the need for a prompt implementation of rate credits [is] to remedy harm to customers that resulted from the ETA Bonds not being issued at or near the time the final unit of SJGS was shut down on September 30, 2022.” (p. 3, ¶ 3.) Our agreement also ensures that:

    • Customers shall be held harmless if the average weighted coupon rate of securitized bonds exceeds 5.5%. Shareholders must pay for any additional principal or interest above the 5.5% and refunds will appear on customers simultaneously.

    • Customers will not reimburse PNM for cost recovery (through bond issuance or otherwise) for its legal costs for the Show Cause proceeding and PNM’s appeal to the Supreme Court.

    • PNM shall not seek any amendment to the Financing Order unless it results in a lower rate and adds no new costs to the amount financed.


PNM will ask the NM Supreme Court to dismiss its appeal in the rate credit case, S-1-SC-39440 to the PRC. Upon issuance of an order by the PRC approving the settlement rate credits will be issued within 30 days and customers will see the nearly 11% rate credit on their bills - $9.28 per month for the average rate payer.


How does ROE Work?

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ROE, or Return on Equity, is at the heart of the dysfunctional model that incentivizes private utilities like PNM to slow walk the transition to renewable energy. When PNM spends $100M on infrastructure it is entitled to collect an additional $9,575,000 from customers - $100M plus the ROE. When PNM spends $300M on infrastructure it is entitled to collect $328,725,000 from customers. This 9.575% ROE is actually the primary source of utility profits.

The model itself incentivizes wasteful spending and the purchase of the most expensive energy generation plants possible - coal, gas and nuclear. The more PNM spends, the more they can take from New Mexican families.

To add insult to injury, PNM has filed for an increased Return on Equity (ROE), from 9.575% to anywhere from 10 to 11.3%.  Recent analyses find that in general utilities have been successful in maintaining these higher-than-needed rates of return, even as they have found ways to reduce their risks, resulting in excess wealth transfer from ratepayers to shareholders.

Utilities have been successful in maintaining or increasing their ROE even while significantly reducing risk through the use of numerous “rate riders.” These are rate provisions which permit automatic changes in retail prices outside of a rate review process. Typical examples include fuel clauses and purchased power clauses that automatically adjust rates according to a utilities costs.  Translation - PNM does not deserve an increased guarantee of return on its investments because, in fact, the utility faces less business risk than other industries. For the test year being used in this case, PNM expects that almost a third - 31% - of its total revenues will come from “rider revenue”.

In Arizona regulators recently reduced the Return on Equity for Arizona Public Service Company for similar reasons. 

Because PNM has failed to reflect the materially reduced risks of its operations, we recommend that its ROE be set at no more than 8.9%. 

Our energy system is in the process of a necessary transition that threatens the guaranteed profit model that has served utilities like PNM well for many decades. Utility companies, like fossil fuel companies, enjoyed an inordinate and undemocratic level of control and dominance over our economy and our decision makers because they supplied the necessary engine for nearly every aspect of our lives and our economic growth. 

Now solar, wind, and battery storage technologies are disrupting that entire equation - giving local governments, communities, even individuals access to energy generation and storage. PNM failed to understand the change that was coming, and now they want us to pay for their failures. 





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