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New Mexico regulators reject PNM's rate increase, solar fee proposal

Utility Dive reports on the PRC's rejection of PNM's rate case.

By Herman K. Trabish | May 18, 2015

Dive Brief:

  • The New Mexico Public Regulation Commission last week rejected a proposal from Public Service of New Mexico (PNM) to institute a 12% rate increase and monthly charges on rooftop solar customers. NewsOK reports the commissioners voted to approve a hearing examiner's recommendation that PNM's application was incomplete and should be denied.

  • The request from PNM, the state’s dominant electricity provider, would have raised its average residential customer’s monthly bill $9.75 as of January 2016. It would have added a monthly $6 per kilowatt charge for new solar customers, increasing the monthly cost of an average 3.5 kw to 6 kw system by $21 to $36.

  • Regulators left PNM the options of appealing their decision or filing a new application, but ruled out its request to amend the application.

Dive Insight:

PNM says it is reviewing its options. The utility wanted the rate increase to cover costs for new solar power plants, for retrofitting its coal burning San Juan Generating Station to meet EPA-imposed pollution controls, and for recession-associated and energy efficiency-associated revenue losses.

The hearing examiner’s recommendation was based on a technical flaw in the PNM application, according to former Federal Energy Regulatory Commission Chair and Stoel Rives partner Jon Wellinghoff, who observed the PRC proceedings. The utility inaccurately applied its right to base its calculation of expected expenses on a hypothetical future “test year” and, therefore, invalidated its conclusion about a needed rate increase.

"This type of inconsistent decision-making creates uncertainty for consumers and regulated companies in New Mexico," according to PNM spokesman Pahl Shipley. "It also sends a strong message that New Mexico is not business friendly and will likely affect important economic development efforts."

But New Energy Economy Executive Director Mariel Nanasi says PNM can only blame itself, because there were "so many unanswered questions and unsupported values" in the utility’s application that participants couldn’t use it.

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