In December PNM finally filed a rate case after putting off as long as possible the $300M question - the prudence of its investments at the Four Corners Power Plant (FCPP). 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 not be required to deliver the rate credits that customers are entitled to. Rates will continue to include:
1. Costs associated with the shuttered San Juan Generating Station - $98M per year
2. Costs associated with sold Palo Verde Nuclear Generating Station assets (114 MW) - $93M per year
Just as PNM is continuing to charge customers for costs at San Juan despite its closure, PNM will be continuing to charge customers for $87,861,281 in costs related to the 114MW share of the Palo Verde Nuclear Generating Station that will be sold and transferred as of January 15th! 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 cent increase PNM is touting is really a $15.75 per month increase! If that were not bad enough, the rate case filing also
makes the argument that PNM's investments at FCPP were prudent and ratepayers should be required to pay $300M for investments PNM made to extend the life of the coal plant without any financial analysis,
requests to increase the fixed monthly customer charge by 50.07% from $7.11 to $10.67, and
requests to raise the Return on Equity the company is entitled to collect from customers from 9.575% to 10.25%.
How does Return on Equity (ROE) work? The ROE 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. Now that the most reliable forms of energy are also the cheapest - solar, wind and battery storage - PNM wants to protect its profits by getting permission to charge New Mexicans even more ROE, but not because they are taking on more risk, only because they feel entitled to their cut of every family's income. PNM counts on the perceived complexity of the energy system by its customers, the legislature, and indeed, the NM Supreme Court, to continue fleecing New Mexicans, including many low-income families that can spend up to 50% of their take home pay to keep the lights and heating on. We know the jargon can be confusing and utility law sounds dry, but in fact the details represent moral issues at the heart of economic and environmental justice, and the issues are simple - solar, wind and battery technology have made the monopoly private utility model obsolete - plentiful, clean, renewable energy can and should be provided as a public good. We are in the weeds because the details matter. Our research, expert testimony, and legal filings bring to life the principle of "just and reasonable" rates as defined by the Public Utility Act. Nowhere is that role more critical than during rate case proceedings. The case will be argued over the next ten to twelve months at the PRC, and New Energy Economy will be paying attention every day to argue for the people and the planet.