A hearing examiner is recommending approval of an agreement that would increase Public Service Company of New Mexico’s base rates by 10.8 percent, or $85 million.
However, hearing examiner Carolyn Glick also suggested eliminating a one-time $20 million additional charge requested by PNM for capital projects.
PNM previously estimated that the base rate increase would add a total of $6.32 over two phases to the monthly bill of a typical residential customer. The first phase could take effect as early as August.
That may change due to Glick’s recommendation for a different residential rate design structure that would affect customers differently depending on their usage.
The structure is aimed at promoting conservation, rewarding low users with lower rate increases. But PNM contends that the new design will “have a disproportionate impact on some residential customers depending on usage.”
Attorney Steve Michel, who represents the group that proposed the rate redesign, said customers using over 1,000 kilowatt-hours a month could see up to a 15 percent increase, while those using about 600 kilowatt-hours could see up to a 7.6 percent increase.
Parties in the case will be able to file responses to the recommendation by July 1. The case would then go to the Public Regulation Commission for final action, probably next month.
“We’re disappointed that the recommendation does not accept the stipulation in its entirety,” PNM spokeswoman Susan Sponar told the Journal. “The agreement we reached in February with several key parties to the rate request effectively balances the need to keep PNM bills affordable while still providing adequate funding for improvements needed for reliability.”
She said the capital projects rider was a “key reason we were able to agree to a certain rate path extending through 2013.”
The agreement was hammered out by PNM, the Attorney General’s Office and PRC staff, and signed by four other intervenors, including two large energy-user groups.
In addition to the rate increase, the agreement proposes caps on fuel, energy efficiency and renewable energy riders. PNM agreed it would not raise rates again before 2014, but would be allowed to recover costs associated with any state or federal environmental regulations.
Glick did not change that part.
PNM’s original rate request, filed last July, was for a $165 million base rate increase.
Seven intervenors in the case have since filed objections to the stipulation.
In her decision, Glick called the stipulation with the recommended modifications, “fair, just and reasonable” and said it should be approved.
The additions rider, which would allow PNM to recover up to $20 million for capital projects between June 30, 2010, and Dec. 31, 2012, was one of the principal objections raised by the Commercial Energy User Coalition – which represents retailers, restaurants, building owners and others – during the evidentiary hearing Glick presided over in May. The group contended the proposal amounted to piecemeal rate-making, which it said is contrary to PRC policy. PNM estimated that would have added about $1.54 to an average monthly utility bill.
“We’re very pleased with the decision on the additions rider,” said the coalition’s attorney, Lewis Campbell.
Of the overall recommended decision, he said, “We think it is incorrect on the cost of service. We think a lot of the cost of service was not proper and shouldn’t have been approved.”
He said if the commission adopts Glick’s decision in its entirety, the group may seek a rehearing on the grounds that the stipulation contained a statement that if it was not approved in its entirety, it would be void.
The new rate design Glick recommended for Residential Class 1A customers was proposed by Western Resource Advocates and two other intervenors.
During the hearing, there was PNM testimony that with the addition of the various riders and existing surcharges, utility bills could actually jump 18 to 23 percent by 2013, even with the caps proposed by PNM. That would be slightly less without the capital project charge.
Photo Credit – Journal file
Cutline – PNM customers may see new tiered rates. Customers using more than 1,000 kilowatt-hours a month could see an increase of up to 15 percent. Those using about 600 kwh would have an increase of up to 7.6 percent.