By Dale R. Dekker
Albuquerque Architect
The world is changing, and we as a society are realizing that the world as an ecosystem consists of a finite set of resources that must be conserved for future generations. Electric utility producers just like water utility producers are "critical" infrastructures for society to exist and thrive into the future.
I support the Public Service Company of New Mexico's rate increase request for the above stated reasons. In addition, I urge the Public Regulation Commission to take the "long term" view and work with PNM to develop a rate structure that communicates the value of electricity to its customers; thereby promoting long term-efficient use and conservation.
Unless a rate structure is implemented that sends "strong conservation price signals" to the consumer, we are burying our heads in the sand.
The success of the water utility that serves the Albuquerque area and the Water Utility Authority's conservation strategy are clear indicators that this model should be replicated in other applicable industries.
In 1995 the Water Utility Authority put in place an "Increasing Block Rate Structure" designed to:
Provide water at low prices for basic and essential needs so all customers can afford it.
Reward conserving customers with low unit rates for water.
Encourage efficient use by sending a strong conservation price signal and seasonal adjustments.
Assign water supply and development costs proportionately to the customers who place the highest burden on the supply system and the natural supply system.
Do all of the above while maintaining a stable flow of revenue to the utility.
This "long term" rate strategy has had dramatic results on water conservation. In 1995 the average per person use was 251 gallons. As of 2006, water consumption has been reduced to 162 gallons per day.
Production of water in 1995 was 40,775 billion gallons with a service population of 445,167 people. In 2006 production was reduced to 31,751 billion gallons while the service population increased to 537,659 people. Simply stated, the service area population has increased by 20 percent, while real water production has decreased by 22 percent and the individual consumption in gallons per day has decreased by 46 percent.
Since the authority put in place the "Increasing Block Rate Structure" in 1995, rates have increased for the average residential user by 100 percent. Clearly there is a relationship between the cost that one pays for a resource and one's desire to manage the resultant cost increases through conservation efforts.
We are all consumers of water and electricity with the expectation that water will be there when we get up every morning and go to bed at night. To aid in the conservation effort, we have installed low flow shower heads, removed the grass from our lawns and changed out our toilets to conserve water, while at the same time doubling our water utility rates over the past 10 years.
We also expect the power to be there to run our refrigerators, air conditioners, home entertainment centers and personal computers as we need it on a 24/7 basis. Moreover, we have come to take for granted the reliability and low cost of electric service and consequently have become "spoiled" consumers.
Well, tomorrow is here and we are discovering that our habits have led to global warming, climate change and pose a potential threat to our economy and way of life.
I personally do not know what the proper "amount" of the increase is, but I do know that unless we start pricing the commodity like a precious resource we will not change our consumptive habits.
Conservation is the primary way to maintain capacity and provide long term stable rates to the consumer. The PRC and PNM must also develop a long-term pricing and rate system that reflects the real cost of doing business and in determining a reasonable return on investment for PNM's shareholders.
I believe we as a community of consumers, providers and regulators can work together in the best interest of current and future generations of New Mexicans to develop a long term vision that recognizes the value of having a sustainable, efficient and reliable supply of electricity.
The above was adapted from Dekker's Jan. 4 testimony before the Public Regulation Commission.
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