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Saturday, November 21, 2009
Independent Auditor Examines PNM's Power, Fuel Buys
By Michael Hartranft
Copyright © 2009 Albuquerque Journal Journal Staff Report
An independent audit focused on PNM's fuel and power purchases during the past fiscal year should soon be in the hands of state regulators, with more planned for the state's other public utilities.
The Public Regulation Commission required the PNM audit and "prudence" review in 2008 as a condition of approval for a controversial fuel adjustment clause.
Fuel clauses give utility companies a mechanism to cope with fluctuations in the costs of fuel for generating power by passing them along to customers.
In an interview, PRC chairman Sandy Jones said he viewed the audit as a safeguard to ensure these so-called pass-throughs are warranted, given the great amount of debate about the issue. The requirement, though, will be applied to other utilities as well. Up next is the Southwestern Public Service Co.
Each year, Jones said, utilities in New Mexico pass on $1.4 billion in fuel costs — both those imbedded in rates and in fuel clauses —to customers.
Companies reported their fuel purchases monthly, but the PRC lacked the staff to audit them, Jones said.
"It's a huge consumer protection piece," he said of the audits. "We wanted to make sure that when we pass on a dollar's worth of fuel to the consumer, we got a dollar's worth of it. It really is a big deal."
He added, "It certainly gives us a lot of detailed information, and we have a much better understanding of how companies are functioning. That's good information to have a for a rate case."
The auditor reviewing PNM is Ann Arbor, Mich.-based Shumaker & Co. Its report will examine the company's purchases of coal, natural gas and nuclear fuel as well as power produced by other generating companies, sales of excess energy and accounting procedures and protocol, according to Jones. The review period is July 1, 2008, to June 30, 2009.
The cost of the audit, about $300,000, will be passed onto PNM customers in their rates, Jones said. The auditor is expected to submit a preliminary report next month, with a final version of the audit likely to be presented to the commission in January, according to PRC staff.
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