ALBUQUERQUE, N.M. — Public Service Company of New Mexico has rejected a regulatory ruling that would allow it to increase its rates but not recover millions of dollars it spent on two coal-fired power plants.
The rejection means the case will now be sent to a new round of hearings in front of the New Mexico Public Regulation Commission, though without consideration of additional evidence.
“PNM respectfully submits that the Commission reconsider . . . the prudence of certain investments in Four Corners Power Plant and San Juan Generating Station,” the utility wrote in a regulatory filing. “PNM asks that the Commission also recognize and give weight to the strategic and long-term importance of . . . retiring coal generation without foreclosing future input of stakeholders and communities in that process.”
In addition to the power plant investments, PNM also took issue with how regulators said the rate increase should be allocated and the PRC’s rejection of an agreement among some, but not all, of the parties in the case.
In December 2016, the utility requested $99.2 million in new revenue. But in May, it reached a “stipulation,” or settlement agreement, with about a dozen parties for $62.3 million in revenue.
Environmental group New Energy Economy did not agree to the settlement on the grounds that PNM allegedly failed to conduct a thorough financial analysis to justify its investments.
The PRC last week voted 4-1 to allow PNM to raise its rates by 9 percent, phased in over the next two years. Had the decision been accepted by each of the settlement parties, the average residential customers would pay about 8.3 percent more on their total bill by 2019, with monthly charges climbing 3.9 percent in 2018, and an additional 3.4 percent the following year.
The overall impact on bills would be smaller than the 9 percent hike in base rates approved by the commission because it applies only to a portion of the bill.
But in a controversial move, commissioners also ruled that PNM investments made in recent years in the Four Corners Power Plant near Farmington were “imprudent,” thus rejecting the utility’s request to recover $148 million it has spent on new pollution controls and other upgrades there since 2013. The PRC also disallowed $37 million out of a requested $46 million in investments made at San Juan.
In a statement, a PNM spokesman said the “Commission’s order last week not only muddies the regulatory waters here in New Mexico, but also makes it more difficult to achieve a collaborative transition path toward providing cleaner energy to our customers.”
The new hearing will be based on PNM’s original application for $99.2 million.
New Energy Economy executive director Mariel Nanasi said her organization objects to PNM’s decision and called the new hearing “a risky move” for the utility.
“They could very well get less than what they were given (in the PRC’s recent order),” she said. “We’ll have to wait and see.”