Southeast New Mexico’s major electricity provider proposed raising its power rates, aiming to recoup millions of dollars in infrastructure investments recently made across the region.
Since 2019, Xcel Energy reported it invested about $1.1 billon in projects in New Mexico including new substations and transmission projects along with the massive Sagamore Wind Project eastern New Mexico.
Through an agreement with state regulators that allowed Sagamore to be built, Xcel was required to file a review with the New Mexico Public Regulation Commission that showed a need for added revenue to recover funds spent on recent expansion of Xcel’s power grid in New Mexico.
More: Xcel Energy completes eastern New Mexico wind farm, full operation by end of year
The review also showed that fuel savings created by Sagamore would recover the investment, leading to a net savings, and that additional revenue would be needed to recoup the substation and transmission line projects, per an Xcel news release.
The review process of the proposed rate hike would be before the Commission for several months, the release read, involving state regulators and customer groups, with any changes to rates not expected until the last three months of the year.
If the proposed rate change was approved, customers could expect their rates to increase by about 9.2 percent per 1,000 kilowatt hours or about $9.81 per month.
The federal Energy Infromation Administration reported it takes about 877 kilowatt hours per month to power the average home.
More: Xcel adds $65 million transmission line to Carlsbad area, responds to growing local demand
Xcel would expect to increase its revenue by about $87.8 million.
About $39.9 million if fuel savings was expected to be generated from the Sagamore project, the release read, netting a $47.9 million revenue growth.
Of the revenue increase request, $37.7 million would be attributed to Sagamore, with the remaining $50.1 million would be to recover costs of power grid improvements, new transmission and distribution lines, substations and retirements of coal plants, and increases in property taxes paid by Xcel.
More: Xcel invests $7.1 million in Carlsbad power grid, continues push for renewable energy
David Hudson, president of Xcel Energy- New Mexico said the use of wind power and renewable energy could reduce costs for power customers even further such facilities go online and continue to be used, keeping Xcel electricity bills 23 percent lower than New Mexico’s average and 32 percent below the national average.
“Xcel Energy has invested substantially in New Mexico to power the regional economy, both now and well into the future,” he said. “And with investments such as the Sagamore Wind Project that deliver as much savings as they cost to build, we’re able to keep electricity bills under the state and national averages even with incremental price increases.
“Our focus on reducing fuel costs has enabled us to keep our billing increases within the range of inflation and positions Xcel Energy as one the nation’s leading low-cost energy providers.”
More: Energy companies eye renewables for oil and gas operations in the Permian Basin
U.S. Sen. Martin Heinrich (D-NM) touted the benefits of renewable energy for New Mexicans and the nation in keeping rates low while protecting the environment.
He touted the inclusion of renewable energy tax credits in the $1.4 trillion federal spending and tax extension package expected to be voted on by Congress in the coming weeks.
The clause added a two-year extension of the Investment Tax Credit for solar power and a one-year extension of a tax credit for wind power production, along with a new five-year 30 percent tax credit for offshore wind projects.
More: New Mexico’s renewable energy sector growing in rural areas, local seek to capitalize
Heinrich pointed to a recent increase in utility-scale renewable energy projects in New Mexico as positioning the state to be a national leader in wind and solar supported by the legislation.
“I am pleased this bipartisan agreement extends and expands tax incentives for clean energy, which are proven ways to grow both the wind and solar energy industries in New Mexico and bolster nation’s efforts to combat climate change,” he said.
“As we look for the best ways to rebuild our economy in New Mexico and across the nation in the face of the challenges brought on by the Covid-19 pandemic, we absolutely need to double down on wind and solar.”
More: Here are the businesses in Eddy County investigated for COVID-19 outbreaks
But an increase in electricity bills could face opposition from rate payers across the state already grappling with higher bills amid the pandemic.
A study from consumer research firm Ownerly showed New Mexico had the third-highest electric bill increase during the pandemic, more than triple the national average.
Since 2019, the study showed New Mexico saw an average increase of $11.49 since 2019, a 14.1 percent hike for an average energy bill of $93.21.
Vermont had the highest rate increase at 20.8 percent, read the study, followed by Michigan at 14.4 percent.
In total, New Mexico households spent about $75.9 million more on electricity from March through August of last year when the pandemic peaked, the study showed, compared with the same time period in 2019.
New Mexico was still well below the national average monthly bill of $122.92 during that time frame, up 3.8 percent from the same period in 2019 while total electricity usage grew 5 percent across the country.
While New Mexico had less “heating and cooling days” in 2020 than 2019, Ownerly attributed the increase in cost directly to the pandemic and stay-at-home orders leaving many residents working from home and using their own utilities.
“Besides more people using electricity at home, other factors at play in determining bills include differences in regional heating and cooling days compared to the spring and summer of 2019 as well as local costs for power generation,” said Michael Pugh, a data analyst for Ownerly.
Adrian Hedden can be reached at 575-628-5516, firstname.lastname@example.org or @AdrianHedden on Twitter.
This article originally appeared on Carlsbad Current-Argus: Xcel Energy seeking 9.2 percent increase to power rates
(c)2021 the Carlsbad Current-Argus (Carlsbad, N.M.)
Visit the Carlsbad Current-Argus (Carlsbad, N.M.) at www.currentargus.com
Distributed by Tribune Content Agency, LLC.