ALBUQUERQUE, N.M. — New Mexico’s largest electric utility asked state regulators Wednesday for an average system rate increase of 14 percent – two months after the most recent increase showed up on consumer bills.
Following through with plans announced earlier this year, Public Service Company of New Mexico filed an application with the state Public Regulation Commission seeking an increase of $99.2 million and a return on equity of 10.125 percent.
“This (rate request) is primarily about decreasing pollution and going forward with our capital investments,” PNM Chief Executive Pat Vincent-Collawn told the Journal. “Our customers tell us the No. 1 most important thing to them is reliability (of their electricity), and this will allow us to make that possible.”
Vincent-Collawn said the overall 14.3 percent rate increase would be spread out over two years to soften the impact for customers: 7.2 percent ($5.82 for the average residential customer) at the beginning of 2018, and 7.1 percent ($4.67 for the average residential customer) in 2019.
The rate increase would mean all classes of customers would see an average 11 percent rise in their monthly bills. Residential customers would see an average increase of 13 percent.
Nearly half the $99.2 million request is for costs associated with a settlement with the Environmental Protection Agency and several other parties aimed at reducing air pollution in the Four Corners area.
As part of the settlement, PNM will retire two units at the coal-powered San Juan Generating Station, which it plans to replace with other coal as well as nuclear-generated power at a cost of $35 million. Another $9 million in the request goes toward the $90 million PNM will spend on pollution-reduction equipment at the coal-powered Four Corners Power Plant and other infrastructure projects related to the settlement.
The rest of the $99.2 million request includes $20 million in other ongoing capital investments, $11 million for costs associated with customers using less energy and $9 million in adjustments made as a result of various electric cooperatives ending their contracts with the utility.
The company has not asked regulators to consider any of the items rejected by the commission in the last rate case, one of the most contentious in recent memory.
That includes millions of dollars in investments in the nuclear-powered Palo Verde Generating Station and air pollution controls at San Juan, the two items that accounted for most of the controversy in the previous case.
The previous case lasted 13 months and ended in September, when regulators gave PNM a $65.7 million revenue bump, compared with the $123.5 million it requested. The new rates went into effect in October and resulted in an average customer increase of 7 percent across the system. PNM is appealing the commission’s decision to the New Mexico Supreme Court.
Asked what the company would do to address customers most affected by a utility rate increase – New Mexico’s poorest residents – Vincent-Collawn said the company will continue to invest in its Good Neighbor Fund, a program aimed at helping low-income customers with their bills.
PNM’s announcement that it is seeking another rate increase has sparked public scrutiny of Vincent-Collawn’s $5.2 million compensation package, most of which is paid for by shareholders. Of her $800,000 salary, $250,000 comes from ratepayers.
Asked about the appropriateness of her compensation, Vincent-Collawn said it is commensurate with that of other chief executives at similar-size utilities.