PNM seeks to increase rates in 2025 and 2026

The Public Service Company of New Mexico is again trying to increase rates, after state regulators five months ago ruled against letting the utility do so and actually ended up decreasing them.

PNM filed a new proposal on Friday that would increase the average monthly residential bill with 600 kilowatt-hours usage by about $23 over the next two years.

The company would institute, for the average customer, an $11.12 monthly bill increase in July 2025 and a $12.48 monthly bill increase in January 2026. The utility said in its application the two separate phases are to help minimize the impact of increased prices.

The request will still be up in the air for a while. The utility’s filing is over 2,400 pages, containing the rate increase application itself, current and proposed rates and testimonies.

The New Mexico Public Regulation Commission is the state agency with the authority to allow the rate increase and must go through a hearing process first.

It’ll likely be at least a year before state regulators issue a final decision. PNM asked for a final order by June 2025 so new rates can go into effect by July 2025.

The ins and outs

PNM’s rate increase request comes five months after the New Mexico Public Regulation Commission ruled on PNM’s 2022 rate change application, denying or significantly modifying many of the utility’s price increase asks.

The company then wanted to raise residential base rates by 9.7%, though the utility said it would’ve only ended up being a 0.9% increase, or 75 cents more on the average customer bill. State regulators ended up approving an 8.14% decrease in rates, resulting in $6.55 less a month on electricity bills — a change that started earlier this year.

An appeal by the utility of the 2024 PRC decision still sits before the New Mexico Supreme Court.

“PNM’s currently-authorized rates are no longer just and reasonable because they do not allow PNM to recover its costs of providing utility service and do not afford PNM the opportunity to earn a reasonable return on investments in public utility plant and property,” PNM’s latest rate change application states.

Unlike the 2022 application, which mainly focused on the utility’s transition away from retiring power plants, many of the costs associated with PNM’s new proposal are focused on infrastructure needed for a state-required renewable energy transition.

“This proposed rate increase follows directly on the heels of the 2022 rate case because of the financial and economic challenges confronting PNM (and the electric industry as a whole) as customer needs change and expand,” the utility explained in its application.

The total requested relief in the newly filed application is $174.3 million, which is a 23% increase in system costs.

“As the energy landscape continues to rapidly evolve, PNM’s rates must keep pace with the cost of providing reliable service,” the utility’s executive summary to its rate proposal states.

The most costly request relates to investments in distribution, transmission and generation, adding up to nearly $74 million.

The utility is also seeking to recover $37.2 million for energy storage agreements, a relatively new concept in the transition to renewable energy resources as projects like solar farms require a form of energy storage.

A roughly $20 million chunk included in the rate increase request could likely be met with pushback. PNM wants $19.8 million in relief to align the depreciation of the Four Corners Power Plant with the company’s anticipated abandonment in 2031.

Environmentalists battled similar requests in the most recent rate case with other retiring power stations.

One of the other issues that could spark challenges is the utility’s request for an increased return on equity, or ROE. PNM asked the PRC to approve a 10.45% ROE, allowing shareholders to receive up to that much back on investments.

The utility similarly tried to bump up its ROE in its 2022 case, but state regulators didn’t allow the requested increase.

The other relief requests include $34 million in capital costs, an effort to address high interest rates and $12.6 million for wildfire mitigation and protection.

There’s also a negative $3.2 million in the relief request because of increased load revenues.

The requested rate change also attempts to even out business rates. PNM wants to set cost-based rates or reduce the percentage of the subsidy big customers pay to offset residential and small business bills, to attract more businesses to the state.

“Economic development is a priority to help bring jobs that can keep New Mexicans in the state: adding new customers and load across all rate classes will help cover future investments needed to deliver reliable and resilient service,” the application states.

All of the cost changes are necessary to operate a “safe, reliable and resilient system,” according to PNM.

The utility said its system needs to be able to respond to new energy demands and large load swings.

“This rate request reflects the significant investments that the company is making to ensure the energy uses of our customers are served through a safe, reliable and resilient system as PNM continues to shift its generation portfolio to cleaner sources of energy,” the utility’s rate change application states.