ALBUQUERQUE – New Mexico regulators will hear more testimony next week on a request by the state’s largest electric provider to raise customer rates.
The Public Regulation Commission called for another hearing to begin Monday after questions were raised about costs incurred by Public Service Co. of New Mexico when the utility purchased the rights to more electricity from a nuclear power plant in Arizona.
The power from the Palo Verde Nuclear Generating Station is intended to help fill part of the void that will be left by the closure in 2017 of two units at the coal-fired San Juan Generating Station in northwest New Mexico. The planned closure is the result of an agreement with state and federal officials to curb haze-causing pollution in the region.
Some environmentalists have been vocal opponents of the plan, accusing the utility of misleading regulators about the cost of the Palo Verde power.
The utility disputes the claims, saying it’s seeking to recover what it paid for a greater interest in Palo Verde. The rate increase would also cover some $655 million in capital investments the utility has made since 2011 and will make through the end of 2016.
Top PNM officials have argued that questions regarding the nuclear power have been addressed in past filings with state regulators and that the purchase was made at fair market value to secure a continued source of electricity for customers.
Ryan Baca, a spokeswoman with parent company PNM Resources, said the utility negotiated a lesser purchase price for interest in Palo Verde and has appraisals that defend the value.
“We look forward to sharing the facts during next week’s hearing,” she said in an email. “PNM expects and encourages a vigorous discussion/debate about the choices we make on behalf of our customers. However, some of the information presented by intervenors’ is incomplete or inaccurate.”
Groups that have intervened in the case – including the state attorney general’s office, a water utility that serves New Mexico’s largest metropolitan area, industry advocates and environmentalists – will have an opportunity to review any new evidence presented during the hearing.
The Albuquerque City Council voted 7-2 earlier this week in favor of a resolution asking the Public Regulation Commission to limit PNM’s request. The resolution also raises questions about the utility’s proposed rate structure, adding fuel to the arguments of environmentalists who have been critical of the electric company.
“There is growing momentum, not only from intervenors, but from elected officials representing the vast majority of electricity users, to reign in PNM’s out-of-control spending on illegitimate projects and legacy expensive power,” said Mariel Nanasi, executive director of Santa Fe-based New Energy Economy.
PNM first filed its request in December 2014 to increase annual base revenues by an average of more than 14 percent, but the case has repeatedly been pushed back by procedural delays. PNM was forced to refile its request last year after the commission requested more information.
With the latest delay, the earliest any new rate hike can take effect is September.
If approved, some residential users would pay up to 15.6 percent more while some large industrial customers would face a hike of about 3.4 percent. PNM contends the net effect would be less since fuel costs are declining.
