Fact sheet: Hearing on PNM rate case April 7

PNM is proposing another rate increase at the Public Regulation Commission. There will be a public hearing at the PERA Building, 1120 Paseo de Peralta in Santa Fe, at 9 a.m. April 7.

While some aspects of the rate increase are positive, others would hurt low-income ratepayers, energy-efficient ratepayers, and those with solar rooftops the most. And some proposals are unfair to ratepayers across the board. Here are a few of the priority issues the Coalition for Clean Affordable Energy will focus on:

Against:

1. Higher fixed service charge: PNM proposes increasing the monthly fixed charge that all residential customers have to pay from $5/month to more than $13/month. This proposal will result in a large increase in electric bills and especially hurt low-usage households, which tend to be lower-income households. It would also reduce the benefits for households that adopt energy-efficiency measures, save energy or adopt rooftop solar systems (the fixed charge means you pay it no matter how little energy you use). In short, jacking up the monthly fixed charge should be rejected by the PRC.
2. Unnecessary investment in San Juan: PNM wants ratepayers to pay for an environmental control of dubious benefit that the utility wasn’t required to install at San Juan Generating Station. PNM gets a return on such investments and therefore profits from them, but PNM didn’t have to install this control, called “balanced draft,” and it would increase the unrecovered investment cost of San Juan, making it harder to shut down in the near term.

In favor: 

1. Fix for large users’ fuel windfall: New Mexico’s Renewable Energy Act contains a protection for Intel, the City of Albuquerque and other large users: They pay no more than 2% of their bills, or $100,000, whichever is lower, for utilities to comply with the Renewable Energy Act. For example, while the Renewable Energy Act requires investor-owned utilities to provide 15% of their electricity from renewable energy by 2015, that number is actually at 13.5% for PNM because the large-user ceiling reduces the funds available for compliance. Meanwhile, the PRC sets the ceiling for small users’ renewable costs. That ceiling is at 3%, though residential ratepayers currently pay about 2.75% of their bills for renewables. But because renewable energy has considerably lowered utilities’ fuel costs, the fuel surcharge on everyone’s bills is reduced by the same amount. So large users are paying less for renewables, but enjoying the same reduction in fuel costs as everyone else. This has resulted in some large users actually making a profit from the addition of renewables to PNM’s portfolio. A fix has been proposed to remove the windfall that large users get, pay some of it back to residents and make more of those funds available for compliance with the Renewable Energy Act..
2. Rate structure to encourage energy efficiency: PNM has also proposed a “Revenue Balancing Account (RBA)” mechanism, so that PNM would receive the amount of revenue per customer that is approved by the PRC in between rate cases, and no more or less. If PNM collects more revenue per customer than the PRC determines appropriate, the utility would provide a refund to customers the following year. And if PNM collects less than its approved revenue per customer, it would add a surcharge to make up the difference.
   This policy changes the utility business model by removing the incentive that utilities have to increase energy sales and thereby increase profits, once rates are set. The RBA policy promotes energy efficiency and adoption of solar energy and other distributed energy sources.
   An RBA-type mechanism is now in place for electric utilities in 15 states. The annual rate adjustments are typically 2% or less, and they go both ways. In some years consumers get a refund, and in other years there is a small surcharge.