PNM asks to raise rates while Supreme Court weighs order to lower them
Public Service Co. of New Mexico announced plans Monday to seek a rate increase from regulators. But the utility’s request is entangled with a case sitting in the state Supreme Court over when and how PNM should lower customer bills after shutting down a coal-fired power station earlier this year. PNM officials say the rate hike request is lower than it would have been if they’d already passed those savings along to customers, as the state ordered them to.
PNM proposes increasing residential base rates by 9.7% in 2024, though PNM Senior Vice President for Public Policy Ron Darnell was quick to point out that residential bills should actually rise by less than 1%.
“In large part because of considerable savings from the closing of the San Juan Coal Generating Plant, we project the monthly increase for the average residential customers to be approximately $0.75,” he said at a news conference Monday.
Part of the plan for shutting down the San Juan station was that PNM would lower rates with those savings right away. But when it didn’t, the Public Regulation Commission ordered the utility to issue credits to customers who were paying for the decommissioned plant. PNM appealed to the Supreme Court, which has issued a stay allowing the utility to delay the rebates until the case is resolved.
The AP reports the Attorney General’s Office and environmental advocates, including the Coalition for Clean Affordable Energy, filed a motion late last month asking the court to reconsider the stay.
PNM spokesperson Raymond Sandoval says PNM is allowed to manage its costs and savings between rate cases like the one filed Monday, and that’s what they’ve done here.
“By actually allowing us to manage the business, to invest, and to use those savings from the San Juan to offset some of those investments, that’s exactly why we’re seeing this modest increase,” he said of why the rate hike wasn’t even higher.
But Don Hancock, steering committee chair of the Coalition for Clean Affordable Energy, says the group disagrees with PNM folding San Juan savings into their rate hike proposal.
“Customers shouldn’t have to wait 18 months to get their benefit,” he told KUNM. “We should be getting it now.”
PNM will have invested $2.6 billion from 2019-2024 to support the grid and ensure reliability as it shifts toward renewables, according to the filing. Darnell says PNM was able to manage these costs enough to delay raising rates in 2020 and 2021 when many customers were under financial strain due to the pandemic.
Hancock says the Coalition disputes the virtuosity of PNM holding off on requesting a rate hike.
“They could have asked for a rate increase sooner, but they didn’t because they were afraid — in our view — if they asked for a rate increase, they would end up getting a rate decrease,” he said.
If approved, PNM’s rate case will finally remove those ongoing charges for the shuttered San Juan power plant from customers’ bills in 2024. Taking those expenses out lowered the proposed increase by as much as $98 million, according to PNM in filing documents.
Source New Mexico reports the utility also plans to purchase bonds in 2024 to pay for investments made in the station, which customers will pay back with low-interest rates over 25 years.
PNM’s application to the PRC asks that the commission take it up by next fall and make a final order by Dec. 1, 2023. A spokesperson for the PRC says it will likely wait until new commissioners are seated in January before discussing the application.