PNM wants to use rate increase to recoup improvement costs at Four Corners Power Plant

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FARMINGTON — The issue of electricity rate increases is back on the New Mexico Public Regulation Commission’s plate as a statewide utility continues to seek permission to use the possible increased revenue to recoup improvement costs for Four Corners Power Plant emission reduction controls.

On Dec. 20, the PRC approved an approximate 9 percent rate increase request from the Public Service Co. of New Mexico, but rejected PNM’s request to use the revenue from the increase to recoup the costs of power plant improvements. PMN challenged the decision on Dec. 28, and Wednesday, the PRC rescinded its Dec. 20 decision and voted to hold a hearing about the issues on Jan. 10.
 
PNM originally requested a 14 percent rate increase, but decreased it to a 9 percent increase after reaching a settlement with a coalition of environmental groups and major customers, according to PNM spokesman Dan Ware.

The rate increase would generate approximately $63.2 million each year and would pay for PNM costs, including grid and infrastructure maintenance, Ware said. The settlement also provided that PNM could use the rate increase revenue to help pay for approximately $148 million in improvements to the Four Corners Power Plant, namely emission-reduction controls. PNM owns 13 percent of the plant.

“This increase was planned as part of what came out of the agreement that we had for the San Juan Generating Station with the (Environmental Protection Agency) and the state of New Mexico, and the improvements that we made as far as the emissions controls at the (Four Corners Power) Plant and also shutting down the two (San Juan Generating Station) units,” Ware said. “This was going to be part of the plan, and all the co-signers of the plan knew that this was going to be an inevitable part of it.”

The issue will head back to the PRC on Jan. 10, when PNM and the co-signers will argue their case, Ware said. New Energy Economy, the only group in the coalition to not agree to the settlement, and other opponents will have the opportunity to speak. The commission will decide to how to proceed after the hearing.

Mariel Nanasi, executive director of New Energy Economy, said the Four Corners Power Plant was not “prudently incurred, and therefore ratepayers should be held harmless for imprudent decisions.”

“I don’t want ratepayers to be stuck with the bill when PNM did no financial analysis,” Nanasi said. “That’s just not fair, and that’s what they have done. That’s why I fought and didn’t participate in the (settlement agreement) and up 'til now, that’s why (New Energy Economy’s) position has prevailed.”

Ware said PNM hopes the commission will reconsider its decision and ultimately decide to approve the settlement as originally presented. If not, PNM could pursue litigation.

“If we do that, it can wipe out the settlement agreement completely, and we start over with our initial request of (a 14 percent increase),” Ware said.

Lynda Lovejoy, who represents District 4 on the PRC, including the Four Corners region, said during Wednesday’s meeting that she was concerned that revisiting the issues could leave room to increase the rates even more.

“What is that (Jan. 10) rehearing going to bring — a better outcome?” Lovejoy said. “What if it doesn’t? What if the rate increase is higher? Then what? You have no concern about the PNM ratepayers who will get a huge bill. … We’re going to do financial harm to those constituents. They’re going to holler and scream, and they’re going to look at this commission as the most incompetent, idiotic sitting commission.”

Megan Petersen covers business and education for The Daily Times. Reach her at 505-564-4621 or mpetersen@daily-times.com.

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