Dive Brief:
- Public Service Company of New Mexico (PNM) will file with the state Public Regulation Commission by December for an as-yet-to be-determined rate increase, its first since 2011.
- The increase will be to recover costs for previous and planned power plant and grid infrastructure investments between 2012 and 2016, to cover revenues lost to decreased demand associated with the economic recession and to increased customer use of energy efficiency and distributed renewables.
- Despite a 6% customer increase, PNM has sold 5% less residential electricity, 3.1% less commercial electricity, and 8.4% less industrial electricity in 2014, leading to a 26% decrease in PNM 2014 1H 2014 earnings.
Dive Insight:
The PRC approved a 9% average rate increase in 2011 and, because the current average PNM residential customer pays roughly $74 per month, a comparable new rate increase would raise the average bill just over $6.50 per month.
PNM investments for the 2012 to 2016 period, including a planned $40 million natural-gas plant, are estimated to be in “the hundreds of millions,” with upgrades at the San Juan coal plant alone potentially costing well over $500 million after 2018.
The rate increase request will include updated depreciation rates on capital investments that will help PNM elude stranded asset losses that are currently a major concern for owners of traditional generation across the country.
Utilities across the U.S. are coping with decreased revenues due to decreased electricity sales. The U.S. Energy Information Administration now predicts a 0.9% yearly electricity demand growth rate through 2040, down from a projected 1.2% to 1.5% increase during years preceding the recession.
