Learn More about the Rate Case Decision
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PNM has carefully reviewed the written order from the New Mexico Public Regulation Commission (NMPRC) regarding the company's rate case. Based on the specific elements of the NMPRC ruling, we have calculated the average system increase and bill impact for the average residential customer:
- Overall average system increase: 7%
- PNM original request: 14%
This number reflects the difference between what customers pay today and what they will pay under the new rates. The difference between North and South customers is due to the gradual integration of Southern customers into the overall PNM service territory after the company purchased TNMP, which had previously been serving customers in the southern part of the state.
- North (all customers except Alamogordo, Ruidoso and Silver City customers): $6.89
- South - Alamogordo, Ruidoso and Silver City customers: $1.26
- PNM's last general rate increase took effect in 2011, and the majority of this increase will help pay for the more than $650 million the company has already invested to improve the electric system and better serve customers. We made these investments because they were the right thing to do for our customers and our state. Many of these improvements are critical to reliability and grid security, including the poles, wires and other equipment needed to maintain and protect the system.
- In addition, PNM has added cleaner resources to generate electricity, including new utility-scale solar facilities and a new natural gas-fired plant. The company continues to use emission-free nuclear energy from Palo Verde Nuclear Generating Station in Arizona, as it has for more than 30 years.
- Allowing utilities to recover the cost of investments made on behalf of customers is critical to maintaining the financial health of utilities for the business environment in general.
- Many of the investments made in the system support keeping the lights on 24/7. PNM is ranked nationally in the top 25 percent of utilities for reliability. We were recognized in 2015 with a national award for that achievement.
- PNM has held operating expenses almost flat since the last increase five years ago.
- Even with the approve increase, PNM's residential customers will continue to see some of the lowest bills in the state and are among the lowest nationally.
- PNM is strongly committed to economic development. PNM's commercial and industrial prices are also competitive and are critical to retaining and recruiting businesses to New Mexico.
Q: What does the NMPRC's decision mean to PNM customers?
A: The order issued by the NMPRC incorporates a number of different elements, but the bottom line is that PNM residential customers will see an average increase of $6.89 per month to their electric bill from what they paid the month before (refers to residential customers who use an average of 580 kWh per month).
Q. What does the increase cover?
A: Primary elements of the rate increase are:
- System investments for reliability as well as grid and cyber-security
- Four large-scale solar generation facilities across New Mexico
- A cleaner-burning, natural gas-fired power plant in Valencia County
- Environmental upgrades at San Juan Generating Station
- Retention of long-term, reliable and emission-free energy from the Palo Verde Nuclear Plant in Arizona
Q: Why does PNM need nuclear power from Palo Verde?
A: Palo Verde is one of the world's safest, most-reliable nuclear plants and is the nation's largest producer of emission-free energy. Palo Verde has been a reliable and cost-effective source of energy for PNM customers for more than 30 years. Not only is this an affordable resource, it is also carbon-free. If PNM didn't have nuclear energy, it would be more difficult and costly to reduce emissions and for New Mexico to meet federal carbon regulations. Reliable, round-the-clock energy from Palo Verde is needed to deliver clean electricity when the sun isn't shining or the wind isn't blowing.
Q: What is the "Customer Charge", and why is it going up?
A: The customer charge is increasing from $5 to $7. This charge covers a portion of the actual, fixed cost of providing monthly services for every customer (meter, meter reading, billing and other customer-related activities). The actual cost to the company for these services is approximately $13 per month, and the overall total monthly cost to provide electric service to each customer is approximately $61. The costs associated with serving customers are fixed costs, meaning they don't change month-to-month or according to the amount of electricity used. It makes sense to recover these costs through a fixed monthly charge.
Q: Why is PNM increasing the charges for connecting or reconnecting service? What about off-site meter reading?
A: As with any consumer product, the actual costs of providing various services (crew hours, travel and administration) have increased over time. We are updating the charges for these services to reflect the actual costs of providing them today. This helps to ensure the costs of the services are paid by those customers who benefit from them and the expense is not transferred to other customers.
Q: Why is the Fuel Cost Adjustment changing?
A: Traditional generation facilities require fuel, including natural gas, coal and nuclear. Just like prices at the gas pump, the cost of fuel for power plants can vary greatly. Renewable energy generation sources, such as solar and wind, obviously do not require fuel but are not available at all times of the day and night. Traditional generation is needed to ensure reliable and adequate electricity 24/7, including when solar and wind resources are not available.
PNM is transparent with the cost of fuel, and until now, part of these costs were included in the energy charge on customers' bills, with the remaining amount shown separately as the Fuel Cost Adjustment. Under the new rates, 100% of the fuel cost for traditional resources is included in the Fuel Cost Adjustment. It's important to note customers are charged the actual cost the company pays for the fuel without markup, and these charges are adjusted quarterly based on the latest cost of fuel. The costs in this section are not related to customer-owned solar. The fuel charges now appear this way on the bill:
- Non-Renewable Fuel: This line item covers the actual cost of fuel purchased to generate energy from traditional resources
- Renewable Fuel: This line is currently $0 because solar, wind and geothermal generation do not require fuel.
Q: What is the Renewable Energy Rider?
A: While solar and wind generation facilities do not require traditional fuel, the equipment needed to convert that energy into electricity and deliver it to your home or business requires significant and ongoing investments. The Renewable Energy Rider is how the NMPRC allocates those costs to customers of PNM renewable energy systems and facilities. The charge is listed separately on customer bills and is adjusted annually to accurately reflect the actual amount PNM has invested.
Q: Why don't you cut executive salaries instead of raising customer rates?
A: Only a portion of executive pay is including in PNM rates. Less than $1 million of executive compensation is included in PNM rates, and no executive incentive compensation is included in PNM rates. The rest of executive pay is covered by PNM Resources and our TNMP, our Texas utility. The rates set by the NMPRC help cover more than $700 million in utility costs. The total executive pay is a small percentage of that amount and would not have a meaningful impact on customer bills.
Q: Is it true PNM plans to file for another increase by the end of this year? Are you kidding me? This is just greed.
A: This is the next step in the process to close two of the four units of the coal-fired San Juan Generating Station (SJGS) and replace the power with other resources, including emission-free nuclear energy from Palo Verde in Arizona. Any increase will not take effect until 2018 after the two units are shut down, but the filing must be made now to ensure changes are in place when that occurs.
The plan for SJGS was approved by the NMPRC in 2015 and was the result of a negotiated agreement between PNM and a broad group of stakeholders (including NMPRC staff, environmental and consumer protection advocates). The next filing is in large part necessary to recover the investments PNM made (and will make) to execute that plan.
The next filing is necessary to adjust rates in 2018 to account for the difference in costs between the units being retired and the replacement plant approved by the NMPRC. In addition, the request will cover new investments and improvements we are making in the electric system to keep your power safe and reliable.