New Mexico PRC staff recommends cutting PNM's proposed rate increase

Dive Brief:

Public Service Co. of New Mexico (PNM) will challenge recommendations made by a hearing examiner that would significantly lower its requested return on equity, and which would exclude several significant expenditures from the utility's proposed rate base, according the utility's press release.
PNM requested a rate increase of more than $123 million, but the hearing examiner has recommended a $41 million increase.
The utility is having a difficult time convincing regulators to increase its rates. About a year ago, the utility's 12% rate request was rejected by the New Mexico Public Regulation Commission.

Dive Insight:

PNM is struggling to push rate increases past regulators, and for the second time in two years, is at odds with the New Mexico regulators. A year ago, the commission rejected a bid to impose solar fees and raise rates, and the utility looks likely to receive a similar result this time around.

"We are deeply disappointed with the Hearing Examiner's recommendation as it does not represent a fair balance between the interests of customers and shareholders," PNM Resources President, Chair and CEO Pat Vincent-Collawn said in a statement.

Vincent-Collawn said the rate case represents a request to recover the $655 million PNM has invested in its system since 2011, and added the company plans "to file strong exceptions with the Commission that emphasize the importance of recovering our investments."

According to a PNM press release, New Mexico regulators previously suspended rates through the end of this month, and the utility expects the hearing examiner's recommendation to be considered before the end of the suspension. However, the commission has the authority to suspend the proposed change in rates one additional month, but not beyond Oct. 1.

"We have already taken action to temporarily offset the effects of the delay in rate implementation," said Vincent-Collawn. "As a result, we expect to remain within our original 2016 guidance."

PNM Resources narrowed guidance for ths year for consolidated earnings, to $1.55 to $1.65 per diluted share from the previously stated guidance of $1.55 to $1.76 per diluted share.

The hearing commissioner has requested to exclude several important items from PNM rate base, with the largest being 64 MW of previously leased Palo Verde Nuclear Generation Station Unit 2 capacity. PNM included it at about $153 million, but the hearing commissioner has recommended excluding it now and including the generation in a future PNM rate case.