New PNM rate increase doesn't cover coal plant upgrades

Dive Brief:

The New Mexico Public Regulation Commission on Wednesday approved higher rates for the state's largest electric utility, but balked at $150 million proposed for upgrades at the Four Corners coal plant.
According to the Santa Fe New Mexican, the 4-1 vote could lead to about an 8% average rate increase by 2019, but only if the utility and other parties accept the commission's rejection of the coal plant charges.
New Energy Economy, which had opposed the coal plant spending, hailed regulators' decision as a victory. The group said the immediate savings to customers would be more than $150 million.

Dive Insight:

It is not clear yet whether PNM will accept regulators' decision, but for now, customers will not be paying more on their electric bills for Four Corners upgrades. The utility already forged a plan that calls for ditching its 13% share of Four Corners in 2031, but environmental groups would like to see it exit that arrangement sooner.

Regulators gave PNM and parties to its agreement five days to accept the decision. The utility told the Santa Fe New Mexican it was "disappointed" with the decision but was still weighing options on how to move forward. NEE in a statement called it "a great day for New Mexicans."

"The PRC agreed with New Energy Economy that ratepayers must be held harmless from any amount irresponsibly invested and a cost disallowance should equal the amount of unreasonable investment," the group said in a statement on Facebook. In addition to the immediate savings, the group said PNM is also at risk of "having the entire Four Corners coal plant investment disallowed."

NEE, the sole party opposing the utility's plan, says that PNM’s re-investment in the Four Corners Power Plant was “imprudent” and amounted to a ratepayer subsidy of PNM losses at the plant.

Earlier this year, PNM laid out a plan to phase out its use of coal by 2031. The proposal includes retiring San Juan Generating Station units 1 and 4 by the end of 2022, and exiting its arrangement at Four Corners. The utility proposed replacing the coal-fired energy with more renewables, natural gas and possibly energy storage, while maintaining its stake in the Palo Verde Nuclear Generating Station.