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Amid request for rate hike, PNM announces fuel-cost drop in customers’ bills

Public Service Company of New Mexico said this week that residential customers will see their monthly electric bills drop by about $2.60 starting this month, thanks to a dip in the cost of fuel used to generate power.

The announcement comes at a time when PNM is asking the state Public Regulation Commission to approve the company’s controversial plans for the coal-burning San Juan Generating Station near Farmington. The utility also is preparing to file a new rate increase request because the commission in May rejected an earlier rate proposal.

Some critics dismissed the utility’s issuance of a news release about the fuel-cost adjustment as a public relations ploy.

The company said the average household currently pays a fuel-cost fee of about $8.05 a month. But because of falling fuel costs, that amount will drop to about $5.46 a month. Commercial, government and educational customers also will see reductions, PNM said.

State regulators allow the company to periodically recalculate the fees according to a set formula and automatically pass along to customers any cost increases or decreases.

“The fuel clause allows for timely, appropriate bill adjustments based on the actual fuel costs incurred to generate electricity to serve our customers,” Gerard Ortiz, PNM’s vice president of regulatory affairs, said in the news release. “In this case, the decrease in costs is passed directly to customers, reducing their monthly bills.”

The fuel adjustment clause permits PNM to collect the difference between what the utility had estimated in its last rate filing that it would have to pay for fuels — including coal, gas, oil and renewable energy sources — and what the actual cost turned out to be.

According to PNM, if there are no revisions or adjustments affecting fuel costs and revenues between now and the end of the year, the fuel-cost adjustment fee could decrease by an additional $2.58 a month in January.

“Customers would see even more savings in fuel costs starting in 2016, if the [Public Regulation Commission] approves PNM’s plan for San Juan Generating Station,” the news release said. If that plan is approved, the release stated, a new coal supply agreement between PNM and the Westmoreland Coal Co. would mean lower fuel costs.

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Public Regulation Commissioner Valerie Espinoza, D-Santa Fe, who has opposed the company’s plans for the San Juan power plant, said she thinks PNM’s announcement is an attempt to “rally the public” behind the company’s proposal for shutting down part of the plant while continuing to rely on coal as a significant part of its energy portfolio. But she said the utility is creating “false hope” because “fuel costs are going down, but capital costs are going up.”

Steven Michel, chief counsel for Western Resource Advocates’ energy program, said Wednesday, “I would not characterize PNM’s July 1 adjustment as a decrease. I would characterize it as less of an increase.”

Asked if he thought the announcement was part of a public relations effort, Michel said, “that would be a charitable description.”

The PNM rate increase proposal rejected by the commission in May would have added another $7.80 a month in the base charge for residential customers. It would have increased monthly bills overall by more than 16 percent.

On Wednesday, PNM filed documents pertaining to its San Juan proposal that include a coal supply agreement with Westmoreland Coal Co., as well as a purchase and sale agreement between BHP Billiton and Westmoreland for the San Juan Mine. Also among the documents are restructuring agreements with the city of Farmington and Tucson Electric Power. Six other restructuring agreements with various entities, including California municipalities that will no longer be part owners of the power plant, are expected to be filed by an Aug. 1 deadline imposed by the commission.

PNM on Wednesday also filed a request for a “protective order” that would keep secret certain documents filed in the case in order to keep “proprietary information and trade secrets” out of the public eye. Earlier this year, PNM was able to get the commission to agree to keep some San Juan documents out of the public record.

Espinoza said she believes the public should be able to inspect documents related to the power plant.

Jodi McGinnis Porter, a spokeswoman for PNM, defended the confidentiality request. She said the utility has no authority to release the purchase agreement between BHP Billiton and Westmoreland. As for the coal supply agreement, McGinnis Porter said, “Westmoreland operates coal mines competitively around the country. Information in regard to pricing and the structure of the agreement is considered trade secret competitive information and should be kept confidential.”

Porter added, “disclosure of proprietary information would discourage PNM suppliers from doing business with the company because they could not be sure their confidential business information or trade secrets would be kept private.”

PNM plans to close two units at the San Juan station in 2017. Plans for replacing that generating capacity include adding a plant fueled by natural gas, using nuclear power from the Palo Verde plant in Arizona and adding some solar power. The utility on Wednesday filed a request for the commission to approve a 187-megawatt, $132 million natural gas-fired generator located adjacent to the San Juan facility.

This article was written by Steve Terrell from The Santa Fe New Mexican and was legally licensed through the NewsCred publisher network.

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