ALBUQUERQUE, N.M. (AP) — New Mexico's largest electric provider plans to ask state regulators to raise rates for their customers.
PNM wants to recover costs for investment in power plants and other infrastructure and to make up for a decrease in power consumption. The drop in consumption is attributed to factors such as the state's weak economy, energy conservation and renewable sources such as rooftop solar.
The utility expects to file a case for a rate increase with the Public Regulation Commission by December, PNM Vice President for Regulatory Affairs Gerard Ortiz told the Albuquerque Journal (http://bit.ly/1lwe9CZ).
PNM hasn't yet decided how big of an increase it will request.
"It's related to capital investment PNM has continued to make since it filed its last rate case in 2010," Ortiz said. "It will cover investments made from 2011 to the end of 2016. We'll be trying to catch up with five years of spending."
Utility investments are expected to total in the hundreds of millions of dollars for the five-year period.
PNM last won a rate increase in 2011 when the commission approved a 9 percent increase in customers' bills.
The company's number of customers grew by 6 percent over the past six months, but PNM still reported drops in overall electricity use. Resident use dropped by 5 percent during the first half of the year, commercial use dropped by more than 3 percent and industrial demand was down 8.4 percent.
The sharp decline in electricity demand is chipping away at the utility's earnings this year.
PNM and other utilities must maintain their revenue streams to cover fixed costs for infrastructure, but the combination of a sluggish economy, more energy-efficient technology and building practices and renewable energy systems are putting them in a bind.
"All power companies, PNM included, have this problem," said Revis James, director of generation at the national Electric Power Research Institute. "Economic factors drive demand growth, or the lack of, on a short-term basis. But you have to plan for energy infrastructure in the long term to be ready to meet future demand at least a decade out."
Planning is becoming more challenging for utilities facing declines in consumption, James said.
Pending and future environmental regulations are complicating matters for PNM, which faces major investments to ensure its aging coal-fired San Juan Generating Station meets standards. The costs related to dealing with San Juan will be covered in later rate-increase cases.