PNM’s Rate Case FAQ
What will the PNM rate increase pay for?
In a word, progress. From 2011 through 2016, we’ll have invested more than $650 million to keep the lights on 24/7, protect the environment and responsibly add cleaner energy, including solar. These are benefits customers are receiving but have not yet been paying for.
What should I expect the increase to look like next year?
PNM refiled its rate case, requesting an increase of 15.8%. However, customers will pay less for fuel next year and other proposed changes, if approved, will make the bottom line impact much less.
To explain how this will impact your bill next year:
- Customers living in the Albuquerque metro area (including communities in Bernalillo, Sandoval & Valencia Counties), Santa Fe, Las Vegas, Clayton, Deming and tribal communities, click here
- Customers living in Alamogordo, Ruidoso, Ruidoso Downs, Tularosa, Silver City, Lordsburg, Bayard, Santa Clara, Gila, Hurley and Cliff, click here
So, what changes to my bill should I expect in January 2016, that will help to offset some of the rate increase that will occur next summer?
In January 2016, PNM customers will see a combined 7% reduction due to decreased fuel costs and savings related to the proposed partial shut-down of the San Juan coal plant.
With the anticipated rate increase, how will PNM’s residential affordability compare to other states?
No one likes their bills to go up, but as PNM recovers the investments made to keep our electric system reliable, environmentally friendly and affordable, customers will also enjoy some relief.
At the same time, your PNM electric bill will remain a good, affordable value.
PNM’s residential affordability continues to be among the best in the nation:
Why does the increase differ for certain customers?
PNM is proposing that the amount customers pay for electricity match the amount they use. This means that some customers will pay more and others will pay less as a result of this change.
Specifically, customers in certain southern New Mexico communities, previously served by Texas-New Mexico Power Company, joined the PNM system in 2005.
To fairly distribute costs across all customers groups, the customers in these areas have been paying an additional line item on their bills. As part of this rate case, this extra charge will be removed and all customers will pay the same rates. As a result, these customers will see a smaller overall increase.
Similarly, businesses have been paying more than their fair share for their use of the electricity system. It is important to keep business and industrial rates competitive with neighboring states to attract and keep New Mexico employers.
Why is PNM requesting a change in electricity rate design?
While electricity rate design is exceptionally complex, the short answer is that the way you use electricity is very different than the way you are charged.
PNM has proposed a 4-year program to measure the difference between costs and revenues and allows for an annual adjustment. This would provide more bill predictability for customers because it matches costs with customer usage.
What about solar and wind – is there a fee for customers who install new systems?
No. PNM did not feel it would be productive to include it in the re-filed case given the need to implement the new rates in a timely manner.
PNM has long supported the development of solar power. In addition to developing utility-scale solar generation, PNM has subsidized the development of more than 5,000 customer-owned solar systems through more than $24 million in payments to solar customers and by providing 24/7 access to power for these customers. PNM is proud to continue to support the evolution of electric power.
PNM continues to support customer choice and believes changing the rate structure for customer-owned solar and wind generation is necessary to reflect the benefits and actual costs. While not everyone will support this change, we will continue to address concerns in this important discussion and will likely raise the issue at a later time.
San Juan Generating Station FAQ
Why did PNM develop its own plan for reducing regional haze in the Four Corners region?
To reduce haze in the Four Corners region, the U.S. Environmental Protection Agency (EPA) initially mandated the installation of expensive pollution controls on all four coal-fired units of the San Juan Generating Station. This technology would have cost nearly $1 billion while only addressing haze. With the leadership of New Mexico Governor Susana Martinez, we worked with the EPA and several stakeholders to find an alternative that would benefit both customers and the environment by reducing coal power at San Juan Generating Station by 50%, placing additional environmental equipment on the remaining units, and replacing the lost power with energy from cleaner sources.
Have any other stakeholders agreed to PNM’s plan?
On Aug. 13, PNM and four other environmental, clean energy and consumer organizations announced a new agreement that would move the San Juan plan to address regional haze forward. The parties to the settlement included the Utility Division Staff of the NMPRC, the New Mexico Attorney General, Western Resource Advocates and the New Mexico Coalition for Clean Affordable Energy. In addition, the Albuquerque Bernalillo County Water Utility Authority has indicated it will withdraw its opposition.
Since that time, the New Mexico Industrial Energy Consumers (NMIEC) has announced that they will also join the stipulated agreement for San Juan. Other parties may still join the agreement before the Public Regulation Commission announces its decision.
It’s important to remember that PNM was originally faced with having to implement a costly federal plan to reduce regional haze, but with the leadership of Governor Susan Martinez and the support of the Navajo Nation, PNM was able to work with the EPA and the state to find a less costly way forward that would provide broader environmental benefits.
If the plan is approved by the PRC, the closure of two of the San Juan units will occur by Dec. 31, 2017. PNM plans to add environmental equipment to the two remaining units. The effect will be a reduction of water use and seven air emissions, including carbon, by 50 percent.
Key terms of the new agreement can be found here.
Why doesn’t PNM close San Juan Generating Station altogether?
The plan PNM developed is designed to address the core requirements of an electric utility: providing reliable, affordable, environmentally sound power to customers. Closing all four units at San Juan Generating Station would cost five times more than the PNM plan, if we had to replace all that power. Moreover, it would cost New Mexico hundreds of high-paying jobs and significant tax revenues, devastating the Four Corners economy.
Will the PNM plan result in lost jobs?
PNM has pledged that there will be no layoffs at San Juan Generating Station and that it will handle any reductions through attrition. Two units of San Juan Generating Station will remain open, as well as the continued operation of the San Juan coal mine; therefore, the region’s economy should remain stable and hundreds of New Mexican jobs saved.
What will happen if the Public Regulation Commission rejects the PNM plan?
If the plan is rejected, hundreds of New Mexicans will lose their jobs at the power plant and coal mind and hundreds of indirect jobs in the region that support the plant and mine will also be lost. This represents a loss of nearly more than $100 million in annual payroll and $31 million per year in state and local taxes. Moreover, the increase in residential electric rates would be as much as five times more than it would be under PNM’s plan. It would also impact many New Mexico businesses that the plant uses for purchases. In 2014 alone, the PNM San Juan Generating Station spent more than $39 million at local New Mexico businesses.
What is the status of the San Juan Generating Station Settlement?
PNM worked with the New Mexico Environment Department and the EPA to develop a comprehensive plan to reduce regional haze in the Four Corners. The company is proposing to shut down two coal-fired units at San Juan by the end of 2017 and install new emissions control technology on the remaining two units. The retirement of the two units will reduce seven different emissions, including carbon, by about 50 percent. The EPA has already issued its final approval. PNM reached a settlement agreement with most of the parties involved in the state case, and the New Mexico Public Regulation Commission is scheduled to hold a hearing on the agreement in January, 2015.
How is PNM replacing power from San Juan Generating Station?
PNM proposes to replace the power from retired coal units by:
- Adding 134 megawatts of carbon-free nuclear energy from Palo Verde (AZ)
- Developing a 177 megawatt natural gas peaking plant
- Expanding our solar resources with an additional 40 megawatts of capacity
What does PNM use to create electricity? How will it change in the coming years?
PNM has proposed closing two units at San Juan Generating Station and replacing the lost electricity with a combination of natural gas, purchased nuclear power and solar. The end result will be a balanced energy portfolio and emissions reductions that will help New Mexico comply with new federal environmental regulations.
PNM is just complying with EPA regulations; why not go beyond federal requirements?
Our plan for our coal-fired San Juan Generating Station goes well beyond the EPA’s haze regulations. PNM’s plan to retire the two existing coal units at San Juan and install nitrogen-oxide reducing technology on the other two units addresses the EPA’s haze-reduction mandate and also reduces six other emissions, including carbon. So, it also puts New Mexico well down the road toward complying with new emissions levels under the proposed federal Clean Power Rule. This supports PNM’s objective to expand our use of more sustainable and less carbon-intensive power generation while we continue to provide reliable, affordable electricity to customers.
How much will the San Juan plan cost consumers?
Under the settlement agreement, the proposed plan would increase the average residential bill by seven percent, or about 17 cents per day. Over the next 20 years, the settlement agreement will save customers more than $780 from the federal plan that PNM would otherwise have been required to implement.
Why is PNM purchasing nuclear power? Is it safe?
Nuclear power is part of a balanced fuel mix and an important part of PNM’s generation capacity and it is carbon free. Combined with natural gas, coal, and renewable resources, nuclear power helps PNM ensure reliable electricity at all times, like when the sun does not shine and the wind does not blow. The Palo Verde plant was built and is maintained to comply with stringent federal safety requirements, including automated and redundant systems as well as extensive security measures.
Why is PNM using coal at all? Why not simply add more solar generation?
PNM serves about 500,000 customers who depend upon us for reliable and affordable electricity to conduct their lives and businesses. PNM strongly supports solar energy, and our plan calls for additional solar capacity. Even so, solar power presents challenges for reliability (e.g., the sun doesn’t always shine) and integrating this intermittent resource into the continuous flow of the state’s power grid. The costs of integrating a sudden surge of solar power into the system would have to be included on customers’ bills. The PNM plan is a prudent approach that supports solar expansion while ensuring reliable and affordable electricity for our customers.
Will closing two units of the San Juan Generating Station cost any jobs at the plant?
PNM is committed to no layoffs that result from the two unit closures at the San Juan plant. However, to minimize the economic impact on the people of the Four Corners region, PNM has also committed more than $1 million for the PNM Navajo Nation Workforce Training program and to support local economic development efforts.
Can’t we meet our state’s needs through energy efficiency programs?
Our energy efficiency programs have made a significant contribution to helping customers save energy. Even so, New Mexico is growing, and conservation alone will not be enough to support the state’s economy and our customer’s quality of life. We will continue to promote conservation, because as an old adage says, “The cheapest electricity is the electricity you don’t use.” PNM’s energy efficiency programs helped customers save 75 gigawatt hours of power in 2014 – the equivalent of the energy needed to power 10,417 homes for a year. There’s an environmental component as well: energy efficiency programs have prevented an estimated 905,000 metric tons of carbon dioxide emissions and reduced the need for water for power plant use by 481 million gallons since 2007.
Why can’t PNM invest in more solar generation?
PNM is committed to solar energy, and by the end of 2015 will have invested about $270 million in solar power, totaling more than one million solar panels. Solar power is affected by the weather, and today storing solar energy has not advanced to guarantee power when the sun isn’t shining. The cost of solar technology is declining but it is still more expensive than other energy resources, such as natural gas. Energy investments are shared among all our customers, therefore we carefully diversify our investment in energy resources to ensure that we can provide affordable and reliable power to all our customers.
How are rooftop solar customers subsidized under the current pricing structure?
Rooftop solar customers are subsidized by all non-solar PNM customers who contribute to the fixed costs to maintain the electric system: infrastructure, poles, wires, transformers and service personnel. A home or business with a solar photovoltaic system uses the electric grid by exporting excess power and sometimes importing power from the grid based on their needs, but paying significantly less to maintain the grid than non-solar customers. This approach helped solar power gain a necessary foothold in the marketplace, but rooftop solar has matured to the point when the costs for using the grid should be paid for by the customers using that grid.
How does New Mexico compare to other states in adoption of solar power?
The group Environment America ranks New Mexico among the “Dazzling Dozen,” the 12 U.S. states that have most aggressively pursued solar installations and supporting policies. While the state’s population ranks 36th in the nation, New Mexico is number 10 for total solar power installations. And for solar power capacity per person, New Mexico is 5th in the country (source)
Where are PNM’s solar facilities located?
We have eight solar farms in operation today, resulting from our $269 million investment in solar power to date. PNM also has three solar plants under construction, and we have four more planned for 2015. By the end of 2015, PNM expects to have 107 megawatts of solar generation online.
What is the difference between utility-scale solar and rooftop solar?
- Utility-scale solar generates electricity at facilities owned by the utility that use industrial solar panels on a large plot of land.
- Rooftop solar produces energy with solar panels located on a home or business and is owned or leased by the customer.
Why choose natural gas over other forms of generation, like wind, which have less of an environmental impact?
PNM has invested hundreds of millions to reduce coal emissions as we take advantage of the abundant wind and sunshine we enjoy in New Mexico. We are working diligently with the rest of the power industry to turn “intermittent” resources – the wind doesn’t always blow, and the sun doesn’t always shine – into more reliable energy options. Meanwhile, natural gas and nuclear generation allow us to ensure constant access and peak capacity through a balanced energy generation mix.
How often is natural gas used as a generation source in the U.S.?
Roughly 25 percent of our nation’s electricity is generated by natural gas.
How does the price of power in New Mexico compare to other states?
Cost of living varies widely across the country, so comparing the cost of a kilowatt-hour in New York City versus Albuquerque doesn’t tell the whole story. It simply costs less to live in New Mexico than New York. To see how we compare for actual affordability, the chart below shows the percent of household income customers typically spend each month for power. New Mexico is in the top quarter of states for the most affordable electricity.
Source: August 12, 2014, Goldman Sachs Power
What is the most efficient way to reduce my energy bill?
Reducing the amount of energy you use in your home on a daily basis can add up to a lot of pennies saved on your bill. The graphic below shows the estimated daily costs of a four-person house in Albuquerque. As you can see, you can reduce the greatest amount of electricity use through lowering your water consumption and adjusting your thermostat.
Why do I have extra utility charges on my bill in addition to my energy consumption?
Electricity rates cover the cost of energy as well as the infrastructure required to deliver power to customers. Our customers expect electricity to be there when they need it, which means the electric grid – poles, wires, transformers and other investments – must be in place and well maintained. For PNM, the value of our grid is close to $1.5 billion.
What is PNM’s commitment to the environment?
PNM is committed to protecting and preserving the environment. We focus on efforts supporting energy sustainability, environmental conservation and stewardship of our natural resources. We are committed to providing responsible leadership for the preservation of the environment and to continuously improving our operations to reduce environmental impact.
What effect do PNM’s wires and poles infrastructure have on the wildlife?
Birds naturally gravitate to utility structures to roost, nest or find protection from weather. While birds can safely sit on power lines, they can be electrocuted if they touch certain equipment under the right conditions. PNM has maintained an active bird protection program since 2006. We also offer educational programs and install avian habitats on power poles to support these efforts.
What is PNM doing to retrofit their coal-fired power plants?
In 2009, PNM completed a four-year $320 million environmental upgrade for the San Juan Generating Station. We also intend to retire two of this facility’s four coal-fired units and add new pollution controls to the remaining units. PNM is now in full compliance with federal regulations and will continue to upgrade as needed.
Since coal plants take so much water to run, what is PNM doing to reduce their water usage?
PNM makes continuous efforts to conserve water use in our system. Since 2002, PNM has reduced the amount of water used per kilowatt-hour by 25 percent through the addition of new resources and continuous conservation efforts at existing power sources.
How much of an impact do energy saver programs really have?
Since 2007, PNM residential and business customers have saved enough energy to serve more than 205,000 homes and earned more than $44 million in customer rebates. These programs have also saved 481 million gallons of water that would have been used at power plants and prevented the release of 905,000 metric tons of carbon into the atmosphere, equivalent to pulling 190,000 cars off the road.
What is PNM doing to invest in our local communities?
PNM has been investing in our local communities for nearly a century to power progress in the state of New Mexico. Since 2013, PNM has given $4.4 million to non-profits and community partners through corporate giving and the PNM Resources Foundation.
How involved is PNM in the education of our young people?
Over the last few years, PNM has invested millions toward educational programs in New Mexico. One of PNM’s key focus areas has been STEM (Science, Technology, Engineering & Math) education. Knowledge of math and science is a core part of many careers and we want to be sure our students are prepared to enter the workforce to be a part of our state’s future success.
Where does PNM rank compared with other states on greenhouse gas emissions?
PNM is around the national average in terms of the rate of greenhouse gas emissions by power plants.
What is PNM doing to comply with the new rule that the EPA proposes on greenhouse gas emissions and to comply with current regulations?
PNM plans to close two units of the San Juan Generating Station, which provides an opportunity for us to rework the way we generate electricity so we can rely less on carbon. We’ll continue to seek new ways to reduce carbon emissions, at the same time providing reliable, affordable power to customers.
Why is PNM using coal at all? Why doesn’t PNM use more solar?
PNM is reducing its dependence on coal, but as a utility providing power to about 500,000 customers, we must balance reliability and affordability when considering the types of resources used to generate power. Solar is intermittent and still more expensive than coal or natural gas. PNM is committed to solar and as the cost of technology declines, the company is increasing its investment. PNM will have spent approximately $270 million in solar power by the end of 2015, with more than one million solar panels. A sudden increase in solar power requires a significant technology investment that would be borne by customers, which is why we rely on a variety of energy sources to provide reliable and affordable electricity for customers.