Deregulation: The Road Not Taken

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Liberal activists are wailing about PNM’s request to hike its rates. As the Albuquerque Journal reported: “The utility wants … approval for $123.5 million in additional annual revenue, mostly to pay for about $655 million in investments it’s made in the electric system since 2010, the last time it received a rate increase. Among other things, the company also wants to raise the fixed monthly charge on customers’ bills by about 160 percent, from about $5 to $13, to better cover fixed costs as the rate of growth in electric consumption declines in New Mexico through energy efficiency programs and conservation.”

But concerns about the price of electricity shouldn’t lie solely with the left. The price of power can be a significant cost for many industries, and New Mexicans working to foster a vibrant private sector here should support reforms to make electricity more affordable.

It’s disappointing that in all the debate over PNM’s rates, deregulation is never mentioned. Many states have “restructured” their electricity markets over the last two decades. Some efforts have yielded dismal results, due to poorly designed plans that imposed as many — or more — mandates as were lifted. (California’s high-profile debacle is the best example.)

Yet several states adopted true deregulation, and customers of all kinds — residential, industrial, and commercial — benefited. Texas stands out, as does Pennsylvania. (The Keystone State has the lowest electric rates in the Northeast.)

In the words of the COMPETE Coalition’s William Massey: “Markets are working when regulators and policymakers give competition a chance. It drives prices to their lowest available levels.”

Power in four of our five neighbors is cheaper than it is in the Land of Enchantment. It’s time to revisit the Electric Utility Restructuring Act, which was passed in 1999 but repealed four years later. (In 2003, the Foundation presciently warned that the repeal portended “nothing but high prices in the long run.”)

Competition offers the best path forward for electricity in New Mexico. Why are elected officials AWOL on deregulation?

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3 Replies to “Deregulation: The Road Not Taken”

  1. When a company spends money to improve its infrastructure, one would think those expenses are deducted at tax time, reducing the amount of taxes paid at the end of the year, or amortized over time. To then come back and ask for rate increases to pay for the expenses they have already deducted sounds like double-dipping at the public’s expense.

  2. I’m sure the rate increase would be less if they weren’t mandated to buy into solar and wind energy as just about every state or country that has significant penetration saw significant rate increases.

    Renewables are inefficient and require shadow gas powered generators to back up their intermittent which just necessarily adds to the infrastructure cost. There is nothing wrong with coal if the right pollution controls are implemented and I’m not talking about CO2 capture.

    One thing about CO2 is it’s good for recovering oil out of spent wells. But CO2 is very beneficial for plant growth and 600ppm would be very desired for healthy plant growth. And it’s contribution to Global Warming is not significant beyond 30ppm.

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