Some facts on electricity in NM

With all of the controversy over PNM’s proposed rate hike, it is important to have a few facts. For starters, regardless of any other policy proposal at the federal or state levels, New Mexico’s renewable portfolio standard is expected to cost utility rate-payers $619 annually by the time it is phased in, in 2020.

According to the US Energy Information Agency (EIA), New Mexico’s commercial and residential customers already pay relatively high rates for their electricity. No bordering state has higher commercial or residential rates than New Mexico. Not surprisingly, New Mexico also has one of the most ambitious RPS’s among its neighbors (it will be interesting to see how rates in Colorado climb to comply with their 30% requirement).

Lastly, as the chart below (also from EIA) shows, New Mexico has seen some rather steep price increases in the past year alone with residential and commercial rates jumping by nearly 10% in a single year.

It is hard to say whether PNM should get all or part of its requested rate hike, but it is clear that government mandates are having a big impact on electricity prices in our state.

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4 Replies to “Some facts on electricity in NM”

  1. The impacts seen in New Mexico are typical of states that have Renewable Portfolio Standards (RPS). Expenditure of large amounts of capital for relatively ineffective means of production results in high costs to the customer. Added to these costs are massive capital costs associated with equipment necessary to meet the continuing drum beat of the EPA and you have another burden that consumers must bear with little actual benefit to the customers or environment. Utility investors do benefit via the rate making process. They are more than made whole in the rate making process as it has long be recognized that investors get return on and of capital improvements mandated by state or federal regulation. The only open question is how to calculate the basis of the impact in dollars and what is a fair and equitable rate of return necessary to attract and retain the investors. If you look at the data available from the EIA for the period 2000 to 2010 inclusive the average rate for electrical energy across the United States rose at twice the rate of inflation for the same period.

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