Following other changes that take effect at the same time, the net customer bill increase would average 7.7 percent.

"In order for PNM to be able to maintain reliability, continue forward with cleaner energy resources and to best serve our customers in a world of rapidly evolving technology and tougher environmental regulations, this rate request is critical," said Pat Vincent-Collawn, PNM Resources’ chairman, president, and CEO. "Changes are needed to bring the rate structure more in line with how people use energy today, ensuring the ability to recover the costs of operating the electric system, and to more fairly allocate those costs among customers."

The rate request reflects $2.4 billion in rate base, which is a $585 million increase since the 2010 rate case. These investments are not currently recovered in PNM rates, and account for 92 percent of the company’s request, including depreciation. Key capital additions to rate base include:

Four new solar centers online by 2016 (40 MW, $79 million) capable of powering 16,200 average homes;
La Luz Natural Gas Plant online by 2016 (40 MW, $56 million) to serve customers when demand is highest, to support renewable energy growth and ensure reliable power under a variety of grid conditions;
Emission control equipment at San Juan Generating Station to comply with federal haze regulations (Selective Non-Catalytic Reduction equipment to reduce NOx emissions, $81 million);
Critical resources for the future: Purchasing Rio Bravo Generating Station (formerly Delta Person) natural gas plant ($38 million) and purchasing leases for Palo Verde Nuclear Generating Station Unit 2 ($163 million); and
Investments to keep our electric system reliable, including a $30 million investment at PNM’s Rio Puerco Switching Station, a critical hub in our transmission system, $8 million to improve substation security, and an upgrade to our distribution system operations center.

The balance of the request is related to declining energy sales driven by the still recovering New Mexico economy, improved electric appliance efficiency, and PNM’s own energy efficiency and customer rooftop solar programs.

In the rate filing PNM also proposes to more fairly align electric rates with actual costs to serve customers, while still supporting energy efficiency and rooftop solar programs. The filing proposes an electric rate design focused on balancing environmental priorities and customer choices with the need to maintain reliability. The proposal supports economic growth and affordable electricity for all customers through a fair distribution of costs.

Specific regulatory improvements that, if approved, would be applied beginning on Jan. 1, 2016, include:

A Revenue Balancing Account pilot program, also known as decoupling, designed to support recovery of fixed costs that are critical to reliability of service at the lowest cost to customers, similar to fuel adjustments that are regularly recovered;
An economic development tariff to support state and local efforts to retain and attract companies that provide economic based jobs; and
A solar distributed generation interconnection fee, applied only to new rooftop solar customers after Jan. 1, 2016, to more properly allocate the costs between solar distributed generation and non-solar customers, since today non-solar customers help to pay for the utility system that solar customers use. The proposed fee is $6 per kilowatt, and with systems averaging 3-5 kilowatts, the new fee would be $18-$30 per month.

"These regulatory improvements reflect our commitment to support robust energy efficiency, economic development, and rooftop solar programs into the future. By making sure critical infrastructure costs are fairly recovered, the integrity of the system – both in terms of reliability and fairness – can be ensured," added Vincent-Collawn. "The proposed rooftop solar changes are necessary to avoid non-solar customers becoming increasingly and unfairly burdened with higher costs because of customers who have rooftop solar systems."