The New Mexico Public Regulation Commission (NMPRC) issued an order in the application for a 2024 change in customer base rates by Public Service Company of New Mexico (PNM), a wholly-owned subsidiary of PNM Resources (NYSE: PNM).
The order modified the recommended decision in the case and equates to an estimated increase in base rates of $15.3 million, based on a 9.26% return on equity and a 50% equity capitalization structure on $2,557 million of rate base. PNM had requested a $63.8 million increase to base rates. PNM's current authorized rates are based on a 9.575% return on equity with a 50% equity capitalization ratio.
"We are disappointed with this outcome after holding rates steady for the past six years," said Pat Vincent-Collawn, Chairman and CEO of PNM Resources. "The transition to clean energy means our system is changing rapidly, requiring investments to upgrade the grid to maintain reliability while bringing solutions to customers at affordable prices. As we move forward it will require collaboration by stakeholders to achieve the clean energy transition while preserving the financial health of the utility."
In addition to the changes made to the return on equity and equity capitalization structure, the final order also includes adjustments related to traditional legacy power sources:
Disallowance of $64 million net rate base investments in the Four Corners coal plant,
No return on $39 million of rate base associated with the Palo Verde leasehold improvements regulatory asset, as well as a
Separate rate rider to refund $38 million associated with expiration of Palo Verde leases over two years.
The order also postpones recovery of $55 million of rate base investments that may be requested again in PNM's next filing and $9 million of adjustments to forecasted annual costs.
PNM will evaluate the final order and consider its next steps, including the potential appeal of certain issues. Additionally, PNM plans to file its next rate case during 2024 with rates requested to be implemented during 2025.
