Regulators Approve $8.6 Million Increase for PNM Gas Utility Delivery Fees
State regulators late Friday unanimously approved an increase in revenues of $8.6 million for PNM Resources’ (NYSE: PNM) natural gas utility, PNM.
The New Mexico Public Regulation Commission based the new fees on a revenue requirement of $148.8 million, which includes an authorized return on equity of 9.53 percent. The new delivery fees are effective July 6.
The commission ordered the fixed monthly customer charge for residential customers to increase from $9.00 to $9.54, comprising approximately $2.9 million of the approved revenue increase. Overall, PNM delivery fees, which do not include the cost of natural gas, will increase 6.0 percent for residential customers and 6.6 percent for most business customers.
PNM had proposed an ROE of 11.0 percent and a revenue requirement of $163.0 million, said Bill Real, PNM Resources senior vice president of Public Policy.
“We are disappointed in several elements of the order,” Real said. "While PNM has done a tremendous job of controlling costs where it can, the utility is facing significant cost increases in the fundamental building blocks of its system.
“We believe our original proposal addressed these costs drivers while minimizing the impact to residential and business customers,” he said. “Specifically, we believe the approved ROE is too low and not reflective of a fair return for our shareholders. We will analyze the commission’s order and its reasoning to determine if an appeal to the state Supreme Court is in order.”
PNM’s proposal to implement a decoupled rate design, which promotes energy efficiency and stabilizes revenue, was not included in the final commission order. However, the commission has expressed a desire to look at the issue of declining natural gas consumption per customer and how this affects the utility, Real said.
Since 1997, natural gas use per customer has declined 26 percent. Because a large portion of PNM customer fees are levied on a per-therm basis, declining usage has affected the company’s ability to adequately recover the costs of running and maintaining its natural gas system.
The commission’s order recognized the need to design rates based on a 10-year weather history, Real said. “On average winters have been warmer in recent years,” he said. “Looking at more current history data will help ensure the costs of maintaining and operating our system are based on better customer-use projections,” he said.
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