PNM Resources announces Hearing Examiners decisions in rate review filing

The Hearing Examiners of the New Mexico Public Regulation Commission, or NMPRC, issued recommended decisions in the Public Service Company of New Mexico, a wholly-owned subsidiary of PNM Resources, application for a 2024 change in customer base rates and its application for 12 megawatts of distribution battery storage. The recommended decision equates to a revenue increase of $6.1M, based on a 9.26% return on equity and a 50% equity capitalization structure of $2.56B of rate base. PNM’s $63.8M request included a 10.25% return on equity and 52% equity capitalization ratio of its $2.71B rate base. The current authorized rates are based on a 9.575% return on equity with a 50% equity capitalization ratio. Adjustments related to traditional legacy power sources in the recommended decision include: Disallowance of $64M of rate base investments in the Four Corners coal plant; No return on a $39M regulatory asset associated with Palo Verde leasehold improvements, as well as a separate recommendation to retroactively refund $38M associated with expiration of Palo Verde leases, and maintaining current useful lives of existing gas plants beyond 2040, versus PNM’s proposal to change these dates to 2040. The recommendation also postpones recovery of $55M of delayed rate base investments that may be requested again in future filings and $11M of adjustments to forecasted annual costs. Parties to the case have an opportunity to file exceptions to the recommended decision, along with responses to other parties’ exceptions, before NMPRC consideration of a final order. The statutory period for a decision in the case ends January 4, 2024. The recommended decision in this case calls for approval of PNM’s proposal to add 12 megawatts of distribution-level battery storage to expand the capacity of overloaded feeders at two locations. This innovative solution supports reliability and resilience of the grid and accommodates more renewable energy in these areas. The proposal was unopposed by intervening parties. The project reflects $33M of capital expenditures included in PNM’s investment plans and is expected to be operational in 2024. PNM has indicated this type of solution could be implemented more broadly across its system and expects to file additional proposals. Parties to the case have an opportunity to file exceptions to the recommended decision before NMPRC consideration of a final order. PNM requested approval of its proposal by the end of the 2023.