ALBUQUERQUE, N.M. (AP) — New Mexico’s largest electric provider is asking state regulators to consider a proposal that would allow it to recover fixed service costs independent of how much electricity is actually consumed by customers.
Public Service Co. of New Mexico is pursing what is known as decoupling, pointing to uncertainty amid the coronavirus pandemic. The utility recently filed its request with the Public Regulation Commission after announcing its intensions to shareholders in May.
“Decoupling is designed to collect fixed costs – no more, no less,” PNM Director of Pricing Stella Chan told the Albuquerque Journal. “If we over collect, we’ll credit that back to customers, and if we under-collect, we’ll charge customers the difference to recover the costs we incurred.”
If approved, the utility next year will begin tallying how much customers paid for electricity throughout 2021 and then compare that with the annual revenue that regulators allow it to collect to cover its costs.
If the amount collected from customers is less, the company would apply a rate rider on customers’ bills starting in 2022 to make up the difference. If customers over pay during 2021, the utility would credit the difference to ratepayers.
Decoupling would address the deficit the utility has incurred as customers reduce their use through energy efficiency programs and rooftop solar installations.
Since PNM’s last rate case in 2015, the utility said overall residential consumption has fallen about 5%, representing a revenue loss of about $3 per month for every residential customer. Yet fixed costs have remained the same.
State lawmakers last year authorized the Public Regulation Commission to approve decoupling as part of a new law requiring utilities to spend more on energy efficiency programs.
Larry Behrens with Power the Future, an advocacy group that supports New Mexico’s traditional energy industry, said he had concerns about the utility using the decoupling mechanism as a way to to force customers to pay more as it brings on more renewable energy infrastructure to meet the state’s emissions mandates.
“It also appears PNM’s proposal doesn’t protect low-income New Mexicans who could see higher electric bills even if they use less electricity,” he said.
The utility proposes to limit recovery for under-payments to a maximum of 3% of its annual revenue requirements in any given year, Chan said. The remaining under-collected balance would instead be carried forward for collection in the following year.
If customers overpay, PNM would immediately pay back the full amount.
The dynamics of demand have changed in light of the public health orders that encouraged people to stay at home and forced the closure of many businesses and curtailed commercial operations, according to an update PNM shared with investors in May.
The utility contends the coronavirus pandemic makes decoupling more urgent since electric consumption by small businesses has plummeted. While residential use has increased by about 5%, the utility says commercial demand is expected to decrease by about 15% depending on the pace of economic recovery.