2016 Rate Review and Bill Impact Information - pnmprod
2016 Rate Review and Bill Impact Information
Key Facts About the PNM Rate Review
On Jan. 17, 2018, the New Mexico Public Regulation Commission (PRC) voted to approve a request by PNM to raise customer rates. This increase will be phased in over a two year period. Beginning Feb. 1, 2018, residential customers will see an average increase of 0.7 percent or approximately $0.46 per month on their electric bills. Beginning on Jan. 1, 2019, an additional 0.6 percent or approximately $0.42 per month increase will go into effect. This rate increase will allow PNM to cover costs associated with the closure of two of four units at the coal-fired San Juan Generating Station, improvements to the electric grid, and other infrastructure maintenance and upgrades.
Bill Impact
Customers may notice additional lines on their first bill after the rates have gone into effect. As part of the rate increase approved by the PRC, PNM must now charge customers using the rates effective on the day the electricity is used, rather than charging customers using the rates that were in effect on the date their meter was read. This is not a double billing. Click here for an example of how page 2 of the bill will look with additional lines (highlighted). 
Frequently Asked Questions
Q: When will it go into effect?
A: The increase will be phased in over two years. Phase one will begin on February 1, 2018. Phase two will begin on January 1, 2019. This was done to minimize the impact of the increase on customers¿ bills.
Q: How much will my bill go up? (Residential)
A: When phase one begins on Feb. 1, 2018, the average residential customer can expect to see an increase of about $0.46 per month. When phase two begins on Jan. 1, 2019, the estimated increase for the average customer will be an additional $0.42 per month. The total increase, spread out over two years, will be approximately 1.3 percent or about $0.88 per month.
Q: How much will my bill go up? (Commercial)
A: Each rate class's average increase can be found in the table below the FAQ. As with residential customers, the increase will be carried out in two phases. The first phase will begin on Feb. 1, 2018. The second phase will begin on Jan. 1, 2019.
Q: Why does my bill look different this month?
A: As part of the 2016 Rate Review, PNM was ordered by the commission to bill customers in a new way that may result in additional lines on your bill. In the past, PNM billed customers using the rates effective on the meter read date. Moving forward, PNM must bill customers using the rates effective on the day the electricity is used. Your bill will have lines that show charges under the old rates for electricity used before February 1, 2018 and will have additional lines that show charges under the new rates for electricity used after February 1, 2018. For example, if your bill covers usage in January and February when the new rates go into effect, your usage in January will be billed under the old rates and the February usage will be billed under the new rates.
Q: Didn¿t you just get a rate increase recently? Why did you get another rate increase?
A: This rate increase will recover new costs that were not included in our last rate increase effective on October 1, 2016. This latest increase will allow PNM to do two things: (1) Maintain and improve our electric grid, and (2) recover the costs of closing two of the four coal-fired units at the San Juan Generating Station. The costs associated with the San Juan Generating Station were part of an operating plan approved by the commission and were agreed to by multiple stakeholders in our community.
Q: Didn¿t you initially ask for close to $100 million? Since you accepted the PRC¿s decision does that mean you didn¿t really need $100 million?
A: In our original filing, PNM did request an increase of approximately $100 million. However, PNM worked with stakeholders to develop a settlement agreement that reduced the requested increase to $62.3 million in annual revenue. As part of the settlement, PNM had to agree to absorb certain costs. The PRC made additional reductions and voted to approve an annual revenue increase of $57.9 million. The recently passed federal tax reform bill reduced our tax costs by $47.6 million, allowing us to pass our tax savings on to our customers. As a result, the final amount approved by the commission was a much smaller increase of $10.3 million. The original request of about $100 million was an accurate amount of the increase PNM needed to recover their operating costs at the time the request was made. The difference between the $100 million requested and the $10.3 million approved, is a result of both updated costs as well as the dedication of so many parties to reaching an end result that is balanced and fair.
Q: Why is the federal tax reform bill affecting your rate increase?
A: The newly passed federal tax reform bill lowers corporate tax rates. With Commission¿s approval PNM will pass through the reduced tax benefits of $46.7 million to our customers starting February 1, 2018.
Q: Is PNM going to ask for another rate increase this year, since it only got a 1.3% increase this time around?
A: As part of the settlement approved by the Commission, PNM will not implement another general rate increase until at least January 1, 2020.
Q: The news said you reached a settlement with organizations and government agencies. Who are they?
A: The settlement we filed with the Commission had broad support from environmental groups, government agencies and business organizations. They included: NM Attorney General; Albuquerque Bernalillo County Water Utility Authority; the Utility Division Staff; Coalition for Clean Affordable Energy; Wal-Mart, Stores East, LP and Sam's East, Inc.; Kroger Co.; Sierra Club; Renewable Energy Industries Association; The New Mexico Industrial Energy Consumers; City of Albuquerque; County of Bernalillo; and Western Resource Advocates.
Q: What is the difference between Service Rendered and Bills Rendered?
A: In the past, PNM billed customers on a ¿Bills Rendered¿ basis which means PNM billed customers using the rates effective on the meter read date. Moving forward, PNM is required to bill customers on a ¿Service Rendered¿ basis. This means that PNM will bill customers using the rates effective on the day the electricity is used. For example, if your bill covers usage in January and February when the new rates go into effect, your usage in January will be billed under the old rates and the February usage will be billed under the new rates.
Q: How does the corporate tax reduction affect my bill?
A: The lower corporate tax rates result in lower costs for PNM. These lower costs are reflected in the new rates you will be paying starting February 1, 2018.
Q: Why are you ¿double billing¿ me?
A: You might see additional line items on your bill this month. As part of our recent rate review, PNM was ordered by the commission to bill customers in a new way. In the past, PNM billed customers using the rates effective on the meter read date. Moving forward, PNM must bill customers using the rates effective on the day the electricity is used. Your bill will have lines that show charges under the old rates for electricity used before February 1, 2018 and will have additional lines that show charges under the new rates for electricity used after February 1, 2018. For example, if your bill covers usage in January and February when the new rates go into effect, your usage in January will be billed under the old rates and the February usage will be billed under the new rates.
Q: Why did I get charged more on the second part of the bill?
A: Beginning February 1, 2018, the current electricity charges portion of your bill will look different. As part of the recent rate review, PNM was ordered by the commission to bill customers in a new way. In the past, PNM billed customers using the rates effective on the meter read date. Moving forward, PNM must bill customers using the rates effective on the day the electricity is used. PNM¿s recently-approved rate increase went into effect on February 1, 2018. Because of the new billing method, you will see charges under the old rates for electricity used before February 1, 2018 and will have additional lines that show charges under the new rates for electricity used after February 1, 2018.
Q: The news said I was supposed to be saving because of tax reform. Why is my bill higher than last year?
A: The recently passed federal tax reform bill reduced PNM¿s tax costs, allowing us to pass our tax savings of $47.6 million on to our customers. As a result, the final increase approved by the commission was a much smaller increase than the original request.
Q: Why does my customer charge change when it¿s supposed to be a fixed cost?
A: Customer charges recover the cost of providing services such as reading your meter, creating your bill and providing customer service. These costs can change over time. PNM is able to update the customer charge to reflect the change in these costs only after receiving commission approval during a rate review. You may have heard that PNM¿s rate increase request was recently approved. As a result you will see a slight increase of your customer charge starting February 1, 2018.
Q: How do I know what my bill is going to be like next month? Where can I find the latest rate updates and when?
A: The average residential customer can expect to see an increase of about 46 cents per month. You can find all of PNM¿s current rates at PNM.com/rates.
Q: What percentage increase did PNM implement overall?
A: The overall percentage increase that was approved by the commission was 1.3 percent. Customers will not experience the full 1.3 percent increase until January 1, 2019 because PNM will implement the rate increase in two phases. Beginning February 1, 2018, the average residential customer will see an increase of .7 percent. The second phase of the increase will go into effect on January 1, 2019 and will increase the average residential rate by an additional .6 percent.
Q: What is this extra money paying for?
A: This rate increase will recover new costs that were not included in our last rate increase effective on October 1, 2016. This latest increase will allow PNM to do two things: (1) Maintain and improve our electric grid, and (2) recover the cost of closing two of the four coal-fired units at the San Juan Generating Station. The costs associated with the San Juan Generating Station were part of an operating plan approved by the commission and were agreed to by multiple stakeholders in our community.
Q: Why do you keep increasing my bill? I remember when PNM went 30 years without an increase.
A: PNM asked for the increase to ensure that we are able to maintain and improve our electric grid as well as recover the cost of closing two of the four units at the San Juan Generating Station. The electric utility industry is evolving and PNM¿s plan for the San Juan Generating Station is part of PNM¿s evolution. As we move towards providing cleaner energy for our future generations, we recognize the need to balance reliability, affordability, and environmental responsibility.
