The Public Regulation Commission approved a new renewable energy rate rider Tuesday to allow Public Service Company of New Mexico to begin recovering its investments in solar, wind and other clean energy sources.
Customer bills, for the first time, also will carry a line item showing the cost of renewables along with an explanation that they reduce the amount the utility spends on fossil fuels.
The green energy charge could begin appearing on bills as soon as this month, depending on when the commission publishes its final order, said PNM spokeswoman Susan Sponar.
She said preliminary estimates indicate the average customer, who consumes about 600 kilowatt hours of electricity a month, could end up paying about $1.34 each month.
The charge would be adjusted in coming years as PNM investments in renewable energy increase or decline.
PNM needs to recover about $18.29 million in renewable investments in 2012, said Carolyn Glick, the hearing examiner in PNM’s case, who recommended in June that the PRC approve the rate rider.
That includes costs for building five solar facilities last year around the state that together produce enough power for about 7,000 average New Mexico homes. It also includes investments in a pilot solar facility with battery storage, and subsidies paid to customers to install their own solar systems.
Since the rate rider will only cover the last four to five months of 2012, most of this year’s investment recovery will be carried forward to 2013, Glick said. That will push PNM’s total cost recovery for next year to about $23 million.
Consequently, the rate rider will increase next year but Glick said it isn’t clear by how much.
The PRC has not yet reviewed the utility’s 2013 renewable energy procurement plan, which proposes more investments in the next two years to comply with the state’s renewable portfolio standard. That obligates public utilities to derive at least 10 percent of their electricity from renewable sources this year, 15 percent in 2015 and 20 percent in 2020.
The commission also approved a new line on bills that tells customers the rate rider reflects renewable investments. That’s something environmentalists objected to, arguing that it singles out renewable energy without showing customers what they pay for fossil fuels, or how renewable procurements help reduce other fuel purchases.
Steve Michel, chief counsel for Western Resource Advocates, said his organization is still concerned that the line item reflects “selective transparency.” In addition, he said rate rider opponents could still appeal the PRC ruling, because New Mexico law requires public hearings to raise utility rates.
“We’ll look at the final order when it comes out to evaluate it,” he said.
Without the rate increase, PNM would have had to wait for its next rate case to recover investments. By allowing timely recovery of costs, the company said it could save about $2.7 million from avoided interest charges on borrowed money.
Commissioner Doug Howe said the savings, which ultimately benefit customers, was key to PRC approval. The commission voted 4-0 in favor. Commissioner Jason Marks was absent.
“With the rider, PNM can start to repay money more quickly and pay less interest charges over time,” Howe said. “It’s a pay-as-you-go approach, rather than defer payments down the road. That’s what our decision was all about.”
