New Mexico: Raising Rates for Bad Energy in a Poor State
New Mexico has enjoyed some of the lowest energy prices in the country—which is good as it is a poor state. However, the major supplier of electricity to the state, PNM, has just asked for a 21.2% rate increase on top of the 24% they’ve received over the last few years. Welcome to the new world of government-forced renewable energy–and one reason why Senator Harry Reid (D-Nev.) recently said he didn’t have the votes for a federal renewable portfolio standard (RPS).
The anticipated rate shock gets worse for New Mexicans: a nearly 50% rate hike in five years. While PNM claims New Mexico still has some of the lowest rates in the country, the citizens are not taking the preventable increase lying down. David King, chairman of the New Mexico Public Regulation Commission (PRC), for example, calls the rate increase a “hot potato” saying that he’s received “a flood of calls from ratepayers.”
During the month of July, PNM has been holding Public Forums through out their service area regarding their Integrated Resource Plan (IRP). The flyer promoting the event invited the “public” to join in on the discussion on topics such as “To what degree are consumers willing to pay more for a different combination of power sources?” The news about the proposed rate increase came out at the same time as the forums were scheduled. While PNM had a set program they’d planned to deliver, the attendees had little interest in the PNM’s dog-and-pony show.
I attended the forum in Santa Fe—the second they held in the state. The anger in the room was palpable. The woman leading the meeting for PNM admirably accepted being pelted with questions about the rate increase.
One questioner asked, “To what is this rate increase going?”
“Environmental improvements,” was the answer.
The questioner asked about the $330 million PNM spent as a result of a lawsuit filed against them by the Sierra Club. There was acknowledgment that this was accurate. The questioner continued, “I understand that PNM did not fight the lawsuit?” Again, affirmed. “He commented, “You could have hired the best lawyers in the country for $330 million.”
So, the Sierra Club is one contributor to the increase. The current rate increases do not include much of the additional costs for renewables–but they are coming. The Santa Fe Reporter asked about the rate increase, “Does that mean there could be another rate increase in the future to pay for the costs of complying with renewable energy requirements?” The PNM representative, replied, “The answer is ‘yes.’”
Finally, a marketing executive from PNM had to come and quiet the crowd. He told us that they need to “get through the program.” Clearly the program was more important than customer feedback.
Once the PowerPoint presentation was over, another PNM representative attempted to guide us through an “exercise.” There were audible moans at the implication that we were now going to play a “game.”
We had to choose whether we’d prefer option #1, “Maintain reliable energy access and keep the lights on,” or option #2, “Minimize customer rates for energy.” The distributed solar group was angry that their choice was not even presented on the five point/30 minute exercise. Those who were there to express their frustration over the rate increase didn’t like the exercise—which some called “insulting.” One woman stood up in disgust and exclaimed, “this is ridiculous.” With that she stomped out.
The meeting went downhill from there and the exercise was abandoned. The man who earlier attempted to calm the crowd, called me out specifically, “Marita, this is the wrong place for you and your group. You need to be at the PRC [New Mexico Public Regulation Commision] Hearing.”
I assured him we’d be there too (it is scheduled for December when anger over the rate request will presumably have died down). People dribbled out of the meeting room while the facilitator let people vent their frustrations–but the damage had been done. Instead of building coalitions or making allies, PNM antagonized most of the “public” who had attended the forum.
I received similar reports from CARE (Citizens’ Alliance for Responsible Energy) friends from both the Albuquerque and Los Lunas forums—though after the raucous time in Santa Fe, they did seem to stick to the agenda more tightly.
Time to Undo New Mexico’s RPS?
PNM was the focus of the public’s wrath. But the fault goes to New Mexico’s Public Regulation Commission and other elected representatives who voted for renewable portfolio standards and other measures that increase energy costs.
In 2009 and the New Mexico State Legislature unanimously passed a bill that upped the percentage of electricity generated by renewables by 2011 from the current mandate of 6% to 10%, then to 15% by 2015, and 20% by 2020—and renewables cost more.
On my current PNM bill I am paying between $0.07 and $0.10 a kwh. Yet, if I have solar panels on my roof and produce more solar than I can use, PNM will pay me $.13–.15. So if PNM is paying more for solar power than they are charging me for electricity—they are in trouble. (For the worse-than-bad economics of solar, see David Bergeron’s MasterResource post on Arizona’s solar program.)
The PRC is also considering a plan from PNM that would add 80 megawatts of solar to their system to help them meet state-mandated renewable energy standards—for which PNM says they will “defer the costs associated with the renewable resources as regulatory assets on its balance sheet.” So, according to PNM that rate hike will an additional increase!
New Mexico’s Bad Energy Actors
What’s the national lesson—especially for our lawmakers? Renewable energy mandates mean higher costs and rates without any meaningful environmental improvement. And as the truth gets out, ratepayers do not like it. It is as if they have been mislead and lied to by those in authority.
Elected officials, such as New Mexico’s Ben Ray Lujan and Maritn Hienrich clearly haven’t gotten the word about their constituents attitudes and anger. They each just voted for the CLEAR Act (HR 3534) in the House Natural Resources Committee, which will raise energy costs and increase reliance on foreign energy sources.
On the Senate side, Senator Bingaman has been quietly working behind the scenes to make energy still more expensive. He has a bill that has already passed the Natural Resources Committee markup that would increase renewable electricity and is now writing a power-plant-only carbon cap bill. His legislation aims to limit emissions from the electric power sector.
Wake up and learn a lesson from New Mexico. We are not happy with a 50% increase in energy costs and you won’t be either! Do not let our congressmen and senators raise your energy bills!
There is never a good time to intentionally raise the cost of energy—a resource central to all economic activity—but now, with an economy in critical condition, is the worst possible time. And for what purpose? To reduce global temperatures in 2100 by an amount too small to measure? Renewable energy is not green. Even if the climate needed to be “saved” (a questionable point), it cannot be saved with unreliable power sources that may well require more energy to construct than they will ever produce.
Let’s go ahead and say it: Any Senator, any Congressman, any state legislator, who votes to raise energy costs doesn’t deserve our vote.
Marita Noon is the Executive Director at CARE (Citizens’ Alliance for Responsible Energy), the New Mexico nonprofit organization advocating for citizens’ right to energy that is abundant, available, and affordable. CARE works on energy issues state, region, and nation wide. Find out more at www.responsiblenergy.org.