by Jason Marks
As a PRC Commissioner for the past five years, I take PNM's proposed rate increase very seriously. Marita Noon's recent commentary on it, not so much. As a cheerleader for the fossil fuel industry, Noon would clearly like to believe that renewable energy policies (and their proponents such as me) are to blame for large PNM rate increases, but the actual facts say otherwise.
To begin, the 25% increase in PNM's rates thus far since 2007 was not driven by the state's renewable energy requirements. It was the result of adding more conventional (natural gas) generating plants to the ratebase; converting a lease for a portion of Palo Verde nuclear generation station's output to an ownership interest (short term cost; long term savings); increased coal, natural gas, and nuclear fuel costs; and other increases to supply costs and operating expenses. These rate increases were approved in three separate PRC cases. I voted for the 6% increase to base rates that we granted in May 2008, against the imposition of a fuel clause in June 2008 (9% effective increase), and against the 10% rate increase the PRC approved in May 2009. I have written in some detail about these cases on jasonmarks.com
Renewable energy could not -- and did not -- have any material impact in these cases because, through May of 2009, the only substantial renewable resource on PNM's system was their 200 MW wind farm near Fort Sumner, and the price for that power was only $0.0275/kwh. This price is only slightly more than PNM's average supply cost, and is actually lower than the market price of for new wholesale power from conventional sources.
Now, PNM is requesting another 22% hike, and again, it is not related to renewable energy. About half of the rate increase request relates to increased rate recovery for capital investment items. PNM is asking for an increase in its rate of return on equity capital and also to be able to charge customers for $329 million in capital investments it has not yet made (but plans to make). This $329 million does not include any renewable energy projects. Other significant factors PNM mentions in their summary of the rate increase are increased costs for employee benefits and maintenance.
As mentioned by Noon, there is a case before that could potentially add relatively expensive solar resources to PNM's system. But, the rate case it filed in June for an average 22% increase does NOT include any of the costs of these potential solar programs and in fact has nothing to do with renewable energy standards. Don't believe me? Read PNM's own executive summary at http://www.pnm.com/regulatory/pdf_electricity/10-00086-ut_exec_summary.pdf (By the way, I have been scrutinizing the solar case carefully, and will not be supporting components that can't demonstrate that they are a reasonable "deal.")
PNM ratepayers deserve better than the partisan hogwash that Marita Noon delivered up regarding the proposed rate increase. When so many families and businesses are struggling financially and will find it hard to absorb a large electric rate increase, they need to know what the real issues are, and the PRC needs to be looking at these real issues in order to determine a fair outcome.
PNM ratepayers are also entitled to a fair and informed discussion of the costs and benefits of greater use of renewable energy. The fact is, PRC rules that I drafted, sponsored, and passed do require utilities to do more solar projects, but they also cap the bill impacts for renewable energy activities at 2% - 3%. I think the benefits of investing in alternative energy supplies are easily worth cost impacts in this range. Think about it: 3% on our electric bills to invest in our future versus 40% -50% to just support business as usual. I've written more about renewables, climate change, and the risks of fossil fuel dependency at jasonmarks.com.
----- Editors Note-----
Yesterday we received the above rebuttal from Commissioner Marks. As you know, we believe in airing all sides to every issue and allowing readers to voice their own opinions. As such, we'll let Ms. Noon and Commissioner Marks air their opinions in their own words.
Understand that we haven't done any serious research on these specific cases, but have never seen government mandates that don't add to the cost of business - usually far more than the government projects (healthcare for example).
PNM is a regulated utility, a state protected monopoly. As such, market forces have very little effect while political forces mean everything. In this political environment and under this administration, PNM would not benefit from making an issue of the cost of "alternative energy" mandates. However, don't believe for a moment that these government mandates aren't reflected in the rates that you pay.
7 comments:
Yes, government mandates ARE reflected in the rates we pay. But does anyone think for one nanosecond that, unregulated, PNM's rates would actually be lower?
And how much higher is your electric bill because PNM pays someone to write propaganda for them? Or buy billboards taking about what a wonderful company they are for using wind power? The state doesn't mandate that.
A better argument would be that subsidizing the cost of renewable energy (i.e., solar panels) for those wealthy enough to afford them, by charging more to those who can't afford them, is regressive. Which is why tax rebates should apply only to those whose assets and incomes fall below a reasonable multiple of the household average. And/or that the value of the electricity sold back to PNM should be taxable.
People who like the idea of one person owning a resource (or its means of distribution) so another has to pay them to use it are happy with the utility model... they'd buy up all the sunlight and resell it to us if they could. Which I suppose makes me a socialist for arguing that it should remain free?
I did read over Mr. Marks website although much data seems outdated, especially in reference to carbon, climate change with no reference to the many recent debates over whether man-made climate change is anything more than a cash cow. Not to forget the recent PRC shenanigans have left the informed public mistrustful and wary.
I do appreciate his counterpoint though because there are always 2 sides to the story.
Bottom line is PNM wants a rate increase at the worst possibly time, which shows they apparently feel no obligation, or even consideration to a hurting economy, those taking paycuts or unemployment, and huge upcoming tax increases for everyone.
My thanks to the EYE and Mr Marks for providing a counter argument. It's always nice to hear from each side.
PNM wants the taxpayer to pay the costs of their market losses.
Think your rates are high now, wait until the bogus Global warming carbon regulation pops its fraudulent head out of the ground.
Some science for renewable energy.
http://en.wikipedia.org/wiki/Electric_power_transmission
LOL maybe Hamsters on wheels or a plug in to all the citys treadmills and bicycles is the answer? (Not).
If you read my comment, I do not deny that there is (or will be) a cost for renewable energy mandates. My point was that these mandates are not responsible for the proposed current 22% rate increase in front of the PRC.
I welcome an informed debate on the costs and risks of addressing/not addressing climate change. There's nothing wrong with questioning the science behind the AGW consensus in an intelligent way (at least the east cost heat wave has put a temporary stop to the "how can it be global warming when it's snowing outside?" level of debate).
What is wrong is politicizing the issue to block all action in the face of catastrophic risks. I.e., if me and all those "crazy socialistic scientists" are wrong, the worst we will have done is spent a modest amount more on energy (about 50% ultimately), while also commercializing new technologies that create more jobs than the old energy sector and make us less dependent on fossil fuels and foreign dictators. On the other hand, if the climate skeptics get their way and block all action now, but turn out to be dead wrong on the climate science, we will have imposed catastrophic costs in terms of our economy and our way of life. The climate models predict devastation to our agriculture, flooding of coastal cities and massive migration leading to economic disruption and civil conflicts.
A rational person wouldn't take such risks simply to prove a political point or save a modest amount of money in the short-term. A rational person who was skeptical of climate science *would* support carbon regulation like Waxman-Markey or the Kerry Bill that posed modest cost impacts over the next 10 years, with the understanding that we could adjust course in the future as scientific understanding increased.
there give in there so much corruption in this state thats why the biggest employer is the Federal Government and Walmart. They should say no and tell them to cut there pays. Like there CEO pay I just got my electric bill from PNM 545.00 dollars this is rediculous. We need Federal intervention and investigtion were being monopolized by crooks. Get us some othere electrical company providers. We have a large I40 corridor with wind there all the time, put the windmills in the corridor and we can say good bye to PNM. When they cut there pays then they can talk they need more money but giving there last CEO a big bonus. I hope the state says no, but they won't because they are like the company crooks. We need to ask for Federal Governemtn intervention because our crooked moron state officials will not do there jobs.
Actually, Derek Bill, I do think rates would be lower if we ended PNM's monopoly and allowed a free market in energy.
These mandates are energy-price increasers and job-killers. They also reflect that the majority of politicians are too stupid to make it in the private sector.
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