Public Service Company of New Mexico linemen transfer wiring to a new pole along Alameda Street in February. The company is seeking a two-year rate increase that would begin in 2025.
Public Service Company of New Mexico linemen transfer wiring to a new pole along Alameda Street in February. The company is seeking a two-year rate increase that would begin in 2025.
Public Service Company of New Mexico executives say the company's most recent request for a rate increase — a proposal that would raise the average household bill by more than $23 over a two-year period — is based on its efforts to decarbonize the energy it provides to big chunks of the state.
That means the increased revenue will flow to a variety of places — from a new solar and battery storage park in Valencia County to the company's efforts to exit from a coal plant in the Four Corners to upgraded transmission lines throughout Northern New Mexico.
PNM officials do not deny satisfying investors is a factor as well, but they note infrastructure investments will be critical for the future of both the company and its customers. It's the largest rate increase request in the company's history.
Most of the $174 million in additional revenue would fund upgrading and replacing energy transmission and distribution equipment and adding battery storage capacity.Â
Battery storage projects currently use large amounts of lithium-ion batteries to store electricity for up to four hours. Such systems are necessary to replace coal-fired and natural gas plants with resources like solar and wind, which cannot produce electricity around the clock, PNM spokesman Ray Sandoval said.
"If we are going to get to a carbon-free grid, batteries are going to have to be a major player in that," he said, adding the utility is now "somewhere in the middle" of a process of procuring storage capacity and planning for future systems that can hold electricity for much longer than four hours.
In PNM's 20-year plan for energy resources that was approved by state regulators earlier this year, the utility mapped out its aspirations for battery storage: 940 megawatts installed by 2027 and more than double that number by 2042.Â
PNM has 13 battery storage projects expected to come online by 2026, and three of them will be owned by the utility.
The largest capacity project, Atrisco Solar and Storage, involves 300 megawatts of solar power generation and 300 megawatts of battery storage on the west side of Albuquerque. The site is expected to begin operating both solar generation and battery storage in September, according to testimony from executives filed in the rate case. Â
Battery storage projects have sometimes been met by opposition from residents, including the Rancho Viejo solar and storage project proposed by global energy giant AES Corp. for a site south of Santa Fe, with plans to connect to PNM's grid. Surrounding residents have fought the development in Santa Fe County's permitting process, citing safety concerns over possible fires or explosions from battery storage systems and expressing a need for more stringent land use regulations for such efforts.Â
While AES announced in 2022 that it planned to break ground on Rancho Viejo in 2023 and to bring it online in 2025, the start date was later moved to 2027 as the county permitting case dragged on. An online timeline provided for the project by AES was no longer available Friday.
A February report from the U.S. Energy Information Administration said battery storage was set to make up 23% of the country's new electric-generating projects in 2024, second to solar, which was planned to make up 58%. The federal agency forecast battery storage capacity would nearly double throughout the U.S. over the course of the year, if all went according to plan.
The utility's pending request to the state Public Regulation Commission, filed earlier this month, involves a total rate increase of about 27% split into two phases taking effect in July 2025 and January 2026.
The current average residential electricity bill totals $88.32. PNM's requested rate hike would raise the average household bill by $11.12 in the first phase and by $12.48 in the second.Â
The $23.60 average total increase to bills would also allow a higher rate of return on equity the company has requested, which would guarantee a higher rate of profit for PNM shareholders. The company has requested a rate of return of 10.45%, an increase from the current rate of 9.26%, according to the rate case application. That represents about $20 million, or 11.5%, of the total rate increase, Sandoval said.
He added the increase would allow the company to attract more investors and capital for projects, saying "that increase is what's needed to make sure we can continue to achieve investors to invest money in the system."Â
In its most recent rate case, the company requested an increase to 10.25% from the former rate of 9.575%, but commissioners in their January ruling cut the utility's rate of return instead. Â
In that case, commissioners approved a small rate increase that, in effect, resulted in lower average electricity bills. The ruling disallowed the utility from recovering about $85 million related to past "imprudent" investments in the coal-fired Four Corners Power Plant and clawed back about $38 million more for PNM's power leases at the Arizona-based Palo Verde nuclear plant.Â
The 2025 rate case seeks to "accelerate" the retirement of the company's share of Four Corners plant to 2031 from the current planned retirement date of 2042, at a cost of $20 million, or 11.5% of the rate increase.
The outcome of the previous rate case — handed down by the commission in January — has been implemented but remains unsettled. Several parties have appealed the ruling, including disputes over hundreds of millions of dollars in Four Corners costs.Â
Many critics of the company — environmental and consumer advocates, companies and trade groups — have filed as parties in the new rate case.Â
PNM has requested a decision from regulators on the new case by June 1, 2025.Â
