New Mexico Electricity Prices Soar Due to Renewable Power Mandates

Published August 3, 2010

New Mexicans are rallying to fight a 21.2 percent rate increase proposed by PNM, the largest electrical system in the state. It would be the third major increase in recent years. Previous increases raised rates for some customers by as much as 24 percent.

New Mexico electricity consumers in 2011 will have to pay almost double what they did in 2007 for electricity. David King, chairman of the New Mexico Public Regulation Commission (PRC) calls the rate increase a “hot potato,” saying he’s received “a flood of calls from ratepayers.”

PNM’s rate increases are at least in part the result of renewable power mandates advocated by environmental activist groups and approved by state officials. In 2009 the New Mexico State Legislature unanimously passed a bill increasing the percentage of electricity required to be generated by renewable sources.

Previously the state’s electricity consumers faced a mandate to purchase 6 percent of their power from renewable sources by 2011 and 10 percent by 2015. The 2009 law raised the renewable power mandate to 10 percent by 2011 and 15 percent by 2015. 

Expensive Solar Power
PNM currently charges residential consumers 7 to 10 cents per kilowatt hour for electricity, but it purchases solar power produced by residential consumers for 13 to 15 cents per kilowatt hour. Caught in the middle are consumers, who must ultimately bear the costs of PNM paying higher-than-market rates to purchase residential solar power.

The New Mexico Public Regulation Commission is also considering a plan from PNM that would add 80 megawatts of solar power to their system to help the company meet state-mandated renewable energy standards. PNM says it will “defer the costs associated with the renewable resources as regulatory assets on its balance sheet.” Those costs will ultimately be passed on to consumers, further raising electricity costs.

Marita Noon ([email protected]) is executive director of CARE (Citizens’ Alliance for Responsible Energy), a New Mexico nonprofit organization advocating for affordable energy.