PNM to fine ratepayers with solar panels; Solar fines subsidize purchase of coal mine

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New Mexico’s monopoly public power company  — PNM — has announced plans to fine residential solar power producers. It’s a move that would increase PNM’s profits ahead of another move to purchase one of the country’s largest coal mines, doubling down on PNM’s investment in dirty coal technology for decades to come.

New Mexico’s monopoly public power company wants to buy a coal mine – and they just announced a new plan to fine residential solar producers to pay for it.

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Public Service Company of New Mexico (PNM) has reported more than $424 Million in income over the past four years and are expected to add another $20 million or more in this quarter alone. Apparently that windfall’s not enough, however, as PNM just announced an aggressive plan to raise rates and add new fines and fees to customers.

PNM has raised rates on customers by 41% since 2008. If approved, PNM’s proposed new 14% rate hike would mean New Mexico customers would pay at least 50% more to turn on the lights, run the swamp cooler, or charge their phone than they were paying before the economy took a nosedive and personal earnings dropped almost 5%.

While customers are paying an average of $250 more per year for the same power, PNM’s profits are exploding.  A letter to PNM investors recently reported that PNM’s return grew at more than twice the stock market average, which has been really good all by itself.

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Even though New Mexico is in one of the most sunny (and therefore most opportune for solar power) states, PNM is doubling down on dirty coal.

From Solar Incentives to Solar Fines

For years, homeowners have been encouraged to install rooftop or backyard solar panels to decrease their reliance on utility-generated power that is heavily reliant on pollution-heavy fossil fuels.

Once installed, home systems can be linked to the public grid and send excess solar energy into the power lines running through neighborhoods across the state. In most cases, PNM buys this energy from the homeowner at a reduced rate (currently 3-cents) then sells it to the neighbor next door at the consumer rate (about 9-cents) and profits from the difference without having to do much of anything. That arrangement helped PNM generate profits without work and helped PNM decrease its reliance on fossil fuel-generated power. And according to PNM, “because you are adding renewable-fueled power to the PNM system, we pay you for helping us meet our environmental goals.”
While PNM starts to pocket its profit right away, the average New Mexico customer doesn’t see a return on their investment (in terms of paying less per month) for 5-10 years, depending on the cost. PNM is already in process to reduce that payment to home solar producers.

Now PNM wants to fine solar producers for helping them meet renewable energy goals and going all “green” on their own. From the Albuquerque Journal:

To help pay for those costs, PNM wants the Public Regulation Commission to approve a $6 per kilowatt monthly charge on customers with PV [photovoltaic] systems.

The proposal, included as part of PNM’s new rate case it filed on Thursday, would lead to a $21 per month charge for most residential customers with PV, who typically install solar systems with 3.5 kilowatts of capacity.

PNM isn’t the first to try such a scheme. Arizona regulators approved a similar plan last month allowing Arizona Public Service to charge customers a connection fee.

MSNBC’s Rachael Maddow recently explained how public utility companies in several conservative-led states, including Arizona, were pushing for new fees and fines to discourage home solar use.

Arizona customers see an estimated $10-$20 reduction on their home power bills with an average system. But the public utility sought to fine home solar producers about $50 per month for the privilege of making energy from the Sun. Regulators approved a much smaller fee, of about $3-6 per system, but even that fine greatly undercuts the financial investment to unplug from the coal plan.

Here in New Mexico, PNM is now asking for the same privilege.  But what could they do with all that new “green energy” money?  How about buy a dirty coal mine!

Doubling Down on Diminishing Demand 

Coal power is going out of style, but not for PNM. When BHP Billiton, the world’s largest mining corporation, announced plans to get out of the New Mexico coal business because of diminishing demand and shrinking profits, PNM jumped on the chance to buy the mine that generates 12.65 million tons of dirty coal per year (2012).

Though negotiations are secret, PNM has made no secret about its intent to sign a deal with partner Tucson Electric Power by the end of 2014 (that’s in just a few days). With that deadline looming, PNM is now asking the state’s Public Regulation Commission for more money from customers, especially those who chose to go green on their own.

And it’s not that the coal mining and burning business is a growth industry.  The National Energy Information Administration reports that “power sector coal consumption is projected to fall by 0.4% in 2015, as retirements of coal power plants rise in response to the implementation of the Mercury and Air Toxics Standards, and electricity and natural gas prices fall relative to coal prices.”

An industry publication recently had this take on the outlook of San Juan mine: “In the US, BHP Billiton’s sole remaining asset is the ailing San Juan mine, which supplies the nearby San Juan Generating Station. With only five years reserves left and its power station supply contract expiring at the same time, the mine is hardly a big selling point for investors. (At the end of last year BHP Billiton offloaded its Navajo mine – which has only three years life left – to the Navajo Nation, a deal opposed by some within the tribe.)”

New Mexico’s Public Regulation Commission will hold hearings on the issue in 2015.

Send our elected PRC members a message: tell them to vote NO on PNM’s new rate and fine plan.