{"id":12980,"date":"2018-04-12T08:17:15","date_gmt":"2018-04-12T15:17:15","guid":{"rendered":"https:\/\/emrabc.ca\/?p=12980"},"modified":"2018-04-12T08:34:15","modified_gmt":"2018-04-12T15:34:15","slug":"new-mexico-rejects-pnm-smart-meter-proposal-it-does-not-promote-the-public-interest","status":"publish","type":"post","link":"https:\/\/emrabc.ca\/?p=12980","title":{"rendered":"New Mexico rejects PNM Smart Meter proposal \u2014 \u201cit does not promote the public interest\u201d"},"content":{"rendered":"

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Posted on\u00a0April 11, 2018<\/a>\u00a0by SmartMeterHarm.org<\/a><\/div>\n
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April 11, 2018<\/p>\n

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\u201cThe\u00a0 plan presented in the Application does not provide a net public benefit and it does not promote the public interest.\u201d
\n\u2014 New Mexico Public Regulation Commission,
\nApril 11, 2018<\/strong><\/h3>\n<\/blockquote>\n

Recommended Decision 3-19-18<\/a>
\nFinal Decision, 4-11-18<\/a><\/p>\n

Case No. 15-00312-UT<\/strong><\/p>\n

Today, the New Mexico Public Regulation Commission denied Public Service Company of New Mexico\u2019s\u00a0 (PNM) application in install Smart Meters. In doing so, it adopted the Hearing Examiner\u2019s Recommended Decision in its entirety.<\/p>\n

From\u00a0Hearing Examiner recommendations \u2013 Summary<\/strong>, p. 71-74<\/p>\n

\u201cThe primary purpose of PNM\u2019s project is cost savings. PNM\u2019s proposal focuses on\u00a0the elimination of 125 meter reading jobs, faster disconnections of late- and non-paying\u00a0customers, and increased revenues by preventing tampering and diversion of service.<\/p>\n

PNM designed its project without public input and without examining alternatives. Not\u00a0surprisingly, all of the eight non-PNM parties oppose PNM\u2019s requests.<\/p>\n

PNM also emphasizes that the project is discretionary. PNM states that the project is\u00a0not\u00a0<\/strong>needed<\/strong>\u00a0to provide adequate service or to comply with any Commission rules or other regulatory requirements. As a result, PNM will proceed with the project only if the Commission approves it on PNM\u2019s terms in their entirety and without modification.<\/p>\n

PNM cites no statute as direct authority for the approvals it requests and cites no direct\u00a0authority for the standards the Commission should apply to its requests. PNM argues that the approval should be issued on the basis of its claim that the project\u2019s benefits will exceed its costs over the 20 year estimated life of the meters.<\/p>\n

The non-PNM parties in this case include advocates of residential, industrial, municipal,\u00a0environmental, health and public interests. They include the AG, the City of Albuquerque,\u00a0CCAE, CFRE, NMIEC, NMUS, WRA and Staff. All question the legal authority for PNM\u2019s\u00a0requests for approval of the project outside a CCN proceeding and for approval of advance\u00a0ratemaking treatment. Most support the benefits that can potentially be achieved with smart\u00a0meters, but they complain about the narrow focus of PNM\u2019s plan, its cost, its unfair balancing of investor and ratepayer interests, and its inflexibility in addressing the concerns of PNM\u2019s\u00a0customers. They ask that PNN come back with a better plan, after obtaining input from the\u00a0public.<\/p>\n

The primary justification PNM offers for the project is the net savings it says the project\u00a0would produce for ratepayers. PNM acknowledges that the immediate impact would be rate\u00a0increases. But it says that, over the 20 year expected life of the AMI meters, it would eventually produce savings.<\/p>\n

The non-PNM parties disagree with PNM\u2019s savings estimates. They agree that the\u00a0immediate impact would be rate increases, but they say the lifetime savings would not occur.<\/p>\n

They recommend rejection, because they do not see any benefits sufficient to compensate for the rate increases. The non-PNM parties show that the immediate result of PNM\u2019s $121.5 million plan would be rate increases (at least $5.9 million per year after the meters have been installed), that PNM\u2019s projections of long-term savings are uncertain and that PNM ratepayers would likely pay more over 20 years with AMI meters than the existing non-AMI meters.<\/p>\n

The terms of PNM\u2019s plan include full cost recovery of the $95 .1 million cost of the new\u00a0AMI meters, $24.9 million for PNM\u2019s existing non-AMI meters that will be replaced and will no\u00a0longer be serving customers, and $1.5 million in PNM\u2019s customer education costs. In addition,\u00a0while ratepayers would be paying more, PNM\u2019s shareholders would earn a $42.8 million pre-tax return on the new AMI meters, a $11.0 million pre-tax return on the non-AMI meters that will be replaced, and a $183,000 pre-tax return on PNM\u2019s customer education costs.<\/strong><\/p>\n

The Hearing Examiner agrees with the non-PNM parties that the plan does not fairly\u00a0\u00a0balance the interests of investors and ratepayers. Ratepayers should not bear 100% of the risk that PNM\u2019s savings predictions will occur, while shareholders earn an additional return on the new investment and continue to earn a return on the replaced investment. In addition, the\u00a0prudence of the $95 .1 million capital cost of the project is questionable, given the $6.2 million\u00a0cost increase resulting from PNM\u2019s re-bidding of the installation portion of the project. PNM re\u00a0bid the installation work because\u00a0the contractor it initially selected violated New Mexico\u2019s\u00a0<\/strong>contractor license requirements<\/strong>.<\/p>\n

Further, PNM\u2019s proposed $42.72 per month opt-out fee is too high. Several of the non\u00a0PNM parties have raised concerns about the health impacts, safety, and security of the AMI\u00a0meters. While PNM contests the validity of the concerns and PNM\u2019s plan allows customers who have such concerns to choose not to receive an AMI meter, the magnitude of the monthly opt-out fee is too high to provide customers with a meaningful choice.<\/p>\n

As a discretionary project, the timing is also not good. PNM hopes to achieve its\u00a0predicted savings largely by\u00a0laying off 125 employees<\/strong>\u00a0who perform meter reading and related\u00a0functions. In addition, PNM ratepayers have experienced a recent series of rate increases \u2014 an increase in October 2017 and an increase effective in February of this year. Further rate\u00a0increases also appear to be on the horizon as PNM seeks unrecovered costs of coal plants that it plans to retire and new generating resources to replace them.<\/p>\n

To be clear, the Hearing Examiner is not recommending that PNM be prohibited from\u00a0adopting an AMI project. The recommendation is that PNM\u2019s AMI project not be approved at\u00a0this time in its current form. PNM should engage in the planning process it told the Commission in 2012 was necessary for a project of such a scope. The planning process should examine reasonable alternatives and solicit public input to develop a plan that fairly addresses the needs of its customers and its service territory.\u201d<\/p>\n

Reasons for recommendations include:<\/p>\n