New Mexico Utility’s Energy Efficiency Success Causing Its Own Financial Strife

Public Service Company of New Mexico customers have received nearly US$9 million in rebates and incentives through energy savings last year.
Published: Thu 30 Apr 2015

Public Service Company of New Mexico (PNM), New Mexico's largest electric provider claims that its programmes have reached a milestone in energy efficiency.

Energy efficiency programmes successful

PNM filed its annual efficiency report with state regulators and says it has surpassed a state goal-that is to achieve cumulative energy savings equal to at least 5% off 2005 retails sales by 2014. PNM appears to be well on its way to achieving the 8% 2020 target, also set by the state in its Efficient Use of Energy Act.

PNM business and residential customers received nearly US$9 million in rebates and incentives last year and saved 74 million kWh of electricity from participating in the utility's efficiency programmes. By reducing consumption, PNM’s customers have saved over 521 million gallons of water since 2007 and carbon dioxide emissions were slashed by more than 905,000 metric tons.

PNM has enjoyed much success with the energy efficiency programmes it established eight years ago.

The utility offers a wide variety of programmes for residential and business customers to choose from, including rebates for more efficient cooling and lighting systems, home energy audits, rebates for retrofits, consulting services, and more. The utility is also is adding a programme specifically for multifamily residences like apartment buildings because it is often more challenging to get multifamily housing residents to participate in energy efficiency utility programmes.

Lower power consumption-lower revenue

The success of the energy efficiency programmes are posing a major financial concern though-the programmes are eating away at utility revenues since customers are using less power. PNM’s 2014 adjusted net earnings fell to US$86.8 million from 2013’s US$87.6 million, in part due to a reported decline in load.

In response to this, the utility asked the New Mexico Public Regulation Commission for a rate increase that would add from US$5 to $12.80 per month to residential customer bills beginning January 2016. The rate increase is meant to help the utility cover costs of infrastructure investments such as new solar projects, transmission and expenses related to the Palo Verde nuclear power plant.

The increase proposal also includes adding a fee of $6/kW per month for rooftop solar owners-their reason for this is that these customers do not pay adequately to cover the cost of power they use from the grid in addition to their own solar generation. The new Distributed Generation (DG) Interconnection Fee will take effect on January 1, 2016 if it is approved by the Public Regulation Commission. So, anyone who installs a rooftop solar system before that time will not have to pay the new fee — yet. Every solar customer has a contract, and so their contract is valid until the end of their contract. This is according to Jodi McGinnis Porter, PNM spokesperson. She said customers will be exempt from the new fee for the life of their contract, whether that’s 10, 20 or 30 years. Once their contract is up, however, PNM could institute the new fee.

Rate increases

The monthly rate increase is likely to draw objections from consumer advocacy groups, especially those who own rooftop solar panels. Surely, those who generate their own clean power should be rewarded, not punished especially since this off-grid power has contributed to lower consumption levels?

A new player in the solar market could actually make it easier for some people to go offgrid completely. Solar City, which is already an established provider of photovoltaic systems in several states, had just expanded to New Mexico. While they offer traditional options for residential customers, it is possible to lease a system or buy one upfront — they are also partnered with electric vehicle manufacturer Tesla Motors. Through that partnership — and with advanced new lithium-ion batteries developed by Tesla — Solar City has announced plans to help communities create microgrids that can function independent of a utility like PNM. [Engerati-Microgrids Now Available As A Service] and [Engerati-SolarCity Aims At Integrating Solar Into The Connected Home.]

Perhaps it is in PNM’s best interest to treat their solar panel customers fairly…or be prepared to lose them completely.