PNM Resources’ New Mexico Utility, PNM, filed a comprehensive settlement agreement with the Federal Energy Regulatory Commission (FERC) on March 20, 2015, that would settle its transmission formula rate case originally submitted in December 2012.
The agreement with key parties resolves all matters relating to the proposed formula transmission mechanism used to adjust transmission rates annually.
Under the terms of the agreement, PNM will use a return on equity of 10 percent in the calculation of formula-based rates, which will be updated annually in June. The calculation is based on a historical test year with adjustments for projected changes to certain rate base items, including utility plant.
PNM will also recalculate the rates originally charged during the period from Aug. 2, 2013, through March 31, 2015, under the terms of the settlement. Appropriate changes to earnings were recorded in December 2014 based on the settlement agreement; therefore, the settlement will not result in any changes to 2015 earnings when compared to 2014. PNM’s total transmission rate base under this calculation is about $350 million, about 42 percent of which is allocated to the FERC jurisdiction.
The agreement requires FERC approval and does not impact retail rates for New Mexico residential or business customers.
PNM is an energy holding company based in Albuquerque, N.M., with 2014 consolidated operating revenues of $1.4 billion. Through its regulated utilities, PNM and TNMP, PNM Resources has about 2,707 MW of generation capacity and provides electricity to more than 753,000 homes and businesses in New Mexico and Texas.