New Mexico Electric Utility Restructuring Delay Becomes A Reality, Texas Legislators Gear Up For A Delay As Well
by Lance Adkins
In the last issue of the New Mexico Journal, I noted that Senator Michael Sanchez, author of the Electric Utility Restructuring Act of 1999, had introduced legislation (SB 266) to delay restructuring in New Mexico by five years.
Following two hearings in Senate Committees, SB 266 was introduced and debated in the full Senate, passing without opposition. However, there were two amendments attached to the Bill, one to allow existing, regulated utilities to construct unregulated generation for sales in the wholesale market, and another to allow Public Service Company of New Mexico (PNM) to amortize specific coal mine decommissioning costs over a five-year period. With the addition of the two amendments, PNM supported the delay. While some question the full impact of the two "PNM amendments", the amendments are not expected to have any negative impact on New Mexico retail or wholesale customers. Next stop for SB 266 was the House of Representatives.
Following hearings in the House Business and Industry Committee and House Judiciary Committee, which passed the Bill without further amendment; the Bill went to the full House. SB 266 was passed on March 2, with only three Representatives opposed, one of which stated his reason for opposition was that he felt deregulation/restructuring should be repealed, not just delayed. SB 266 then went to the Governor, and as the Bill was passed while the Legislature was still in session, the Governor had just 48 hours to sign or veto the Bill.
I was in Santa Fe on March 2, and had an opportunity, along with representatives from Roosevelt County Electric, Lea County Electric, and Central Valley Electric, to meet with both Lt. Governor Walter Bradley and Governor Gary Johnson. While both would have preferred legislation with a shorter delay than SB 266, both appeared ready to support the legislation.
On Thursday, March 8, Governor Johnson signed SB 266 into law, and with that act electric deregulation/restructuring is delayed five years, including a delay in the separation of generation assets into unregulated corporate affiliates.
As another point of interest, legislators from the Texas Panhandle have introduced legislation (House Bill 1692) to slow down divestiture of Southwestern Public Service Company (SPS) power plants.
Legislators in Texas have expressed similar concerns as those in eastern New Mexico; deregulation will likely result in significant cost increases to ratepayers over the next several years, unless certain measures are enacted in this Legislative session. Texas HB 1692 is said to have significant support at this time.
Four key elements addressed in the legislation:
If passed, this legislation would also be beneficial to retail and wholesale customers in New Mexico.
- "ensures that competitive development areas, which currently includes only the Texas Panhandle region, will not be deregulated until the Public Utility Commission (PUC) finds that competition will not cause an increase in retail electric rates";
- "ensures that utilities subject to this legislation do not separate their business units into different companies prior to the date on which competition actually begins";
- "creates PUC oversight and stagers the sale of generation assets by a utility and ensures that the gains from sales of utility assets are shared 90% to consumers and 10% to the utility's shareholders";
- and "clarifies that the PUC retains all regulatory authority over utilities subject to this legislation until the region is opened to competition".
As the close of the Texas legislative session is still a number of weeks off, May 28, it may be some time before we know the fate of HB 1692. Stay tuned!
Lance Adkins is the General Manager of Farmers' Electric Cooperative in Clovis, New Mexico, providing electrical service to approximately 10,500 meters in New Mexico.
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