New Mexico Electric Utility Restructuring Must Be Delayed!
by Lance Adkins
On January 5 & 6, I attended a special meeting called by Senator Michael Sanchez, relating to electric utility restructuring in New Mexico.
For over seven years, Senator Sanchez and his committee have studied restructuring, also called de-regulation, and proposed a bill in the 1999 legislative session.
As I have reported in past articles, the legislation passed and restructuring is scheduled to begin on a phased-in basis January 1, 2002. As you may be aware, California has experienced tremendous rate increases following electric restructuring, beginning last spring and which continue to this day. By tremendous rate increases, I refer to consumer's bills for electricity increasing four to five times over last year. In fact, two of California's largest utilities are on the verge of bankruptcy as they are held to price caps to consumers while still subject to soaring wholesale prices in the unregulated electric generation market.
Senator Sanchez's committee wanted to find out how California's woes may impact consumers in New Mexico and if New Mexico should consider delay or outright repeal of the Electric Utility Restructuring Act of 1999. There were many organizations represented at the meeting including investor-owned electric utilities (IOU), municipally owned utilities, cooperative utilities, environmental groups, the Attorney General's Office, Public Regulation Commission staff and commissioners, several municipalities (including the City of Clovis), and at least one member of the public-at-large.
One of the most interesting speakers was Carl Wood, Public Regulation Commissioner from California, who gave a thorough description of events unfolding in California. His recommendation for New Mexico - stop now - before it's too late. Commissioner Wood was explicit; do not let utilities separate generation resources (power plants) from regulation. Currently, each of the four IOUs' in New Mexico have filed transition plans for approval by the Public Regulation Commission, which contain provisions for transferring regulated generation assets into unregulated affiliates for those companies which own generation plants.
Of all the groups making presentations, only three recommended continuing with restructuring on the current time schedule, the New Mexico Share Holders' Alliance, Public Service Company of New Mexico and Southwestern Public Service Company. Each of these three groups are making tremendous profits in California and see a potential for even greater profits following restructuring in New Mexico. Another IOU, Texas-New Mexico Power Company, serving southern New Mexico, reported receiving the lowest bid for their 2001 wholesale power from Public Service Company of New Mexico, at twelve cents per kilowatt-hour (kWh)! By comparison, Farmers' Electric currently pay between three and four cents per kWh under contract with Southwestern Public Service Company.
The overwhelming consensus of the meeting was that further restructuring in New Mexico should be delayed until California's crises are resolved. Farmers' Electric will be communicating with area legislators our desire to see restructuring delayed. Interestingly, two area legislators are members of Senator Sanchez's committee, Representative Anna Crook of Clovis, and Senator Patrick Lyons of Cuervo. In speaking with these representatives, they are concerned with what is currently happening in California and how the California crisis is already affecting New Mexico, and how further restructuring in the state will impact New Mexico consumers.
Initial discussions with Governor Gary Johnson indicate that he does not support any delay at this time. I remain optimistic that Governor Johnson will work to protect New Mexico consumers once he is fully apprised of events in California and its potential to impact New Mexico.
I strongly urge you to stay informed. Let your representatives know your concerns. Click Here to contact your Representative, or Click Here to contact your Senator.
I'm afraid that if we remain silent, crises similar to California's could be forced upon New Mexico consumers.
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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