Tuesday, August 3, 2010

MeanMesa Says "NO!" To PNM Rate Hike

Will all those in favor of paying an additional 33% on their monthly electic bills, please raise your hands!
Oh sure, it may mean putting off your planned purchase of the new Bentley for a few weeks, but, hey, everybody's got to eat.  Right?

An Explanation of Electric Utility Rates in the United States

Because MeanMesa enjoys a good number of visitors from beyond the borders of the United States, it's always a good idea -- not to mention, good manners -- to offer a little background when we broach local issues.  The issue of utility rates -- in this case, electric rates -- can be no exception.

Although we here in the U.S. are "ever so deeply" committed to "everything Capitalism, in fact, plus the salt!" there are a few exceptions.  The electric service we enjoy is, in a sense, one of them.  The local electric company here in New Mexico, PNM, is a shareholder corporation which "purchases" electricity from various generation companies and then "sells" it to service subscribers.

The rates PNM charges for this service are regulated.  Here in Albuquerque, that regulation is conducted by the Public (Utilities) Regulation Commission of the State of New Mexico.  The exact services PNM supplies to its customers include the maintenance of power lines, repairs to the system when necessary and, of course, issuing electric bills.

An Exceptional Environment of Regulation

Now, the PNM rate increase is advertised to all PNM utility customers before the rates increase, and, in fact, before the New Mexico Public Regulation Commission actually holds hearings and authorizes the increase.  Ordinarily, this whole process would be so sleepy as to be almost invisible, but this time there are a couple of "flies in the ointment" for the utility company.

The first "fly in the ointment" is the amount that PNM would like to increase its rates.  For the residential customer -- in this case, MeanMesa -- the rate increase would amount to roughly 33%.  Calculated the "special way" PNM likes to calculate things, it would be slightly less, but here on the monthly "checkbook" end of things, 33% is pretty close.

The second "fly in the ointment" arose from the actions of another part of the New Mexico Regulation Commission.  Here, MeanMesa will turn over the task of telling the story to one of our local television news organizations, Channel Four (Cable News).

From the KOB.com news report:

Thousands of New Mexicans will soon collectively pay millions of dollars a year more for insurance premiums. 

On Monday, the Public Regulation Commission's superintendent of insurance signed off on a rate hike averaging 21 percent for selected Blue Cross, Blue Shield customers. 

A public hearing was scheduled for 9 a.m., but attendees were surprised to learn that a final deal on the rate hike had already been settled by 8:15 a.m. 

Early in the meeting, PRC Commissioner Jason Marks called the rate hike a back room deal. "They announced the deal without even listening to the public," Marks said. 

Dr. Christopher Fletcher, who practices family medicine in Santa Fe, says he has been on both sides of the insurance spectrum with Blue Cross, Blue Shield as both a physician and a policy holder, but has not seen a rise in healthcare costs that would justify double digit rate increases year after year. 

However Blue Cross, Blue Shield attorney Paule Bardacke says the rate increase is needed to cover costs. 

"It's necessary because Blue Cross, Blue Shield of New Mexico has been losing money on these policies," Bardacke said. 

Many at the public forum were also surprised to learn that the PRC's elected officials have no say in health insurance rate hikes; those decisions are left to the PRC's Superintendent of Insurance Morris Chavez.

To read the entire report, link here.

New Mexicans, still "stung" by the back room deal our State Insurance Superintendent Morris Chavez (an officer of the Public Regulation Commission or PRC) made with the giant insurance companies are not in any mood to see another double digit increase in their equally necessary electrical utility rates.

Of course, MeanMesa fired off a letter of protest to Mr. David King, head of the Public Regulation Commission.  It is posted below.

July 21, 2120

Mr. David W. King, Chairman
Public Regulation Commission
P.E.R.A. Building
P.O. Box 1269
Santa Fe, NM 87504-1269

Subj: PNM Rate Increase Application

Mr. King:

As a New Mexico resident and a PNM customer, I would like to add my name to the list of those opposing this rate increase.  I have looked through the application summary, the required customer notification material and several local editorials on the matter. I can summarize my objections this way:

1. There are no justifications or explanations which make the increase compelling. There are no particular service expansions, new equipment or future plans presented which can validate such increased expenses for customers.

2. The current fiscal state of PNM is fairly healthy. If the company were losing money because rates weren't high enough, it would be a different situation.

3. The corporate connections to the Texas company, TNMP, cloud the legitimacy of the increased rates. TNMP is apparently the product of unregulated or under regulated business practices which are common in that state. Electric rates in New Mexico must not be increased to mitigate the suspicious exposure of this unregulated out of state company regardless of how obscured the transfer of the corporate financial liabilities might be.

4. This state is not currently experiencing an inflationary condition which would justify the rate increase. In fact, average wages in New Mexico are falling while the local cost of living -- including electric bills -- remains high.

My first inclination is to simply reject the application for a rate increase. Failing that, a "cooling off" period should be imposed during which PNM can offer a much more complete and understandable argument to justify its application.



PNM, like most large service corporations, has a very real penchant for advertisements which trumpet its "good citizen" qualities.  However, in this case, MeanMesa has to wonder where these people live!  New Mexicans have been wounded in the wake of the Republican Great Depression.  We don't have "extra cash" laying around to pay a one third rate increase for our electricity.

Wait.  Maybe we can figure out where these folks live.  Maybe their house is right between the insurance company "country club" and the heavily soiled Mr. Chavez, all tucked away neatly in some gated community.

Inspired by this incredibly cheap scheme, MeanMesa will borrow a phrase from the indomitable Bart Simpson.

"Eat my shorts."

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