October 4, 2022

PNM customers could face bill increases amid grid modernization effort

The Public Service Company of New Mexico plans to spend $344 million on grid modernization over the next six years, resulting in an increase of about $1.20 per month in electricity bills for the average residential customer.

The utility filed its grid modernization plan on Monday with the New Mexico Public Regulation Commission.

The plan comes as a result of the state’s 2020 Energy Grid Modernization Roadmap Act, which allows utilities to submit an application to the PRC for grid modernization projects. These applications must include the estimated costs of those projects.

The commission must then review the application to ensure that it meets seven criteria:

  1. Improves system reliability, efficiency, security and resilience 
  2. Supports connection into regional energy markets
  3. Increases access to clean and renewable energy, especially for low-income customers
  4. Helps reduce greenhouse gas emissions
  5. Supports increasing the products and programs the utility offers 
  6. Is transparent and incorporates public reporting requirements
  7. Is consistent with the state’s policies and efforts to modernize the grid

The law also allows the utility to recover the costs of the investments from customers by increasing rates or implementing tariff riders.

PNM spokesman Raymond Sandoval said the additional $1.20 per month will go onto customers’ bills starting in the fall of 2023 in the form of a rate rider. He said this is because customers tend to use more electricity during the summer months and PNM did not want to hit them with the increase during peak usage months.

More than half of the $344 million will be spent on changing from analog meters to smart meters, which will allow the customer to better understand their electricity use and will also enable PNM to respond faster to outages.

By helping customers better understand their electrical usage, PNM says the upgrades could ultimately help customers save money.

PNM will roll out a customer energy management platform that will allow customers to see hourly, daily, monthly and annual energy usage.

“Through the Customer Energy Management Platform, customers will have access to their energy breakdown to see exactly where they are using the most energy and adjust their habits accordingly to prevent unexpectedly high bills in the future, should the customer be enrolled in a time-of-day rate,” Mario Cervantes, PNM’s director of customer experience, said in the filing.

This tool will also use algorithmic estimations to break down energy consumption based on end uses such as lighting, electric vehicle charging, appliances and heating or cooling, he said in the filing.

Additionally, he said the changes will allow customers to “personalize their bill payment experience.” That could mean choosing which day of the month for their bill to be due and allowing customers to pre-pay.

During a press conference, PNM officials said the smart meters could pave the way for time-of-use rates. For example, PG&E in California allows customers to opt in to a time-of-use rate. Those who choose to opt in pay higher rates for electricity used from 4 p.m. to 9 p.m. or, if they opt in to time of use rates just for weekdays, from 5 p.m. to 8 p.m.

But time of use rates can have problems, especially for people who don’t have the flexibility to change when they are using the electricity. This can result in customers who, overall, use less electricity actually paying more because of the time of day they use the power.

Laura Sanchez, chief policy and legal advisor at PNM, said that the grid modernization plan will not automatically create a time of use rate. That would come at a later time as part of a rate case. She said it would start as a pilot program with about 8,500 participants. Sanchez said that will allow PNM to gather data about usage patterns.

PNM expects some confusion surrounding the smart meters and will need to hire additional staff for the call center to handle an estimated 10 to 15 percent increase in call volume, according to Cervantes.

The filing comes amid a change in the electric industry. Sanchez said that while power was historically generated at large power plants and sent over transmission and distribution lines to houses, that is changing. More and more people are able to generate some of their own power through things like rooftop solar.

Sanchez said the plan will help PNM meet the decarbonization targets laid out in the state’s Energy Transition Act.

“Grid modernization is a key component in implementing the [Energy Transition Act],” she said. “The upgrades to the grid are critical to ensuring access to reliable electricity as New Mexico seeks to expand businesses and attract new ones. It will create jobs and grow the economy.”

PNM’s plan will also allow for better integration of rooftop solar and electric vehicle charging infrastructure, officials say.

As the plan is implemented, low-income areas will be prioritized.

PNM plans to use census tract information and target the upgrades so that they go into low-income areas or underserved communities like Tribal communities in the service territory and then expand out from there, according to Sanchez.

Omni Warner, PNM’s director of distribution engineering, said in filed testimony that the investments in the grid modernization plan, coupled with the traditional capital investments into the grid, “will transform the Company’s aging distribution system into a more transparent, advanced, digitalized and flexible system commensurate with customer needs and expectations of today and into the future.”

This $344 million investment over six years is part of a larger, 11-year plan.

“The projects in the initial 6-year Plan lay the foundation for further grid modernization enhancements towards meeting customers’ needs and PNM’s longer-term, carbon-free transition,” Warner said in the filing.