The New Mexico Public Regulation Commission in a Nov. 9 order suspended the proposed rates filed by Southwestern Public Service for a period of nine months beginning on Dec. 1, finding that the proposed rates should not go into effect without a public hearing concerning their justness and reasonableness.
As noted in the order, SPS on Nov. 1 filed an application with the commission requesting authority to increase its base rate charges for the New Mexico retail jurisdiction by about $41.4m, a 19% increase over current revenue, using a base period of July 1, 2015 through June 30, 2016 (base period), a test year of July 1, 2017 through June 30, 2018 (test year), a New Mexico retail base rate revenue requirement of about $258.6m, a return on common equity of 10.10%, and a weighted average cost of capital of 7.83%.
As part of the approval, SPS also requested that the commission approve, for instance:
- The company’s request to include in rate base the new capital investment that SPS placed in service during the base period and the capital investment that SPS forecasts it will place in service through June 30, 2018
- A reduction in the service lives of the Tolk Generating Station Units 1 and 2 from the current assumed retirement dates of 2045 and 2042 to an assumed retirement date of 2030, and authorize a new 15-year amortization period for large base system software systems, but otherwise make no change in SPS’ commission-approved depreciation rates
The commission also scheduled a prehearing conference on Dec. 8 in its offices in Santa Fe, N.M., before Hearing Examiner Carolyn Glick to discuss procedural matters, including the possibility of mediation, and details for the case.
The company in its application said that its current rates are no longer just and reasonable and do not allow it to recover a reasonable return on in its investment in its public utility plant and property that serve SPS’ New Mexico retail customers. The company said that it plans on making significant capital investments to maintain continued reliability of electric service to its customers in the foreseeable future, creating a need for additional revenues for SPS’ New Mexico retail services in this case.
SPS is a subsidiary of Xcel Energy (NYSE:XEL).