Title
Consider and take action on a resolution denying the Texas-New Mexico Power Company’s proposed rate increase in connection with its statement of intent submitted on or about May 30, 2018 (City Attorney)
Background:
Approval of this resolution will deny the Texas-New Mexico Power Company’s proposed rate increase in connection with its statement of intent submitted on or about May 30, 2018.
On May 30, 2018, Texas-New Mexico Power Company (TNMP) filed an application to increase its annual revenues by approximately $33.3 million, which represents an increase in revenue of about 10.5%. This is TNMP’s first comprehensive base rate case since 2010. Included in TNMP’s requested increase is recovery of about $4.1 million for rate case expenses; about $4.6 million for vegetation management; and about $7.2 million in extraordinary expenses related to Hurricane Harvey.
TNMP proposed an effective date of July 5, 2018 for its increase in rates. The City has previously taken action to suspend TNMP’s proposed effective date to October 3, 2018. The City is participating in the proceedings as part of the Alliance of TNMP Company Municipalities (“ATM”), a coalition of similarly situated cities in which TNMP provides electric service. Through ATM, the City intervened in TNMP’s current rate proceeding at the Public Utility Commission (“PUCT”) and is represented by the law firm of Herrera Law & Associates, PLLC.
BASIS FOR TNMP’s REQUEST:
The main factors TNMP asserts as the basis for its proposed increase in rates are the following:
- Accounting for the addition of distribution and non-transmission investment since TNMP’s last rate case in 2010
- Updated depreciation and amortization expenses
- Moving TNMP’s Advanced Metering System (AMS) costs into base rates and elimination of the AMS surcharge
- Reduction of TNMP’s discretionary service fees which TNMP had been using to reduce base rates
- A requested cost of capital consisting of a 10.5% return on equity ...
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