6/7/08 - Sky Blue and the PNM Fuel Clause

A phone inquiry from a constituent last week alerted me to the possibility that PNM customers subscribing to their voluntary renewable energy program known as Sky Blue might be getting an improper double-charge under the new fuel adjustment clause. New Mexico law and PRC rules require PNM to provide 6% of all retail electric sales to all customers this year from renewable sources. Sky Blue subscribers agree to pay an extra 1.7 cents per kilowatt-hor to increase the renewable energy percentage for their own PNM electricity usage. While it is an accounting fiction that the individual Sky Blue subscribers receives the specific renewable energy electrons at his or her home, the concept underlying the voluntary program is that the subscriber is paying for a certain number of additional renewable energy kwhs delivered on PNM system over the course of a month or year.

As the constituent who called me noted, a customer who is paying for 90% of their electricity to come from wind is not responsible for fossil fuel and other purchased power cost increases for that 90% portion of their bill. Thus, the customer should not be paying the new fuel clause, which PNM has justified as needed to pay for those fossil fuel cost increases (the fuel clause adjustment is about 0.6 cents/kwh). I have also analyzed this question using the same worksheets PNM used to come up with the Sky Blue tariff amount of 1.7 cents/kwh, based on the incremental costs of wind versus the conventional fuel alternatives, and this also suggests there is an improper double charge being assessed. I have written a letter of concern to PNM, and am awaiting their response.