New Mexico News
| Sterba Offers Plans to Improve PNM's Performance |
| Posted by () on Jun 10 2008 at 3:58 PM |
PNM Resources Chairman, President and CEO Jeff Sterba told shareholders last week a bit of what they already knew: the utility has had a bad year. And then he offered specific plans for improving its performance.
Sterba said the $34 million rate increase the Public Regulation Commission gave PNM utility in April and the $63 million fuel adjustment clause the commission subsequently approved will not cover the costs of providing service in New Mexico. Both PNM, in New Mexico, and Texas-New Mexico Power, in Texas, will file a new rate case in the third quarter of this year, he said.
He told shareholders that, under current conditions, PNM cannot afford to build new power plants to meet growing demand. The $1.7 billion in capital spending the company plans over the next five years is mostly for transmission and distribution of infrastructure, he said.
“We're only contemplating $100 million in new generation. We're spending $400 million this year, and none of that on generation,” he said.
PNMR's earnings per share were down almost 40 percent in 2007 from 2006 levels. Sterba said he takes responsibility for the cause of that loss — a 2002 agreement between PNM, a group of its larger customers and the PRC that included two rate decreases and eliminated PNM's fuel adjustment clause. Although the agreement benefitted PNM by allowing it to retain 100 percent of its revenue from sales of surplus energy, Sterba said it ran a year too long.
In the meantime, he said, PNM's customer demand grew enough to eliminate the surplus energy used to make the sales, and, in 2007, there were significant increases in fuel and the commodities required to maintain infrastructure. But, he denied that PNMR's financial difficulties have anything to do with the cost of acquiring its Texas utilities, with losses in those operations or with exorbitant executive compensation.
Besides the rate cases, Sterba said PNM will focus on three objectives in the coming year: reducing company costs through efficiencies and technology; simplifying PNM's business model by separating its regulated and competitive generation, and selling its natural gas division; and improving the operating capability of Palo Verde Nuclear Generating Station. As part of that effort, PNM will ask the PRC to allow it to include its costs of buying back the leases on Palo Verde Units 1 and 2 in customers' rates, he said.
Comments
Add Comment