New Mexico Getting Electric Customer Choice
New Mexico Gov. Gary Johnson signed into law a bill opening the
state's electric power market to consumer choice beginning in 2001.
"This is an important day for New Mexico, and for PNM [Public
Service Co. of New Mexico]," said PNM CEO Benjamin Montoya.
"Properly implemented, this new law will bring the benefits of a
competitive market to all customers, protect the interests of small
business, residential and rural customers, and preserve the value
of our shareholders' investment in the PNM electric system."
The law gives schools, residential and small business customers
the opportunity to choose among competing power suppliers beginning
in January 2001. Competition will be expanded to include all
customers in January 2002. Rural electric cooperatives and
municipal electric systems have the option not to participate in
the competitive market.
Residential and small business customers who do not select a
power supplier will buy electricity through their local utility
through a "standard offer."
The law does not require utilities to sell generating plants or
exit the power production business, but it does require them to
separate the competitive parts of their business from their
regulated activities through creation of at least two separate
The law provides for a sharing of stranded costs between utility
stockholders and customers, allowing utilities to recover at least
half of these costs. Stranded costs would be recovered through a
five-year charge on customer bills. Utilities would also be allowed
to recover in full reasonable costs incurred in implementing
The New Mexico plan does not include a guaranteed rate cut for
residential customers. Electric rates during the transition to
competition will be set by the Public Regulation Commission. PNM
now has a rate case pending before the commission, which will
likely result in a rate reduction. PNM is a combined electric and
gas utility serving about 1.3 million people in New Mexico.
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