New Mexico Gov. Gary Johnson signed into law a bill opening thestate’s electric power market to consumer choice beginning in 2001.

“This is an important day for New Mexico, and for PNM [PublicService Co. of New Mexico],” said PNM CEO Benjamin Montoya.”Properly implemented, this new law will bring the benefits of acompetitive market to all customers, protect the interests of smallbusiness, residential and rural customers, and preserve the valueof our shareholders’ investment in the PNM electric system.”

The law gives schools, residential and small business customersthe opportunity to choose among competing power suppliers beginningin January 2001. Competition will be expanded to include allcustomers in January 2002. Rural electric cooperatives andmunicipal electric systems have the option not to participate inthe competitive market.

Residential and small business customers who do not select apower supplier will buy electricity through their local utilitythrough a “standard offer.”

The law does not require utilities to sell generating plants orexit the power production business, but it does require them toseparate the competitive parts of their business from theirregulated activities through creation of at least two separatecorporations.

The law provides for a sharing of stranded costs between utilitystockholders and customers, allowing utilities to recover at leasthalf of these costs. Stranded costs would be recovered through afive-year charge on customer bills. Utilities would also be allowedto recover in full reasonable costs incurred in implementingcompetition.

The New Mexico plan does not include a guaranteed rate cut forresidential customers. Electric rates during the transition tocompetition will be set by the Public Regulation Commission. PNMnow has a rate case pending before the commission, which willlikely result in a rate reduction. PNM is a combined electric andgas utility serving about 1.3 million people in New Mexico.

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