The Public Service Co. of New Mexico (PNM) hailed a New MexicoSupreme Court decision yesterday that ruled in favor of PNM andoverturned a $6.9 million gas utility rate reduction imposed bystate regulators in 1997.

The company has not yet calculated the potential financialimpact of the court decision. The case was originally brought tothe court by PNM against the New Mexico Public Utilities Commission(PUC), which has since merged with the State Corporation Commissionto form the New Mexico Public Regulation Commission.

PNM, which serves 1.3 million electric and gas customers, hadoriginally filed a $13.3 million rate increase in 1997. In ratecase 2662, the PUC rejected the filing and ordered the $6.9 millioncut. Although the court upheld certain portions of the gas ratecase, it labeled other significant sections, including the ratereduction, as “arbitrary and capricious.” The five-member courtvacated the entire order as “unreasonable and unlawful,” becausecertain stipulations ordered by the PUC unreasonably hindered theutility’s ability to earn a fair rate of return, PNM said.

Unless any of the parties in the case ask the court for arehearing, the case will be remanded to the New Mexico PublicRegulation Commission. Don Brown, a PNM spokesman, said the utilitywill work with the regulators and other interested parties indetermining a new rate structure. “This is a clear victory for PNM.We will now be able to collect costs that we previously were notallowed to.”

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