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New Mexico Getting Electric Customer Choice

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 corporations.

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 competition.

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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