PNM Resources said Friday that its utility subsidiary, PNM, has asked the New Mexico Public Regulation Commission (NMPRC) to approve a $37.6 million increase in the service fees that the company charges its 441,000 natural gas customers.

Under the proposal, the increase would up both the set monthly service fee and the charge tied to monthly usage. The utility pointed out that those fees are separate from the cost of gas charged to customers, which would not be affected.

“Although PNM has done an excellent job of holding down expenses where it can, the reality is that PNM’s gas system grows every month, and so do the ongoing costs of operating and maintaining that system,” said Bill Real, PNM’s senior vice president. “In spite of achieving efficiencies in its operations, PNM is not earning a fair return on its investment in gas operations.”

Real said a number of factors forced the fee hike request, including:

If the proposed rate increase is approved, PNM said its gas utility would enjoy a 12% return on equity, which is consistent with the return allowed 15 comparable natural gas utilities. PNM currently provides natural gas service to 441,000 customers and electric utility service to 378,000 customers in New Mexico.

For the 12 months ended Sept. 30, 2002, the company said its return on equity in its gas utility was less than 3%. Real said company officials hope the NMPRC will set a timetable for public hearings and deliberation that allows the new rates to become effective in December. He added that the rate case is based on revenues and expenditures during a 12-month “test year” that ended in September 2002.

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