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F I S C A L I M P A C T R E P O R T

SPONSOR Lujan, B.

ORIGINAL DATE

LAST UPDATED

2/10/06

HM 40

SHORT TITLE Transmission Cooperative Consumer Study

SB

ANALYST Earnest

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

None

None

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Public Regulation Commission (PRC)

Energy, Minerals and Natural Resources Department (EMNRD)

SUMMARY

Synopsis of Bill

House Memorial 40 finds that the Legislative Council Service (LCS) and the appropriate legisla-

tive interim committee should conduct a study on the adequacy of the protection of New Mexico

consumer interests with respect to the current regulation of generation and transmission coopera-

tives.

The study may include options to provide additional information to the PRC and member utilities

of generation and transmission cooperatives regarding the basis and justification for rates that

cooperatives propose.

FISCAL IMPLICATIONS

None identified.

House Memorial Bill 40 – Page 2

SIGNIFICANT ISSUES

PRC indicates that member-owned Tri-State Electric Generation and Transmission Cooperative

is the only generation and transmission cooperative operating in New Mexico. Twelve New

Mexico retail distribution coops are members of Tri-State and are the parties eligible to protest a

Tri-State rate increase.

The current three-member protest requirement for PRC review of rates became effective by stat-

ute when Tri-State acquired New Mexico-based Plains Electric Generation and Transmission

Coop. Prior to the acquisition, the Commission set all wholesale rates for Plains following the

normal Commission procedures for public rate hearings, though Plains claimed its submission to

Commission rate setting was voluntary.

EMNRD reports that recent Tri-State filings have not included significant cost-of-service infor-

mation to evaluate Tri-State’s investment and rate design decisions. The member coops are also

discouraged from seeking power from other generation sources, including self-generation, due to

the imposition of penalties. The latter constraint also effectively prohibits the members from

implementing renewable energy projects.

BE/mt