SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 15, 1998
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(August 24, 1998)
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PUBLIC SERVICE COMPANY OF NEW MEXICO
(Exact Name of Registrant as Specified in its Charter)
Commission
New Mexico File Number 1-6986 85-0019030
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(State or Other Jurisdiction (I.R.S. Employer
of Incorporation) Identification Number)
Alvarado Square, Albuquerque, New Mexico 87158
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(Address of Principal Executive Offices) (Zip Code)
(505) 241-2700
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address if Changed, Since Last Report)
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Item 5. Other Event
Retail Pilot Load Program
As previously reported, the City of Albuquerque ("COA") filed a petition in 1997
with the New Mexico Public Utility Commission ("NMPUC") to institute a small
scale retail pilot load aggregation program. The NMPUC Staff presented an
alternative to the COA pilot proposal, which proposed a larger pilot that would
include a broader mix of customer classes. The NMPUC Staff also proposed that
the NMPUC order a separate proceeding to identify what stranded costs,
transition costs and administrative costs would be incurred by the Company in
connection with a pilot program and the proper methodology for quantifying any
appropriate recovery. Hearings were held in April 1998. (See PART I, ITEM 2.
- -"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - OTHER ISSUES FACING THE COMPANY - The City of Albuquerque Retail
Pilot Load Aggregation Program" in the quarterly report on Form 10-Q for the
quarter ended March 31, 1998.)
The Company has opposed the pilot program on the grounds that (i) the NMPUC is
exceeding its statutory authority in implementing such a plan and (ii) the pilot
as structured will not offer any valid lessons in the workings of a competitive
electric market. The Company still believes that a pilot program designed as
part of the framework for overall industry restructuring under legislative
direction will have the most value for an effective transition to full retail
access.
On August 24, 1998, the Company received an NMPUC order, requiring the Company
to start a retail pilot program for a one year period commencing with the first
billing cycle in December 1998. The pilot program encompasses 16 MW of the
Company's system load within the city of Albuquerque, consisting of 31%
residential, 43% commercial, 25% industrial and 1% public streets and highways.
The Company will be responsible for billing, metering and collection, as well as
load balancing and settlement. The Company will be allowed to seek recovery of
all reasonable implementation and administration costs associated with the pilot
program in its next general rate case. The Company currently estimates that
revenue loss resulting from the pilot and the system installation/implementation
costs will be approximately $5.3 million and $1.0 million, respectively.
However, the amount of revenue loss is dependent on the actual rates implemented
for the pilot, an issue about which the order is unclear.
The order defers any decision on recovery of stranded costs in connection with
the pilot, although the NMPUC did lay out certain principles which will guide
the NMPUC when this issue arises, including that the Company must demonstrate
that it has mitigated any revenue loss from this pilot program through the sales
of power in the off-system markets that would have been used to serve pilot
participants.
On September 9, 1998, the Company filed a motion with the NMPUC for rehearing.
In the filing, the Company requested a delay in implementation of the pilot
program to allow reasonable time for installation of the necessary systems to
accommodate the pilot program, including time for supplier notification and
customer education. The Company also requested that the NMPUC reconsider its
determination that it has jurisdiction to order the pilot program. In addition,
the Company requested that the NMPUC stay, pending review of such an order by
the New Mexico Supreme Court, the effect of the order and of any order on
rehearing that would require the Company to participate in a pilot program. If
the Company's motion is not granted, the Company intends to appeal to the New
Mexico State Supreme Court.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Public Service Company of New Mexico
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(Registrant)
Date: September 15, 1998 /s/ Donna M. Burnett
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Donna M. Burnett
Corporate Controller and
Chief Accounting Officer
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