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) April 14, 1999
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(April 8, 1999)
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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)
(Former Name or Former Address if Changed, Since Last Report)
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Item 5. Other Events
Electric Utility Industry Restructuring Act of 1999
As previously reported, Senate Bill 428, Electric Utility Industry Restructuring
Act of 1999, was passed in the 1999 New Mexico Legislature and was awaiting
approval by the Governor. (See PART II, ITEM 7. - "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - OTHER ISSUES FACING
THE COMPANY - ELECTRIC INDUSTRY RESTRUCTURING ACT OF 1999" in the Company's 1998
Annual Report on Form 10-K and Item 5, "Other Events" in the Company's Current
Report on Form 8-K dated March 30, 1999.)
On April 8, 1999, the Governor signed the bill into law, opening the state's
electric power market to customer choice beginning in 2001. 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 starting in January 2002. The Public
Regulation Commission ("PRC"), however, can extend these dates by one year if
necessary. 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 in
the open market can buy their electricity through their local utility through a
"standard offer" whereby the local distribution utility will purchase power
supplies through a competitive process approved by the PRC. The local
distribution utility system and related services such as billing and metering
will continue to be regulated by the PRC, while the interstate transmission
system will remain subject to Federal regulation.
The law does not require utilities to divest their generating plants, but
requires unregulated activities to be separated from the regulated activities
through creation of at least two separate corporations.
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The law also provides for sharing of stranded costs between utility shareholders
and customers, allowing utilities to recover at least half of such stranded
costs. Stranded costs are defined in the law to include nuclear decommissioning
costs, regulatory assets, leases and other costs recognized under existing
regulation. Utilities could be allowed to recover more than half of their
stranded costs if they meet the criteria specified in the law. Stranded costs
will be recovered from customers over a five-year period. Utilities will also be
allowed to recover through 2007 all transition costs reasonably incurred to
comply with the new law.
The law, however, does not provide a guaranteed rate cut for residential
customers. Electric rates during the transition to competition will be set by
the PRC. The Company has a rate case pending before the PRC, which will likely
result in a rate reduction. On April 6, 1999, the New Mexico Supreme Court
issued its mandate in the rate case appeal officially returning the case to the
PRC for further proceedings consistent with the Supreme Court's opinion. (See
"Electric Rate Case" in Item 5, "Other Events" in the Current Report on Form 8-K
dated March 30, 1999.)
The Company is required to file a transition plan with the PRC by March 1, 2000.
The transition plan must include proposals for: (i) implementing customer choice
and open access to the Company's transmission and distribution system; (ii)
separating regulated and non-regulated business activities; (iii) recommended
rates for distribution, transmission and related services; (iv) competitive
procurement process for standard offer; and (v) proposed charges for the
recovery of stranded costs and transition costs.
Due to uncertainties surrounding the stranded costs that the Company will be
allowed to recover, the Company is currently unable to determine the ultimate
financial impact the new law will have on the Company.
Annual Stockholders Meeting
As previously reported on the cover of the Company's 1998 Annual Report on Form
10-K filed with the Securities and Exchange Commission ("SEC") on March 8, 1999,
the date of the Company's annual meeting of stockholders will be June 8, 1999.
This means that the deadline under SEC rules for receipt of any proposal for
possible inclusion in the 1999 proxy statement became "a reasonable time before
the Company begins to print and mail its proxy materials".
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SIGNATURES
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: April 14, 1999 /s/ Donna M. Burnett
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Donna M. Burnett
Vice President, Corporate
Controller and Chief
Accounting Officer
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