Amim Case
ROE PNM used in its illustrative cost of service filed in Case No. 10-00086-UT. Mr. Monroy calculates a net present value cost savings of $20.9 million over the 20-year period of 2020 through 2039. Mr. Monroy selects this period because 2020 is the first full year following full AMI Projected implementation.
Ms. Teague projects the O&M expense savings expected from AMI Project implementation. Ms. Teague provides reasonably detailed and thorough analyses for many of the expense categories in which expense differences are projected to occur. PNM Exhibit RRT-2 indicates that the AMI Project will provide significant O&M savings after full deployment VERIFY, of $11.3 million per year (in 2015 dollars). Mr. Monroy takes these projected savings …show more content…
Possibly. However, PNM cost projections are troubling both because they are uncertain and indicate a lengthy initial 5-year period before cost benefits are realized. What’s more, the AMI Project is not a project that will simply undertaken without some harm to other individuals. PNM estimates that approximately 150 meter readers will lose their jobs as a result of the AMI Project implementation. Although PNM has represented that it will seek to find new positions for these individuals, CITE there is no assurance that many, if any, will remain with PNM, a good New Mexico employer offering favorable salaries and …show more content…
While it is necessary for PNM to earn profits in order to remain financially healthy, in this case the profits PNM projects to earn do not seem commensurate with the costs and risks proposed to be borne by ratepayers.
Q. Given the uncertainties of the AMI Project costs and projected distant benefits, what does Staff recommend?
A. Staff questions whether now is the appropriate time for PNM to undertake the AMI Project. Although PNM represents that NPV savings will result, actual savings, if they do result, will not be realized for several years. The project may eventually result in cost savings, operational efficiencies and customer conveniences, but the project is not essential to provide safe and reliable electric utility service. CITE
In order to ensure that cost savings indeed materialize for customers, and that customers alone do not bear the risk that such savings will be realized, Staff recommends that the $87.2 million in capital costs be capped at amounts projected in PNM’s application and supporting
Ms. Teague projects the O&M expense savings expected from AMI Project implementation. Ms. Teague provides reasonably detailed and thorough analyses for many of the expense categories in which expense differences are projected to occur. PNM Exhibit RRT-2 indicates that the AMI Project will provide significant O&M savings after full deployment VERIFY, of $11.3 million per year (in 2015 dollars). Mr. Monroy takes these projected savings …show more content…
Possibly. However, PNM cost projections are troubling both because they are uncertain and indicate a lengthy initial 5-year period before cost benefits are realized. What’s more, the AMI Project is not a project that will simply undertaken without some harm to other individuals. PNM estimates that approximately 150 meter readers will lose their jobs as a result of the AMI Project implementation. Although PNM has represented that it will seek to find new positions for these individuals, CITE there is no assurance that many, if any, will remain with PNM, a good New Mexico employer offering favorable salaries and …show more content…
While it is necessary for PNM to earn profits in order to remain financially healthy, in this case the profits PNM projects to earn do not seem commensurate with the costs and risks proposed to be borne by ratepayers.
Q. Given the uncertainties of the AMI Project costs and projected distant benefits, what does Staff recommend?
A. Staff questions whether now is the appropriate time for PNM to undertake the AMI Project. Although PNM represents that NPV savings will result, actual savings, if they do result, will not be realized for several years. The project may eventually result in cost savings, operational efficiencies and customer conveniences, but the project is not essential to provide safe and reliable electric utility service. CITE
In order to ensure that cost savings indeed materialize for customers, and that customers alone do not bear the risk that such savings will be realized, Staff recommends that the $87.2 million in capital costs be capped at amounts projected in PNM’s application and supporting