SANTA FE, N.M. (KRQE) – How much revenue a utility company makes has traditionally been tied to how much energy its customers use. So, with increased energy efficiency comes decreased revenue. Now the New Mexico Supreme Court says utility companies can fully decouple their earnings from their sales.
This is called “revenue decoupling.” Utilities have asked regulators to approve a full decoupling of revenue from energy usage as a way to help support energy efficiency. The state’s Public Regulation Commission denied the request, arguing that state law on the topic only allows for a partial decoupling.
Now the New Mexico Supreme Court says state law “clearly describes a full revenue decoupling mechanism.”
But just because utility companies can decouple their revenue from energy sales, that doesn’t mean they can charge customers whatever they want. The Public Regulation Commission will still have to “design rates in a way that fairly allocates revenue collections between the ratepayer classes and permits the utility a reasonable opportunity to recover its revenue requirement,” the Supreme Court says. In other words, utilities will still have to charge rates that are fair to ratepayers.
