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PNM Resources Rate Hike Okayed, but Lower than Expected

HE KEP PNM SPKE

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Per a media release, electric utility PNM Resources Inc. (PNM - Free Report) has finally received the go-ahead from the New Mexico Public Regulation Commission (PRC) to increase electricity rates. However, the approved rate is lower than the 14.4% rate hike proposed by the company.

The approved rate will increase PNM Resources’ annual revenues by $65.7 million and is slightly above 50% of the company’s proposed increase of $123.5 million.

Impact of the Hike

The PRC expects the latest rate hike approval to increase electricity rates of the average customer by 7.6%, with residential customers seeing an increase of around 9%. However, PNM Resources is not entirely satisfied with the rate hike and may consider filing an appeal with the New Mexico Supreme Court.

Note that PNM Resources has not applied for a rate increase since Jul 2011 and a rate hike was long due seeing that the company had invested substantially to strengthen the existing infrastructure, and adding emission control systems, nuclear power and renewable energy assets to its production portfolio.

PNM RESOURCES Price

 

 

PNM RESOURCES Price | PNM RESOURCES Quote

Why Rate Hikes Are Essential

Regulated utilities need to file for a rate hike whenever costs for providing services go up and revenues can no longer cover the expenses of building, operating and maintaining the entire infrastructure.

Hawaiian Electric Industries Inc. (HE - Free Report) has recently announced that its regulated electric utility, Hawaiian Electric Light Co. is filing for a rate hike after six years with the Hawaii Public Utilities Commission. (Read more:Hawaiian Electric Unit Files for First Rate Hike in 6 Years)

Zacks Rank & Key Picks

PNM Resources currently has a Zacks Rank #3 (Hold). A couple of better-ranked utility stocks are Spark Energy, Inc. (SPKE - Free Report) and Korea Electric Power Corp. (KEP - Free Report) .

Spark Energy’s earnings estimates witnessed an increase of 12.2% for 2016 to $2.49 over the last 60 days. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Korea Electric Power saw its earnings estimates rise 4.5% for 2016 to $5.02 over the last 60 days. The company carries a Zacks Rank #1 as well.

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