(ALBUQUERQUE, N.M.) €” PNM residential customers will see their monthly electric bills drop by about $2.60 effective July 1 thanks to a reduction in the rate for PNM's Fuel and Purchased Power Cost Adjustment Clause (FPPCAC). A typical residential customer currently pays a fuel cost adjustment fee of approximately $8.05 a month. As a result of the fuel cost adjustment, the fee will drop to approximately $5.46 a month. Other customers like businesses, municipalities, educational institutions, etc. will also see a fuel cost reduction, depending on their bill amounts.

"The fuel clause allows for timely, appropriate bill adjustments based on the actual fuel costs incurred to generate electricity to serve our customers," said Gerard Ortiz, PNM vice president of Regulatory. "In this case, the decrease in costs is passed directly to customers, reducing their monthly bills."

Assuming no revisions or adjustments in the interim period that would affect the projected costs and revenues of the FPPAC, PNM estimates that the fee could decrease by an additional $2.58 in January of 2016.

Customers would see even more savings in fuel costs starting in 2016, if the NMPRC approves PNM's plan for San Juan Generating Station. The current proposed adjustment does not take into account the potential fuel and fuel-related savings that could flow through the FPPCAC under the new coal supply agreement with Westmoreland Coal Company that would go into effect if the plan is approved.

Fuel adjustment charges are intended to ensure customers only pay for a utility's actual fuel costs. Charges resulting from the FPPCAC appear in a separate category on customers' bills. Customers will benefit from bill reductions when fuel costs decline and utilities will be protected from unexpected increases in fuel costs.

PNM's FPPCAC is administered under NMAC 17.9.550 (also known as NMPRC Rule 550). In April 2014, the NMPRC approved PNM's continued use of its FPPCAC. PNM is required to reset its FPPCAC factor annually as of July 1, to be in effect through June of the following year, subject to a quarterly reset to ensure timely recovery of the costs for fuel to generate electricity or for the cost to purchase power in the competitive market from other generators.