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Monday, March 10, 2008

Political Jolt For PNM; Rate Boost Trimmed; Guv Weighs In; Is He Behind The Curve?, Plus: Party Loyalty Issue In ABQ Race, And: Dems Illinois Hope 

Big Bill didn't cross the line, but he brushed right up against it when he indicated he was not pleased with regulators who handed electric consumers a break by trimming PNM's big rate increase request. The semi-obscure state Public Regulation Commission (PRC), which will make a final decision in May on the rate hike, is independent of the executive branch, composed of five elected members. By saying he wants the PRC to make a "careful decision" some observers felt the Guv might have actually hurt PNM's cause. From the e-mail:

"Richardson is a day late and a dollar short. He should have made his case BEFORE the recommendation was made. Don't be surprised to see PRC dig its heels in just to make it clear the PRC is beholden to no one."

The Guv's pro-PNM tilt--he is friends with PNM CEO Jeff Sterba--may fall on deaf ears with Commission Chairman Jason Marks who is up for re-election this year and Commissioner Ben Ray Lujan, who is seeking the Dem nomination for the northern congressional seat. Not supporting a staff decision that gives major relief to state consumers wouldn't seem a wise way to gather votes. The three other commissioners may be more susceptible to a bigger rate hike. However, if they grant it, they may look like their strings are being pulled by the Governor as they hand consumers a bigger light bill to boot. Those are issues that might not be forgotten. Big Bill can't seek re-election, but showing sympathy for PNM while consumers face a sour economy might not help his approval ratings, particularly with his own Democratic party.

THE POLITICS OF PNM
CEO Sterba
PNM is a company on the rocks. Its stock price crashed nearly 20% Friday when PRC staff recommended to commissioners a $24 million rate increase, not the $77 million the company wanted. PNM has already announced it is laying off five hundred employees, 15% of its workforce. It has also announced it is selling its natural gas division to "better focus" on providing electricity. PNM also formed an investment alliance with billionaire Bill Gates through his Cascade Investments. It has been a money loser.

CEO Jeff Sterba says the company needs the larger rate increase "to provide the safe and reliable service our current and future customers expect and deserve." He adds that rejection of the full rate increase request "limits our ability to invest in the renewable power we believe our customers want us to develop."

There is a way to get a large chunk of the money Sterba says is needed to provide for its customers--cut the dividend being paid to shareholders. PNM stock is trading down nearly 75% from its 52 week high. An investor buying a share today would get a dividend yield of nearly 10%, clearly an unsustainable level. Cutting the dividend in half would give the company over $25 million in additional annual cash.

The political and economic climate is shifting. Capital and business have ruled supreme for several decades, but now a recession looms; money is tight. The tide is shifting. Rather than being protected from the storm by a sympathetic Governor, PNM may have to join its customers and start biting the bullet, or welcome business suitors who can.

ON BEING A DEMOCRAT

When you're running in a primary election, party loyalty is no small deal. Primaries tend to attract hard-core loyalists which is why a perennial issue in them is what party you have belonged to and for how long. In the case of political newcomer Tim Keller, seeking to unseat longtime ABQ SE Heights State Senator Shannon Robinson, the issue has some legs. The 30 year old Keller is running as a "progressive Democrat" against the established Robinson, but confirms that when he first registered to vote, in 1996, he did so as a Republican. In, 2000, he was a college student and re-registered as an independent. It was not until February of '06 that Keller became a full-fledged member of the party of the donkey.

"I have never been active in Republican Party politics, or anything like that. My father was a Republican and he took me down to register when I was 18...I was not involved in politics as a youth...I'm the new guy." Keller said.

Keller also says he hasn't voted much as an adult. He especially regrets it in the case of the Wilson-Madrid '06 ABQ congressional race in which Republican Wilson was re-elected by a margin of less than 900 votes.

Keller, an ABQ native, may have only recently strengthened his Democratic credentials, but his campaign platform is solidly liberal and will have appeal to primary voters. They can weigh that along with his registration history.

THE ILLINOIS HOPE

We continue to hear many Dems fret over their prospects to take over the ABQ congressional seat which has been held by the Republicans since its inception in 1968. They hope a strong national Democratic trend will sweep the nation and sweep them into the ABQ seat. They think they may need it to topple likely Republican nominee Darren White. Over the weekend the D's were given a reason to hope. In a special election, the Democrat won the Illinois House seat being vacated by former GOP Speaker Dennis Hastert. Republicans insist the election does not signal a Dem tidal wave forming for November, but you gotta believe hey have their wet suits at the ready.

THE BOTTOM LINES

Northern Dem congressional hoepful Don Wiviott may have a hard time getting people to pronounce his name right, but they will get a chance to try. A judge has thrown out a lawsuit from Wiviott rival Jon Adams that could have kept Wiviott off the June primary ballot. Adams could appeal.

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(c)NM POLITICS WITH JOE MONAHAN 2008
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