Moody's keeps Public Service Co. of New Mexico on review

Moody's Investors Service said that while it views the recommendation of a New Mexico Hearing Examiner in Public Service Co. of New Mexico's pending electric rate case as negative to the credit quality of the company and its parent, PNM Resources, Inc., the ratings remain unchanged at this time and the review for possible downgrade of the company's Baa2 senior unsecured and P-2 commercial paper ratings will continue.

On Thursday, the examiner issued his recommendation that the company receive a $24.2 million rate increase, based on a 9.71% return on equity. The examiner also recommended that commissioners reject the company's request for a fuel-adjustment clause to recover higher fuel and purchased power costs. The examiner's recommended increase equals only 30% of the $76.9 million increase requested by the company (based on a 10.75% return on equity) and less than 20% of the company's estimated total requested revenue increase assuming implementation of a fuel-adjustment clause.

If the New Mexico Public Regulation Commission's decision is substantially similar to the examiner's recommendation, the agency said it expects to downgrade the ratings by one notch.

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