PS NEW MEXICO <PNM> STUDIES SYSTEM PARTNERSHIP
Public Service Co of New
Mexico said it is evaluating placing its electric distribution
system in a limited partnership with assets of about 400 mln
dlrs.
    The utility said it advised a customer task force this is
one restructuring alternative being considered for the
company's electric business.
    The structure is being evaluated as part of the company's
overall initiative in response to several goals announced by
New Mexico Governor Garrey Carruthers, it explained.
    Public Service New Mexico said a central feature of its
reorganization concept would be to separate the company's
electric utility operation into independent generation and
distribution entities, creating the opportunity for a targeted
35 mln dlr a year rate decrease.
    Noting the use of the limited partnership structure by a
variety of businesses recently, the company said it believes
"the concept may well have an application in the utility
business and intend to investigate it fully."
    The generation company would provide projected power needs
of the distribution entity under a 30-year "power security
agreement" which would have a federally regulated rate
structure, the company said.
    Public Service New Mexico said the restructuring could
provide for its gas and water utilities and its non-utility
companies becoming subsidaries of the proposed holding company
approved by the company's shareholders in May 1986.
    This holding company would be the general partner of the
limited partnership, the company said.
    The company said its limited partnership concept was
presented to an ad hoc customer task force convened by Gov.
Carruthers to review the company's reorganization proposals.
    It said the reorganization and limited partnership are an
alternative structure that would  help reduce rates through a
lower overall cost of capital.
    Last month the governor said "I have outlined to PNM
critical goals which I have asked them to cooperate with may
administration in achieving" adding the goals include immediate
rate reduction, stabilization of future rates and stimulation
of business expansion.
    The company told the task force the new distribution
company, under the limited partnership alternative or
otherwise, would continue to be fully regulated by state
regulators.
    PNM's proposed generation company would continue to be
owned by common shareholders through the holding company. Its
rates would be set by the Federal Energy Regulatory Commission
which regulates for wholesale electric power sales and
transmission services. The generation company would have no
retail customers.
    PNM said it expects to file a detailed restructuring plan
with state regulators in the near future, noting approval would
also be needed by FERC.
 Reuter
