New Mexico is ranked the third poorest state in the nation with a poverty rate of 17.85% according to World Population Review. Soaring inflation and rising energy prices are taking a heavy toll on New Mexico families. A bill proposed in the 2023 legislative session will only make that situation worse for many hard-working families because they will be forced to subsidize the utility rates of others.
The New Mexico State Legislature is considering HB 218 Low Income Public Utility Rates which requires a utility to provide lower gas or electric utility rates for low-income residential customers with the Public Regulation Commission responsible for establishing the rate structure. These lower rates would be subsidized by all other New Mexico rate payers and would ride most heavily on the backs of the lower middle class who are not eligible for government assistance.
Poverty and the needs of others are not lost on any of us. We don’t want anyone to suffer for lack of heating or cooling in New Mexico. But when you force increased rates on others to cover the costs for the low-income, you are creating additional hardships. Consider the elderly or others on a strict fixed income budget who can barely afford their own utilities. How can you force them to help cover utility costs for others?
It doesn’t matter where you draw the line for poverty in this state, you have many just above that line who simply cannot bare these subsidized costs. Any additional costs for these folks may be the difference between barely covering their daily expenses and having to skip meals or prescription refills. And if the legislature passes this bill, you will push many of those who are barely making ends meet into poverty. This will, in turn, increase the poverty rate in our state.
Should it be the responsibility of some rate payers to cover the utility needs of others? Not according to the New Mexico Supreme Court, that in 1984 determined in Mountain States Legal Foundation v. New Mexico SCC that “Establishing a telephone discount rate program which differentiates between economically needy individuals who receive the same service is unjustly discriminatory.” The same holds true for gas and electric utility rates.
Requiring New Mexico utility companies to use an economically weighted or “socialized” rate structure is not the answer the answer to poverty in New Mexico. Furthermore, gas and electric utility companies are not qualified to administer social programs, nor would we want them in that business.
Consider: 1) If the legislature raises most rate payers’ rates to assist low-income households with their utility bills, wouldn’t this be considered just another tax? 2) What about water bills, cell phone bills, internet bills and even property tax bills – are socialized rates next for bills we all pay? 3)If the Supreme Court decision is overturned, which would be the case if this type of legislation is passed, what industry would be next? 4) Should the government use utility companies as tax-collectors?
What we need in New Mexico is economic policy that will promote greater prosperity rather than increased poverty. We hope to hear a responsible response from our state legislature with a resounding rejection of HB 218 Low Income Public Utility Rates.
Carla Sonntag is the president and CEO of the New Mexico Business Coalition (NMBC), a statewide, nonpartisan nonprofit seeking to make New Mexico a better place to live, work, and run a business.